The most dreaded nightmare for tax payers is getting a scrutiny from the ATO or any other tax collection departments of the state. The ATO can randomly pick up and tax return for scrutiny and investigation even when the accounts are error free and taxes are paid. The process of a tax scrutiny is long and involves a lot of financial loss.
The company or individual needs to hire a lot of professionals to help him sail through the tax audit. Getting the annual cover for audit protection insurance comes handy in such scenario. The insurance cover, which can be bought from the accountant or a tax consultant, will take care of all the expenses involved in facing a tax audit.
An annual audit protection insurance cover will safeguard the accountant and the company from the expenses of tax scrutiny which may run into thousands of dollars. The audit protection cover will pay for the expenses of lawyers, tax accountants and advisors needed to advise you on handling the tax scrutiny and also covers the penalties to be paid because of the mistakes committed by the accountant. However, the insurance cover does not cover the penalties incurred because of intentional fraud and faking expenses to lessen the tax.
The audit protection insurance cover is provided by many tax accountants as part of their value added services to high-end clients, while some of them offer the insurance cover at additional fees. Individuals or companies who pay their own taxes can also buy the audit cover directly from insurance companies, by opting for non accountant version of the product.
The audit protection insurance covers all the tax investigations for the previous year of the date of commencement of the policy and all other previous years. Having a working policy is very important to get proper protection and cover. The accountant should see to it that the annual fee is regularly paid to maintain the policy in a working condition. Choosing proper cover is also very important to get the full protection. The amount of cover should be calculated on the size of the company and the amount of tax return. Be ready to face the tax audit whenever it happens by investing in a tax audit insurance.