As your small business clients gear up to complete their tax filing, they may be concerned about the possibility of being audited by the Australian Tax Office. This year may create more “audit anxiety” for your SME clients than usual.
The ATO has resumed normal activity, including recommencing audits of Australian small businesses.1 Though most small businesses do the right thing, a simple mistake or misunderstanding about their tax obligations could potentially lead to a costly audit.
This is where Tax Audit insurance could benefit many of your SME clients.
ATO resumes business as usual
Many small business owners worry more about being audited during the end of financial year, but an audit by the ATO (or other state and federal government agencies) can happen at any time. SMEs were given a reprieve in 2020, with the ATO granting blanket extensions until 1 September 2020.1
However, normal activity has resumed and the ATO is keen to implement planned compliance measures that were also paused. The ATO collected $9.5 billion in audit yield during the 2019-20 financial year,2 or around 88% of the projected tax payable for that period.1 This year is likely to bring greater focus on closing the small business income tax gap.
Tax Audit insurance for small businesses
With the ATO conducting some 120,000 audits of small businesses1 in a normal year, SMEs may be looking for ways to help shield their business from the effects of this process.
Tax Audit insurance* provides cover for some of the fees incurred in connection with a tax return audit by the Australian Taxation Office.
A Tax Audit insurance policy typically covers: *
- Accountants’ fees
- Tax agent fees
- Limited other professional’s fees incurred in responding to a tax audit
The following are typically not covered by Tax Audit insurance: *
- Fines or taxes imposed
- Your client’s time or salary or lost opportunities
- Your client’s employee’s time or wages
Why should your clients consider Tax Audit insurance?
A tax audit can be a lengthy and expensive process. For many small businesses, the cost is often a burden. Hiring an accountant to assist during the audit may stretch tight budgets or mean dipping into business (or even personal) savings. Like other types of insurance, Tax Audit insurance helps minimise a business’ out-of-pocket costs by covering some of the expenses associated with an official ATO audit.
Help your SME clients for the EOFY
Equip your clients with the right cover for tax season, and beyond. Login to BizCover for Brokers now and start binding Tax Audit insurance for your SME clients.
Not a member yet? Contact us today on 1300 295 262 or by email on firstname.lastname@example.org to find out how BizCover for Brokers could help streamline your business processes, or sign-up now to start quoting.
*As with any insurance, cover is subject to the terms, conditions and exclusions contained in your policy document. The information contained on this webpage is general only and should not be relied upon as advice