How Is Audit Protection Insurance Useful
All of the tax payers dread the word tax audit. With the increased scrutiny and number of cases selected for tax audit by ATO increasing every year, taxpayers are better off being prepared for the audit. Since mistakes are human and a lot of calculation and typing mistakes might occur while filing for returns, it is better to be proactive and cover your tax audit costs.
Most of the accountants prefer to sell audit insurance to their clients to cover the professional expenses of tax audit. Tax audits are very time consuming and involve a lot of professional costs like the fee paid to professionals like accountants, lawyers, advisors and others. Since these professionals charge their fee by the hour, buying audit insurance helps taxpayers and their accountants to relieve the financial stress caused by tax audit.
Buying adequate audit insurance cover makes the process of filing returns relaxed and stress free. Since insurance covers both the taxpayers and their accountants, there is no risk of lost man hours and exceeding costs.
Audit protection insurance is especially beneficial for huge businesses which make use of a number of provisions and deductions provided in the tax laws to reduce their tax burden. It is also beneficial for taxpayers who have multiple sources of income and take multiple deductions.
However, the audit insurance policies do not cover all the tax audits. There are different types of audits conducted by the ATO and it is advised to read the terms and conditions of the offer document of the insurance policy carefully, before signing it. The amount covered by the audit insurance policy is also determined beforehand. The amount is fixed depending upon the turnover of the business, the amount of tax paid, type of business and the insurance cover required. Like any other insurance policy, taking adequate audit protection insurance cover is essential to cover all the professional costs involved in a tax audit.
Accountants with audit insurance are able to portray a positive and professional image to the clients. They receive a small commission from the insurance company on the premium paid by the clients. The insurance policy covers both the accountant and the client and so it is recommended to get the audit cover to lessen the financial burden of tax audit.