As you may be aware the lodgment of corporate, business and individual taxation returns is now predominantly on a self-assessment basis. The contents of the returns are no longer reviewed at the time of lodgment but are accepted, as per the lodged return, by the Australian Taxation Office ("ATO").
To ensure the accuracy of the returns lodged, the ATO undertakes Tax Audits of various industry sectors, businesses and individuals on a regular basis. This means that most areas of Business and a large percentage of individuals will be subject to a tax audit some time in the future. These audits are carried out irrespective of whether a business or individual has complied with the Taxation Laws at the time.
ATO audits can also cover such areas as GST, PAYG, FBT and Capital Gains Tax.
When such Tax Audits are undertaken, we are normally in the best position to provide the information requested by the ATO and to generally deal with them on your behalf.
In the event that individual or business clients are subject to a Tax Audit the costs range from $500 to $10,000, or more, depending on the detail and complexity of the Audit. In order that our clients do not have to meet these costs we are pleased to offer a Tax Audit Protection (TAP) Service that will cover the costs you incur in having Halletts undertake this additional work up to your chosen limit of indemnity. Fees relating to any outside person or consultant (e.g. lawyer) are not covered unless prior approval has been given.
The TAP service covers ATO audits of income tax returns, BAS/IAS statements, fringe benefits tax returns and payroll tax audits by state revenue offices. It excludes:
- Audits into any business income tax or fringe benefits tax returns not prepared by our firm;
- Routine enquiries from the Australian Taxation Office:
- Audits where notification was given prior to the commencement of the TAP cover;
- Any fraudulent act or omission committed by you or on your behalf;
- Any tax owed and punitive costs such as penalty tax, costs, interest or any other fines;
- Costs incurred after the audit has been completed;
- Costs which exceed the agreed limit of indemnity;
- Fees in respect of a tax audit notified outside the period of the TAP cover.
By offering the Tax Audit Protection to our whole client base, we are able to pass on significant savings to you when compared to clients seeking to take out individual protection. The premium calculator will determine the premium payable based on your business turnover. Should all conditions be met and the amount paid up front, this will then be the only cost incurred by you to cover all your expenses during an audit up to the agreed indemnity limit.
Tax Audit Protection Premium Schedule
BUSINESS COVER:
This includes audits of businesses including companies, trusts, partnerships and personal entities. The premium, including GST, is based on the combined turnover of each nominated business or entity. To calculate this premium select the limit required, apply premium in accordance with turnover, then add $110.00 per individual in the group to include the personal tax returns.
| Limit of Indemnity per audit | $10,000 |
| Salary/Wage Earner* | $110 |
| Business Turnover | |
| $0 - $200,000 | $190 |
| $200,001 - $500,000 | $260 |
| $500,001 - $1,000,000 | $310 |
| $1,000,001 - $3,000,000 | $450 |
| $3,000,001 - $6,000,000 | $650 |
| $6,000,001 - $10,000,000 | $1,000 |
| >$10,000,000 | $1,200 |
*personal tax returns of all non-business individuals, including directors and partners of a business
EXAMPLE OF $10,000 PREMIUM CALCULATION:
The group consists of two (2) companies, one trust and three directors who work in the business, all of whom are clients of Halletts. The turnover of the group for the 2003/2004 financial year is as follows:
Example Premium Calculation as follows:
| Example | Premium Calculation as follows: | ||
| Company Z | $600,000 | Combined Business Turnover | $450 |
| Company Y | $NIL | Individuals (3 x $110) | $330 |
| Trust X | $500,000 | ||
| Total | $1,100,000 | Total Tax Audit Premium: | $780 |
Please see our Tax Audit Calculator to compute your premium.
Should you wish to be covered by our TAP please complete and sign the Tax Audit Remittance form and return to our office no later than 31 July 2004. Only payments received by the due date will be covered for the 2004/2005 financial year.
For more information please contact Jen Howe at 02 6257 5712.
