Inland Revenue audit activity is on the rise and anyone can be in the spotlight
Our Audit Shield Master Policy provides for the payment of professional fees incurred in the event that you are selected for an audit, enquiry, investigation or review (audit activity) instigated by any government authority which is authorised to conduct audits.
The question many clients ask is ‘What constitutes an audit?’ Here’s the good news! An audit is broadly defined under the policy to include any official audit, enquiry, investigation or review, in respect of your returns or financial compliance obligations, and which you are obliged to respond to or act on. This even includes when Inland Revenue rings us to ask questions on a return that has been lodged by you or on your behalf.
A claim can be lodged for the professional fees we would normally charge you for assisting/responding to any eligible query from Inland Revenue or government authorities which is authorised to conduct audits. There is no excess on the policy and there is also no minimum claim amount.
The cost of being properly represented can be quite considerable depending on the circumstances (see the case studies below). Even a simple enquiry can require hours of work. Our Audit Shield Master Policy provides a fixed, cost effective solution to guard against these unbudgeted costs.
What is covered?
All professional fees (including specialists), up to a prescribed limit (with no excess) are covered.
When you choose to participate in our Audit Shield Master Policy you will receive the following benefits, plus more:
- Protection from any unplanned professional fees resulting from audit activity.
- A cost effective solution when compared to a standalone policy.
- Retrospective cover, so all previously lodged returns are included.
- The assurance that you are covered during a stressful situation.
- Payment for your participation is tax deductible.
Is it right for you?
This comes down to how much can you afford should Inland Renevue call, and how much of a risk taker you are.
Anyone can be reviewed, even if their lodgements are accurate. Data matching capabilities are profound, and are increasing the level of audit activity of both compliant and non-compliant taxpayers. With this in mind, all clients on our taxation agency are invited to participate in our Audit Shield Master Policy.
What’s the cost?
Different levels of cover are available for salary and wage earners and businesses with turnover under $100 million. Audit Shield premiums are calculated based on the type of taxation client you are, the premiums start at $95 for salary & wage earners, $215 for a Sole Trader and from $295 for Business groups (including Trusts). Prescribed limits range from $13,000 to $64,000.
How do I participate in the Audit Shield Master Policy?
Our policy renews on the 1st December each year, however, you can join at any time (premiums are pro-rata outside of the renewal period).
In November, we send out renewal letters with a client acceptance form and an invoice, you can participate by paying the Audit Shield fee or request it by contacting us.
Below are a few examples of Audit Shield clients (not necessarily Munro Benge Clients) who filed honest declarations, however, were still sought after by Inland Revenue. Luckily they participated in the Audit Shield Master Policy and avoided the costly ramifications.
Financial Services Business: Client Risk Review
Inland Revenue initially undertook a Client Risk Review of an Auckland based financial services business. This was expanded into a Full Audit in respect of Income Tax and GST compliance issues related primarily to overseas transactions and property developments being undertaken over the past 3 years.
Fees of $17,850 were fully covered by Audit Shield.
Property Compliance Programme Review
As part of Inland Revenue’s Property Compliance Programme, a Waikato based property developer was selected for an audit of 10 different entities, over 25 different property related transactions to ensure compliance with Income Tax and GST.
Fees of $20,000 were fully covered by Audit Shield.
Business Group: Income Tax, GST and PAYE Compliance Audit
Following a review of financial data obtained from banks, Inland Revenue undertook an audit of a Christchurch based business group in respect of Income Tax, GST and PAYE compliance for the last 4 years. Inland Revenue considered that the net profit being declared was too low and the audit primarily focussed on cash sales that may not have been reported.
Fees of $9,280 were fully covered by Audit Shield.
Business Group: Income Tax Audit – Residency and Foreign Income
Inland Revenue undertook an audit of a Napier based businessman and his related entities. Primarily the focus was on residency and foreign income from an income tax perspective. The taxpayer was deemed to have been a New Zealand resident which resulted in a significant taxation liability despite objections being lodged by the accountant.
Fees of $14,960 were fully covered by Audit Shield.
Terms and Conditions
Please refer to the Munro Benge Audit Shield Master Policy.