Category Archives: Tax

Accountants Must Be Vigilant In Recognizing Pseudo Tax Audit Insurance Services

Since the Australian Taxation Office (ATO) is focusing its efforts on tax compliance to reduce the $8.7 billion gap between the expected collections from individual taxpayers and the taxes that have been collected, it becomes more important to obtain chartered accountant insurance for protection. The number of audits that will be initiated by ATO are expected to increase.

Based on ATO’s study of individual tax returns, it was found out that 72% contained errors from incorrect claims for work-related expenses to rental property expenses and failure to report cash wages. It is easier for ATO to cross-check info from different sources to recognize the breaches through sophisticated data-matching technology.

Accountants can expect an increasing number of queries regarding tax returns. According to Craig Laughton, Executive General Manager of Policy, Advocacy and Public Practice at CPA Australia, the cost incurred in responding to a tax audit or government compliance investigation will become a controversial issue between an accounting practice and its clients.

The audit process is time consuming because of the time required to make preparations to respond to audit findings. Having an appropriate tax audit insurance coverage will cover the costs associated to the tax audit. However, accountants must be alert because there are pseudo tax audit protection services being offered.

On the surface, it would appear that pseudo insurance is a cost effective solution but underneath it all, the accountant may be paying for a service that has no insurance backing. It is important to check what the insurance policy covers and what it doesn’t. Instead of an audit risk being transferred to an insurance firm, they are only self-insuring because there is no associated external insurance cover.

Accounting practices that do not have proper insurance may find themselves at a disadvantage because the associated costs of responding to a tax audit can be substantial.

It is definitely worth having chartered accountant insurance that will cover the professional fees resulting from an official audit, enquiry, investigation, review or examination instigated by Inland Revenue or New Zealand Government Authority. Once there is insurance, the risks are transferred to the insurer that will pay for the total costs of responding to a tax audit.

Why Need CRA Audit Protection To Survive A Tax Audit

You need to know what an inquiry notice is, especially if you’ve filed your taxes and received a notice of assessment. The inquiry notice is a letter from the CRA asking to see more of your tax documents. If you have claimed a deduction for medical expense, for instance, and filed your return electronically, the taxman will ask you copies of the receipts to ensure you are eligible for this tax break. What you need is to provide all documents and respond to the 30-days deadline upon receipt of this letter. You may also need a CRA audit protection to ensure someone is backing you up from the inquiry notice.

The CRA can go desk audit especially if it wants to dig deeper into your returns. You are subject to such audit especially if you have claimed losses and your return shows real estate transactions. They can also do field audits, which they will show up physically to your home or office. With this, you will need a CRA audit protection before you’re actually audited by a taxman, and so here are what you can do:

  • Be Respectful and Cooperate

The worst thing to happen is to pretend you didn’t hear the CRA is coming. Whether you like it or not, you’ll be audited by the CRA team and there’s no stopping it. So, what to do when they’re here is to be organised and cooperative with the process.

  • Get Professional Help

If you receive an audit letter, you need to secure a CRA audit protection for professional advice. Depending on what you need, you may need lawyering or a tax accountant with great qualifications to represent yourself in this time of need. He can perfectly help you in this simple audit, where you just need to present the paperwork to show it. If the accountant can’t help, then you need a tax lawyer for legal help.

  • Appeal the Case if It’s Worth It

After the CRA audit, they will tell you if they find some mistakes and you need to pay more taxes. You have 30- to respond to the findings. The agency will then take another look at your returns and get back to you. If you’re still unhappy with the assessment, you can take the problem to a tax court. A CRA audit protection can also help you with this dire need.

International Monetary Fund Director Notes Risk Of Debt From New US Tax Policies

The International Monetary Fund is one of the United Nations’ many sub-organizations, each handling a certain scope of global politics. The IMF, as the name implies, works to ensure global financial stability, international trade and reduce poverty. Whilst departments like the IRS exist to keep track of things like a business’s employer ID number, the IMF keep track of how a country’s funding affects the world.

Managing Director and CEO Christine Lagarde took notice of the new US tax policies, which she describes as ‘complicated’, and says that there will be some serious effects from the changes, both good and bad. According to her, the growth bump the new tax policy will bring might overheat the US economy, and might cause Uncle Sam’s debts to go up.

In an interview with Reuters on the 1st of March, Lagarde says that these tax cuts are capable of upping the US’s growth rates over the next three years, up to 2020, which should, in turn, bump up the global trade scene for a few years, due, in part to the country’s open economy model.

The IMF once advised to the US to create a new business tax code, one that cuts down on the complexity and allows for more efficient operations, in order to help not only the businesses and their employer ID number, but also everyone involved in the process.

The new tax code follows this advice, though Lagarde says it also has the potential to cause lots of inflation. Lagarde elaborates, saying that the policy will stimulate growth, but that the US economy is already growing, the economy might ‘overheat’, which might increase wages, but also worsen inflation, which will then be followed by the metaphorical belt tightening, as the country’s monetary policy tightens to compensate for rising interest rates the cuts would cause.

Similar increased interest rates led to certain countries, particularly in Asia, to approach the IMF for bailouts. Another issue the IMF notes is the US’s budget deficits, and the debts that would kick in following the growth. The organization Center for a Responsible Federal Budget even notes that the US’s budget deficit could shoot past $1T by 2019, thanks to the tax cuts and increased spending.