It is our view that the ATO will undertake significant audit activity in relation to the JobKeeper Payments once the payment period has reached a conclusion (i.e. post-September 2020). Our concern is whether such audit activity would be covered by Tax Audit Insurance.
Audits in respect of any government benefits or entitlements have always been an exclusion in most Tax Audit Insurance policies and certainly has been in Audit Shield. The logic behind this is that a Tax Audit insurance policy covers Tax Audits in respect of validating, substantiating, justifying or supporting whether or not you owe more taxes or duties than you declared in a lodged return. Government benefits and entitlements, on the other hand, represent discretionary incentives being offered up by governments to encourage certain behaviour. They are not compulsory and not everyone is entitled to these, and the process involves an application process, and then a possible audit of the eligibility, entitlement, purpose or use of that benefit or entitlement.
The provider of our Tax Audit Insurance, Accountancy Insurance, has been working with the underwriter, Vero Insurance, over the previous weeks to try and see what they can do about all of this within the offering, to support accountants and their clients through this. We are pleased to announce that Accountancy Insurance is putting in place an endorsement to our policy which will include Job Keeper audits and reviews. This endorsement will extend not only to renewals but will be automatically applied to all current and existing policies. You do not need to do anything to have this endorsement added to your current policy or renewal policy. This endorsement is being added at no additional cost in premium.
Key features of this policy endorsement:
It only covers JobKeeper payments. All reviews or audits of other Covid-19 support packages are not covered unless they form part of an audit of a lodged return (i.e. BAS audit, Payroll Tax audit etc.). It only covers post-payment reviews or audits so any issues or queries with the JobKeeper application process are not covered. There is no additional premium cost associated with this endorsement. All existing policies will have this endorsement applied automatically. There is nothing clients need to do to trigger this endorsement.
Regards
Eric Cirulis
Director / CEO