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We are delighted to advise that we now offer Accountancy Insurance.

If you are doing our tax work why would we need insurance?

Inland Revenue can take an interest in the taxation affairs of any New Zealand taxpayer at any time, even if you have never been targeted before. Whether it is an Income Tax, GST or Payroll Return, Inland Revenue can still initiate an enquiry. 

Inland Revenue has recently introduced new systems that are resulting in a significant increase in computer-generated “general” enquiries about submitted tax returns and the activity of (particularly) overseas-controlled businesses.

As you would expect, we prepare and file your returns correctly. 

But Inland Revenue is advising that New Zealand accounting firms can expect more general-type enquiries on your business activity as Inland Revenue develops risk profiles for businesses and industries.

And because of the changing international rules that are impacting on smaller companies carrying on business on both sides of the Tasman, and the chances that they may not be aware of these new rules, there is a possibility that Inland Revenue may increase its focus in this area.

In the past, a tax audit has been a tax audit.

However recent legislative changes now allow Inland Revenue to carry out “mini-type” tax audits which may be in the form of general widespread questions about your business and expand from there.

The advantage of using us as your New Zealand tax agent

We are in a great position to help Australian-controlled businesses operating in New Zealand because of our trans-Tasman expertise. We are very mindful of the differences in tax treatment between Australia and New Zealand and the errors that can occur as a result.

And from what we hear, clients are benefiting significantly from having one point of contact where we can explain clearly to your Australian tax agent what we have done, why we have done it and the impact on you in Australia.

This is clearly a better approach compared to matching an Australian tax agent who knows a lot about Australia but not so much about New Zealand, with a New Zealand tax agent who knows a lot about New Zealand but not so much about Australia. This is where there can be a significant risk for an Australian controlled business operating in New Zealand who can be caught in the middle.

Sometimes when we receive enquiries from Inland Revenue we have the information already on file but more often we are needing to confirm that this information is accurate as things can change or, as is more often the case, we need to obtain additional information from you.

The process we need to go through now takes a lot longer than in the past. In fact often dealing with the enquiries from beginning to end takes longer than it took to prepare your return in the first place!

Should an enquiry from Inland Revenue take more than 30 minutes we reserve the right to charge for the time. Of course there can also be more formal lines of enquiry from Inland Revenue by way of an investigation or audit in the traditional sense.

To protect you against any additional costs we offer you audit insurance. We hold the Audit Shield Master Policy in our name and if you choose to participate we will include you and your entities in our policy.

The policy itself is underwritten by certain underwriters at Lloyd’s. Lloyd’s has a financial strength rating from standard & Poor’s of A+.

Specialist tax advice

Having the insurance policy also enables us to obtain specialist advice from tax lawyers or highly qualified tax experts when dealing with tax audits without you paying a thing (up to specified limits). In the past, this has been cost prohibitive for clients.

Dealing with Inland Revenue is not like the ATO

A timely reminder that New Zealand has one of the harshest tax penalty regimes in the world and the most general of enquiries can have a number of ramifications.

What you tell them in good faith may have surprising repercussions!

For professional reasons we discourage our clients dealing directly with Inland Revenue on any matter because of the confusion and misinterpretation that can result from good faith discussions.

We are on your side, have a good understanding of the ramifications of what Inland Revenue may be asking (and why) and are therefore in the best position to protect you.

What Accountancy Insurance covers

The insurance policy will generally cover the cost of any enquiry from Inland Revenue that requires a response.

It doesn’t matter if we prepared the return or not. If you ask us to attend to the matter then you will generally be covered up to generous limits.

And the one premium covers all New Zealand tax types.

Please check out the information that will be attached to the invitation for details.

What if I get contacted by Inland Revenue before I receive the insurance offer?

Clients will receive invitations to take up the insurance offer in the near future.

The insurance policy will commence the day after the premium has been received. For that reason only enquiries received from Inland Revenue the day after the premium has been received will be covered by the policy.

If you would like more details (including the premium applicable to you) please let us know. The premium for most small businesses is around $300 per annum.

What if I don’t want the Accountancy Insurance cover

You don’t have to do anything. Simply ignore the invitation. You might want to let us know so we can update your file.

If you don’t have the insurance cover and we receive an enquiry from Inland Revenue that will necessitate a charge we will provide you with the option of dealing with the matter yourself (which we strongly discourage) or allowing us to deal with it on your behalf as a separate engagement.

If an enquiry is expected to take less than 30 minutes there will be no charge.

 

The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.