Accountancy Insurance Update MGI Australasia Annual Conference 2019 - - PowerPoint PPT Presentation

Accountancy Insurance Update

MGI Australasia Annual Conference 2019

Speaker

Accountancy Insurance

Victor Jahja

Associate Director – Business Development

M: 0402 602 689 E: victor@accountancyinsurance.com.au

The relationship between MGI firms and Accountancy Insurance commenced in 2010. Today we partner with the majority of MGI firms across Australia and New Zealand to protect their clients from unplanned fees incurred as a result of tax audit activity.

Our relationship

Accountancy Insurance

Accountancy Insurance

Products designed specifically for accounting firms

About Accountancy Insurance

Over 15 years of experience specialising in Tax Audit Insurance and 10 years specialising in Professional Indemnity Insurance Thousands of accounting firms across Australia, New Zealand and Canada utilise our tailored solutions

Audit Shield

Solutions specifically for accountants and their clients

Accountancy Insurance

Tax Audit Insurance Cyber Shield Cyber Insurance PI Shield Professional Indemnity Insurance

Deciding on the most appropriate tax audit insurance solution for protecting your accounting firm and your clients should include a solution that is:

Don’t risk not having Audit Shield

Accountancy Insurance

Fully compliant with all relevant regulatory and industry bodies Underwritten by a prominent locally based insurer Aligns with the interests of your firm and your client

Is

risk-free

Audit Shield accommodates all of these conditions, plus more.

Regulatory Compliance

Accountancy Insurance

Insurance needs to be simple, risk-free and most of all compliant.

Australia

In Australia, Accountancy Insurance has worked with regulatory bodies such as ASIC to ensure that the Audit Shield

• ffering is 100% compliant.

New Zealand

In New Zealand, Accountancy Insurance have adopted the Fair Insurance Code developed by the Insurance Council of NZ (ICNZ), which provides you with assurance that we have high standards

• f service to our clients.

These measures will not stop a cyber attack: Standard business insurance often does not cover you in the event of a cyber attack and antivirus software will not help to recover your firm’s expenses. The benefits of Cyber Shield: Designed specifically for accounting firms, the cover is relevant to the needs of the profession. Competitive premiums are a certainty. Cover is comprehensive, ranging from data recovery to privacy regulatory defence costs, plus much more.

Comprehensive Cyber Insurance for Accountants

Accountancy Insurance

PI Shield is designed to take into consideration that all accounting firms are different, so you can be sure no matter the size or complexity of your accounting firm, Accountancy Insurance will provide you with the right cover to suit your needs.

Essential Professional Indemnity Insurance

Accountancy Insurance

The advantages of PI Shield: Designed specifically for accounting firms, the cover is relevant to the needs of the profession. Competitive premiums are a certainty. Cover is comprehensive, ranging from data recovery to privacy regulatory defence costs, plus much more.

Predicted audit activity trends 2018/19

Accountancy Insurance

Recent media headlines reveal an increase in employer obligation and payroll tax audit activity, and overall, a broader audit scope occurring in Australia. Experts at Accountancy Insurance predict that the following recent ATO initiatives will also lead to an increase in related audit activity: Single Touch Payroll (STP) Superannuation guarantee The black economy task force Increased compliance activity in the TPAR area

Single Touch Payroll (STP)

Accountancy Insurance

Tax Man tip: With Audit Shield, accountants eliminate awkward conversations with clients regarding professional fees associated with audit activity

“The ATO is looking at the data, they are talking to people about ‘hey, we’re seeing this, should we be concerned about it?’ and we’re working with them to help them understand.” Matthew Addison, executive chairman of the Institute of Certified Bookkeepers.” AccountantsDaily, 21 February 2019 “The move to STP is the biggest legislative change for small businesses since the introduction of the GST in 2000 and it will usher in a new era of digital connectivity for Australian businesses.” Australian Financial Review, 12 February 2019

Latest updates and impacts on audit activity

Single Touch Payroll (STP)

Accountancy Insurance

• Commenced in July 2018 (obligatory for businesses with 20+ employees).
• Legislation passed in February 2019 – STP will be extended from 1 July 2019

to employers with less than 20 employees.

• Will require all employers to report superannuation guarantee payments

concurrently to paying employees including notifying the ATO of all Superannuation Fund contributions.

• Arms the ATO with new information that enables greater compliance cross-

checking and inevitably this will lead to more audit activity.

Latest updates and impacts on audit activity

“Since 1 July 2018, the ATO have completed 17,917 compliance cases around SG payments, raising liabilities of $451 million.” Accountants Daily, 7 March 2019 “New laws introducing penalties, including imprisonment up to 12 months, for non-compliance of superannuation guarantee obligations have since passed, with accountants urged to bring clients up to speed.” Accountants Daily, 1 March 2019

Superannuation guarantee

Latest updates and impacts on audit activity

Accountancy Insurance

Tax Man tip: Across AU and NZ, we have seen through over 20,000 Audit Shield claims and on average, more than

• ne million dollars is paid per month

in claims.

“The ATO continues to focus on the black economy with warnings that they will be knocking on the door of more than 4,000 companies between now and the end of the financial year.” Sydney Morning Herald, 5 March 2019 “The ATO has got a range of measures to address the black economy and we're getting more sophisticated in our use of data, in the use of industry benchmarks and identifying unexplained wealth.” Australian Financial Review, 12 February 2019 “The taskforce is intended to cover everything from billions of dollars in illegal tobacco flooding into shops, sham contracting and company phoenixing through to tradespeople and restaurants that evade tax by accepting payment only in cash.” Australian Financial Review, 29 January 2019

The black economy task force

Latest updates and impacts on audit activity

Accountancy Insurance

“If your clients have not lodged their 2018 or prior year taxable payments annual reports, now is the time to get them back on track to avoid penalties.” Accountant Daily, 30 January 2019 “The ATO confirmed that its taxable payments reporting system had recovered $2.7 billion in "black economy" money from the building and construction sector, according to its most recent numbers for the 2015-16 financial year. More business sectors will have to do this reporting and will be required to spill the beans on what they pay contractors from July 1.” Sydney Morning Herald, 13 February 2019 “Businesses who are doing the right thing don’t need to worry, however if you’re not meeting your tax obligations there will be consequences.” Australia Taxation Office, 12 February 2019

Increased compliance activity in the TPAR area

Latest updates and impacts on audit activity

Accountancy Insurance

Tax Man tip: With Audit Shield your clients receive retrospective cover so all previously lodged returns are included.

“With LRBAs and TBAR two of the major focus areas for the ATO this year, the tax office has announced plans to contact trustees with high concentration risk in their funds and toughen its stance on misreporting.” SMSF Advisor, 1 March 2019 “Accounting practices should be alert to a growing number of pseudo tax audit protection services being offered that, on the surface, may seem like a cost-effective solution, but underneath effectively involve practices paying for a service with no insurance backing.” INTHEBLACK – CPA Australia, 26 Feb 2019 “The ATO will undertake 4,500 audits of taxpayers it considers are ‘high risk’ because they over claim or don't declare income relating to rental properties.” ABC News, 22 March 2019

Hot issues – ATO and CPA Australia

Accountancy Insurance

Australian Tax Office 2017-18 Annual Report highlights

Accountancy Insurance

⊲ Audit yield of $11.8 billion, representing an increase of $1.6

billion on the previous year

⊲ Release of tax gap estimates for superannuation guarantee ⊲ Analysis conducted for the gaps related to large and small

superannuation funds, and income tax for individuals not in business.

⊲ Expansion of work-related expenses program to interact with

• ver one million taxpayers

⊲ Introduction of the first phase of STP for employers with 20 or

more employees

“The introduction of capital gains tax has been recommended by the Labour government’s Tax Working Group, established to consider NZ’s options on tax changes.” Herald Sun, 1 March 2019 “Inland Revenue will review the information and verify that correct tax is being paid on offshore investments. New Zealand taxpayers are strongly advised to check they have correctly accounted for their offshore investments.” IRD News. 5 March 2019

In the media- IR

Accountancy Insurance

“Inland Revenue is seeking feedback on a proposal to simplify tax obligations for people who rent out their property as short-term accommodation.” IRD News. 5 March 2019 “From 1 April 2019, all New Zealand employers are required to file their PAYE information with Inland Revenue every payday, as opposed to once a month.” Scoop Business News NZ, 19 February 2019

In the media- IR

Accountancy Insurance

Claims

Accountancy Insurance

The following figures are representative of participating MGI firms across Australasia: Average professional fees paid for clients per year (claims paid)

$80,000

• Approx. average per year (last 4

full policy period years)

Total professional fees paid for clients (claims paid) since 2010

$470,000

Approx.

Tax Man tip: With Audit Shield, accountants benefit from a turn-key process, made up of technological smarts and delivered by hands-on people.

ATO (Client Record Keeping Review); 0,31% ATO (High Wealth); 0,28% ATO (Individual Excess Super Contributions); 3,78% ATO Practice Review (Self); 0,23% BAS (Pre & Post Assessment); 19,51% Employer Obligations (PAYG/SG/FBT); 17,78% Income Tax (CGT); 2,24% Income Tax (Data Matching); 5,48% Income Tax (Foreign Source Income); 1,87% Income Tax (Full/General/Combined); 8,24% Income Tax (Medicare/Health Rebate); 0,54% Income Tax (Other Specific); 4,06% Income Tax (Pre Assessment); 3,18% Income Tax (Preliminary Risk Review); 1,19% Income Tax (Rental Property); 1,79% Income Tax (WRE); 2,78% Land Tax (All States); 6,22% Other (Claim Type Not Listed); 2,39% Payroll Tax (All States); 11,62% Stamp Duty (All States); 1,02% Superannuation Fund Review; 2,84% Workcover (All States); 2,64%

Accountancy Insurance

Australian claims activity – claim frequency 17 – 18

Accountancy Insurance

Australian claims activity – claim frequency 16 – 17

ATO (Client Record Keeping Review); 0,51% ATO (High Wealth); 0,70% ATO (Individual Excess Super Contributions); 3,90% ATO Practice Review (Self); 0,08% BAS (Pre & Post Assessment); 24,48% Employer Obligations (PAYG/SG/FBT); 14,61% Income Tax (CGT); 2,89% Income Tax (Data Matching); 4,81% Income Tax (Foreign Source Income); 1,43% Income Tax (Full/General/Combined); 7,74% Income Tax (Medicare/Health Rebate); 0,24% Income Tax (Other Specific); 2,57% Income Tax (Pre Assessment); 1,97% Income Tax (Preliminary Risk Review); 1,79% Income Tax (Rental Property); 1,22% Income Tax (WRE); 2,33% Land Tax (All States); 3,65% Other (Claim Type Not Listed); 2,81% Payroll Tax (All States); 11,74% Stamp Duty (All States); 0,76% Superannuation Fund Review; 4,27% Workcover (All States); 5,49%

0,00% 5,00% 10,00% 15,00% 20,00% 25,00%

Accountancy Insurance

Australian claims activity – claim values (%)

July 2016 – June 2017 July 2017 – June 2018

Accountancy Insurance

New Zealand claims activity – 1/4/18 to 31/3/19

Accountancy Insurance

Audit Shield client take up

Accountancy Insurance

Australia

24%

New Zealand

29%

Average current client take up: Australia

950

New Zealand

84

Number of current paids: Average over the last two years:

23%

Recovery fees

Accountancy Insurance

The following figures are representative of participating MGI firms across Australasia: Average margin per year (recovery fees earned)

$136,000

• Approx. average per year (last 2

full policy period years)

Total margin since 2010 (recovery fees earned)

$915,000

Tips for an efficient claim

Accountancy Insurance

⊲ Manage client expectations ⊲ Provide a detailed WIP ⊲ Tag the matter as a separate job ⊲ Workflow should be logical ⊲ Provide all relevant documentation ⊲ If in doubt, contact your Account Manager

⊲ Is a turn-key process, made up of technological smarts and delivered by

hands-on people.

⊲ The time spent on audit activity is recovered. ⊲ Eliminate awkward conversations with clients regarding professional fees

associated with audit activity.

⊲ Is fully compliant, aligns with the interests of your firm and your client,

and is risk-free.

Why accountants choose Audit Shield

Accountancy Insurance

⊲ One annual fee, no surprises ⊲ Comprehensive coverage compared to alternatives ⊲ Audit activity continues to rise, and is a priority for the ATO and other

Australian government revenue agencies

⊲ In the event of audit activity, they are covered for the associated

professional fees (including specialists)

⊲ Comfort to know the accountant will do whatever is required to assist

them through a tough and stressful time, knowing that they will be paid

Why clients should consider Audit Shield

Accountancy Insurance

⊲ Offer a welcome pack containing information on Audit Shield to

all new clients

⊲ Use client experiences as a powerful way to articulate the need ⊲ Include information on your website ⊲ Undertake a mid-policy mail out or a pro-rata offer ⊲ Include Audit Shield as part of any fixed fee agreement you do

with your clients (ask us how)

⊲ Increase staff awareness through claims education sessions

Increasing client take up

Accountancy Insurance

Accountancy Insurance

Questions?

1300 650 758

info@accountancyinsurance.com.au

www.accountancyinsurance.com.au