Earlier this year, the Ministry of Finance at the House of assembly has published the Newfoundland and Labrador budgets. Included in that publication are the changes in taxes when it comes to insurance premiums. In addition to that, the publication states the Retail Sales tax which is going to be worth 15 percent while the insurance tax for companies is going to increase by a single percent. If you are a business owner who happens to be oblivious to these new mandates, you can easily fail at your tax reports. Failing to pay up the proper tax can cost a lot of money. If things can go out of hand, the government has all the right to chase you so that they can get their money and that can lead to bankruptcy. This is where tax investigation insurance comes in.
How does it work?
Tax investigation itself must be seen from angles. The best situation is where you have paid the right tax amount, and your books are transparent and all entries tally and even if an investigation is ordered, you could get a clean chit and be done with it. Only the professional charges are paid to the specialist you engage to deal with the investigation work from your end and that also is reimbursable under the policy cover you took.
However, that is not always the case. There are big companies and corporations that filed for bankruptcy (yeah you read that right) because they were not able to pay up the right tax (not to mention a few debts that are probably worth billions). They could have avoided that if he has tax investigation insurance because these firms usually go the extra mile and protect you from bankruptcy and foreclosure.
Why is it important?
Your tax is your contribution to the government. It is your obligation as a citizen of the country and a business owner to give a small portion of your earnings to your homeland. However, according to the publication made by the Canadian government that is written above, even insurance policies are now subject to tax. Let us admit it, taxation can be pretty tough sometimes especially if you don’t have a background on tax laws and or if you don’t have the time for it.
Tax investigation insurance provides you with a line of defense in case something goes on wrong. It works like a contingency plan whenever a problem that involves taxes arrive. Put it this way, if you handle the taxes yourself and commit the slightest mistake, the government can fine you with penalties. Although they can be small, they increase in value over time. With this kind of insurance, you don’t have to pay or even worry about that because you already got covered.
Things to remember
Although most companies are pretty reliable, it wouldn’t hurt a bit if you update and educate yourself about taxation laws. Always remember that they can change in a heartbeat. As a business owner, you should be wary of that because the slightest mistake might do a lot of damage.