Broker-arranged
Tax audit insurance
Tax audit insurance pays the professional fees of responding to an ATO audit, review or investigation. It doesn’t pay the tax. Here’s what it covers, where it sits inside a business pack or management liability policy, and how a licensed broker arranges it.
- Accountant’s fees for audits and reviews
- Usually an option inside a bigger policy
- One short form, then a licensed broker takes it from there
What is tax audit insurance?
Tax audit insurance covers the fees your accountant, tax agent or other adviser charges to respond to an audit, review or investigation by the ATO or a state revenue office. Audits take time to answer even when your records are in order, and the fees are what the policy pays. Any extra tax, penalties or interest are yours.
It’s rarely sold on its own. Most small businesses buy it as a section of a business insurance pack or a management liability policy, which is why a broker arranges it alongside your other covers.
What’s usually covered, and what isn’t
Usually covered
- Professional fees to respond to an ATO audit, review or enquiry.
- State revenue audits, such as payroll tax, in many policies.
- GST, income tax and FBT matters, depending on the policy wording.
- Fees from the notice through to the ATO’s decision, up to the limit.
Usually not covered
- The tax itself, plus any penalties and interest.
- Audits that started before the policy, or that you knew were coming.
- Fraud or deliberately false returns.
- Fees for routine returns and bookkeeping.
Records are the first line of defence
business.gov.au says you need to keep most business records for 5 years, starting from when you got the records or completed the transactions they relate to, and that company records and some employee records must be kept for 7 years. Good records make an audit shorter, and a shorter audit means lower fees whether or not you’re insured.
If an accountant or tax agent prepares your returns, their own professional indemnity cover is separate. The Tax Practitioners Board requires registered tax agents to hold professional indemnity insurance, which covers their mistakes, not the cost of your audit.
What changes the price
No prices on this page. A broker will show you the options.
How to get tax audit cover through us
Tax audit insurance questions
Does tax audit insurance pay the tax I owe?
No. It pays the professional fees of responding to the audit. Any extra tax, penalties and interest are yours.
Is tax audit insurance worth it for a sole trader?
It depends on how complex your affairs are and what your accountant charges. For a simple return the cover may cost more than it would ever pay out. A broker can quote it as an option so you can decide.
Can I buy tax audit insurance on its own?
Some insurers offer standalone policies, often through accountants, but most small businesses add it to a business pack or management liability policy.
How long do I need to keep records?
business.gov.au says most business records must be kept for 5 years, and company records and some employee records for 7 years.
Why is tax audit insurance arranged by a broker?
Because it’s usually an optional section inside a bigger policy, a licensed broker arranges it with your other covers rather than as an online quote.
Keep reading
More broker-arranged cover
Sources
Tax audit cover