Why Business Owners Should Consider Audit Insurance
We like to think that part of our job is to help you sleep easier – no surprise ATO bills lurking or compliance that’s gone unchecked. Planning for the “what ifs” is also part of our job, mitigating risk factors that may or may not happen. For instance… what if you’re selected for a tax or regulatory audit? With the ATO making it crystal clear that auditing is one of their current focal points, it’s a good time to write a blog on the topic.
Here’s what you should know about audit insurance: what it is, why it’s useful and why it’s worth thinking about.
What is audit insurance?
In short: audit insurance is a policy that covers the professional fees incurred if your tax affairs (or compliance obligations) are audited, reviewed or investigated. According to AuditCover’s FAQs (more on them later):
- It covers professional fees for accountants, tax agents, bookkeepers, BAS agents and tax lawyers
- It applies to audits of income tax, GST/BAS, capital gains tax, payroll tax, land tax, super guarantee, workers compensation and more
- Importantly, there’s no deductible/excess in many cases so you don’t have to pay out up front and then claim
- It can cover historical tax returns too. There’s no limit to the age of returns covered under the policy (provided the audit is triggered during the period of cover).
Why audit insurance is increasingly useful
1. Audit risk is rising
Tax authorities and regulatory agencies are becoming more data-driven. For example:
- With income tax audits, the ATO uses data-matching (banks, employers, third-party sources) and may revisit multiple years
- With payroll tax, state revenue offices are scrutinising wage declarations, contractor vs employee classifications and cross-state reporting
- Audits around the superannuation guarantee (SG) compliance are on the rise thanks to real-time payroll data and increased oversight.
2. The cost of defending an audit can be high
Even if you’ve done everything properly, responding to an audit may involve:
- Your accountant/bookkeeper re-running historic records
- Legal and tax advisor work to interpret issues
- Liaising with tax/regulator agencies
The costs of engaging your team won’t be a welcome surprise!
Who should consider audit insurance?
While audit insurance isn’t compulsory, it’s more relevant for:
- Businesses or individuals operating in industries with higher audit risk (e.g., cash-heavy, multiple contractors, complex structures)
- Entities with multiple tax obligations (income tax, payroll tax, GST/BAS, super guarantee)
- Those who want to add a layer of risk-management to their advisory toolkit
Think of audit insurance like a protective shield – not because you’re expecting a fight, but because you want the option of professional backup if a regulator comes knocking. In an increasingly complex compliance world, it’s one less thing to worry about, and one more way we can help you sleep easier.
We’ve partnered with AuditCover to give the Future Family an option to minimise professional costs in the case of an audit or review from the ATO, or other auditing bodies. Get in touch with your accountant if it’s something you want to chat through!
