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What is tax audit insurance and what are the benefits?
- 3 March 2025
- by BG Private
- 7-minute read
If the ATO (Australian Taxation Office) or other government revenue authority decides to audit your business, it can cost you thousands of dollars in accounting and legal fees to help manage the audit process.
Tax audit insurance helps cover these unexpected costs, so it’s important to get covered for your financial protection and peace of mind. At BG Private, we recommend Audit Shield for this type of insurance.
Learn more about why tax audit insurance is important, and about Audit Shield’s product.
Are you at risk of a tax audit?
No one is immune to the prospect of an audit. That’s because tax audits and compliance checks can happen to anyone, whether randomly selected, due to inconsistencies in tax returns, industry-wide reviews, or large tax claims that trigger further investigation.
Also, it’s not just business owners who are at risk. Individual taxpayers who have rental properties, cryptocurrency assets, and those with excessive work-related deductions may be up for special scrutiny.
What might a tax audit cost you?
Tax audits often require expert responses from accountants, tax lawyers, and specialists, which can result in high professional fees.
Depending on the size and complexity of your business, a tax audit could cost you tens of thousands of dollars. And, without insurance, these expenses come directly out of your pocket.
What is tax audit insurance?
Tax audit insurance covers the cost of the professional services fees associated with handling an audit on your behalf.
What are the benefits of tax audit insurance?
1. Financial protection. Audit insurance covers the costs of hiring the professionals, such as tax advisors, accountants or lawyers, who represent you during an audit. This can include fees for gathering documents, preparing responses, and attending meetings with the ATO. Without insurance, you will have to foot the bill.
2. Peace of mind. Audits can be stressful and time-consuming. Having insurance provides reassurance that you won’t face major financial strain if you’re selected for an audit. In addition, having insurance to cover the required professional services fees means that you can be confident that every aspect of compliance and representation is being looked after.
3. Expert assistance. Audit insurance covers the cost of professionals who can guide you through the audit process. These experts are familiar with tax laws, the ATO’s processes, and common audit practices, meaning they can ensure you respond appropriately and mitigate any risk of penalties. By being able to hire specialists, you’re less likely to make mistakes when dealing with the ATO, which could otherwise lead to fines, penalties, or additional scrutiny.
4. Time and resource savings. Audit insurance helps ensure that the audit is handled quickly and efficiently by professionals. This reduces the time you and your team personally need to spend on the audit, allowing you to focus on other priorities.
5. Cost-effective. The cost of audit insurance is often small compared to the potential costs of professional fees. Given insurance premiums are a fixed cost, it is also more easily budgeted for compared to the unknowable potential cost of an unexpected tax audit.
6. Access to negotiation and dispute resolution. If discrepancies are found during an audit, insurance can help cover the cost of negotiation or dispute resolution processes, potentially reducing the cost of any tax adjustments or penalties.
Here’s how to get tax audit insurance
Our team can help arrange your audit insurance for you. Simply fill in this callback form and we’ll be in touch. If you are already a BG Private client, your advisor can also help.
We recommend Audit Shield. Read on to learn more.
What is Audit Shield?
At BG Private, we recommend Audit Shield insurance to cover the professional fees incurred when responding to audits, reviews, and investigations conducted by the ATO and other government revenue authorities.
This includes audits, reviews, and investigations relating to:
- WorkCover/Workers Compensation reviews: Verifying correct reporting of workplace insurance.
- Income Tax audits: Reviewing taxable income, deductions, and credits claimed
- GST & BAS audits: Ensuring correct Goods and Services Tax reporting
- Fringe Benefits Tax (FBT) audits: Investigating employee benefits provided by businesses
- Payroll Tax & PAYG audits: Verifying employee tax withholdings and employer compliance
- Superannuation Guarantee audits: Checking employer superannuation contributions.
- Capital Gains Tax (CGT) audits: Reviewing asset sales and related tax obligations.
- Stamp Duty & Land Tax audits: Ensuring compliance with state property tax regulations.
Key benefits of Audit Shield
✅ No unexpected out-of-pocket expenses. Covers accountants, lawyers, and tax specialists’ fees
✅ Covers previously lodged returns. Coverage applies retrospectively as well including current and previously lodged tax returns.
✅ Protects all business structures. Covers sole traders, partnerships, companies, trusts, and more. Please note, SMSFs are not covered and require separate coverage.
✅ Industry-backed insurance: Underwritten by AAI Limited (Vero Insurance), a subsidiary of the Suncorp Group.
✅ Fast and simple claims process: No complicated paperwork or lengthy waiting periods.
Case studies
Small business GST audit: A retail business was selected for a random GST audit by the ATO. Their accountant had to prepare reports, submit supporting documents, and communicate with auditors. Audit Shield covered all professional fees, saving the business over $4,000.
Payroll Tax investigation: A medium-sized company was audited for payroll tax compliance. The process required legal consultation and expert assistance. Audit Shield covered the $6,500 professional fees incurred.
Property investor review: A property investor’s land tax claims were under review. Their accounting firm handled documentation and negotiations with the tax authority. Audit Shield covered all costs, ensuring no financial impact on the investor.
What is not covered?
Audit Shield does not cover:
❌ Fraudulent or misleading tax returns – Any intentional misreporting of financial information is not covered
❌ Tax avoidance schemes – Unapproved tax minimisation strategies
❌ Criminal investigations – Any legal matters beyond tax compliance audits
❌ Routine compliance checks – General advisory notices that do not require professional representation
❌ Existing audits – Ongoing or recently requested audits are not covered. Audit Shield coverage begins the next business day after payment is received.
❌ The actual taxes, fines or interest you are charged – Only professional services fees are covered, the insurance does not cover any charges or penalties that are the outcome of the audit itself.
The bottom line: Is Audit Shield worth it?
Yes! Audit Shield protection is worth the small investment compared to the cost of a possible tax audit which might cost your business thousands of dollars in one lump sum. To get an idea of the potential cost, see the approximate cost table.
Do you need to be a BG Private client?
You can benefit from the service on the proviso that we are acting as your registered tax agent. We hold a tax audit insurance policy in our business name. By proceeding with our Audit Shield service, we will include you and your entities in our policy. Payment is tax deductible. In addition, included in your payment is a fee payable to us. This is simply used as recovery of our administrative costs for managing this service.
How to take out Audit Shield coverage
To get started, simply fill in this callback form and we’ll be in touch. If you are already a BG Private client, your advisor can also help.
Need more information?
Read the Audit Shield information sheet.
Contact us
To find out more about tax audit insurance call your BG Private advisor, or contact us on +61 3 9810 0700 or
