Any business required to maintain tax and financial records can potentially be selected for an audit or review.

The question is whether the business could comfortably absorb the professional fees involved in responding.

What businesses can consider the cover? #

Tax Audit Insurance can be relevant to:

• Sole traders.
• Partnerships.
• Companies.
• Trusts.
• Larger businesses.
• Businesses with employees.
• Businesses with complex tax arrangements.
• Businesses subject to multiple state and Commonwealth taxes.

Does using an accountant remove the exposure? #

No.

An accountant can assist with compliance, but substantial professional time can still be required if an audit occurs.

An audit might require the accountant or tax adviser to:

• Review historical records.
• Reconcile transactions.
• Prepare submissions.
• Respond to information requests.
• Attend meetings.
• Liaise with authorities.

These professional services can result in additional fees.

What affects the potential cost of an audit? #

Factors can include:

• Number of financial years reviewed.
• Business complexity.
• Number of entities.
• Type of tax involved.
• Volume of records.
• Length of the investigation.
• Need for legal or specialist advice.

Is Tax Audit Insurance compulsory? #

No.

It is an optional insurance consideration.

Businesses should compare:

• The available limit.
• Authorities covered.
• Excess.
• Exclusions.
• Whether similar cover already exists under Management Liability.

What if my existing policy already includes Tax Audit? #

Avoid unnecessarily duplicating cover.

Webber Insurance can review the existing Management Liability or Business Insurance schedule to determine whether Tax Audit cover is already included and whether the available limit is appropriate.