Tax audit insurance for small business owners
- A small business can be faced with a tax audit at any time
- Professional fees associated with preparing for an audit can be costly
- Tax audit insurance covers you for audit preparation costs, where professionals can take care of it all for you
For small business owners, the possibility of being faced with a tax audit from the Australian Taxation Office (ATO) can be a worry. Not only do audits require considerable time and effort, they could also come with high costs.
That’s where tax audit insurance can help.
While you may already have insurance in place for public liability, tax audit cover is also worth looking into. In this article we explain what tax audit cover is, along with why it’s important to consider.
Related article: Starting a small business insurance checklist
What is tax audit insurance?
Not every business expects to be audited by the ATO, but it can happen. How would you take time away from running your business to prepare for an audit? Sometimes, it’s best left to the professionals.
Tax audit insurance covers fees paid to accountants, who can help you prepare for an audit and represent your business throughout the process.
While tax audit insurance covers you for costs associated with audit preparation, it doesn’t cover any taxes, fines, or penalties the ATO may impose following their conclusion.
Why would I consider it?
The key benefit of tax audit insurance is financial security.
You could be selected randomly at any time, or a tax audit could be triggered by discrepancies in tax returns, or unusual financial activity. That means the potential of fees associated with an audit is a real possibility.
Tax audit insurance gives a business owner security, knowing that fees for professional help can be covered.
Related article: Small business accounting tools to streamline your finances
Who is tax audit insurance for?
Tax audit insurance is suitable for small businesses that don’t have the financial buffer to absorb unexpected expenses like audit fees.
It can benefit businesses in sectors that are frequently audited or those with complex tax situations. Businesses that show significant financial variability may also find tax audit insurance beneficial, given the increased scrutiny this may attract from the ATO.
While the prospect of an audit can be daunting, the financial strain associated with it doesn't need to be. Tax audit insurance offers a practical solution by covering the costs of professional fees during audits, enabling business owners to focus on what they’re good at – running their business.
QBE offers Tax Audit cover as an additional option with QBE Small Business Insurance.
