Tax Audit Insurance for Australian Small Businesses: Audit Shield vs Vero Tax Probe Plus Scope and Limits

Audit Shield vs Tax Probe Plus: the short answer

Audit Shield is offered through accounting practices to their individual, business and SMSF clients, while Vero Tax Probe Plus is arranged through an insurance broker and sold as four named cover options.[1][2][3] Both are described as paying professional fees for responding to a tax audit or review; Vero’s wording expressly excludes the tax, penalties and interest that may follow.[1][3] Price and limits are set in each quote and schedule, so the choice comes down to which wording fits the business’s structure and likely audit types.[3]

Accountancy Insurance Audit Shield

• Access model: Accountancy Insurance offers Audit Shield to accounting practices, which extend it to their individual, business and SMSF clients.[1]
• What it pays for: Professional fees that help an accountant assist a client to respond to an audit, inquiry, investigation, review or examination of returns lodged with the ATO or other government revenue authorities.[1]
• Audit types it lists as typically covered: BAS/GST compliance, FBT, income, land and payroll tax, record keeping, SMSFs, superannuation guarantee and compliance, workers compensation or WorkCover, and any query of a lodged return where the client is compelled to respond or act, subject to the policy terms.[1]

Vero Tax Probe Plus

• Access model: Vero directs buyers to an insurance broker.[2]
• Cover options: Business Audit Only, Business and Directors Audit, Individual Cover for insureds who are not companies, and Self Managed Superannuation Fund Cover.[3] Directors’ personal returns are covered only under the Business and Directors option, and only where the same tax agent prepared the business return for that year.[3]
• What it pays for: Professional fees reasonably and necessarily incurred in connection with a tax audit that is commenced and notified to Vero during the period of insurance.[3] An audit starts when you or your tax agent first receive verbal or written notice of an audit, inquiry, investigation, examination or review.[3]
• Audit types in the wording: Audits and official reviews of income tax, tax administration, FBT, GST, superannuation guarantee and State or Territory payroll tax, plus workers’ compensation wage audits.[3]
• Extras: Reasonable travel and accommodation costs to substantiate a claim, and automatic reinstatement of the insured amount after a claim.[3] The SMSF option also covers fees for an appeal of a reviewable decision to the tribunal named in the wording, if you provide written evidence that the appeal has reasonable prospects of success.[3]

Where the published scope differs

• Land tax and record keeping: Audit Shield lists both.[1] Vero’s list of designated taxes does not include land tax, and its only State or Territory tax is payroll tax.[3]
• Workers’ compensation: Both refer to it: Audit Shield lists workers compensation or WorkCover, and Vero’s definition of a tax audit includes workers’ compensation wage audits.[1][3]
• Detail available to buyers: Vero publishes its full policy wording; Audit Shield’s product page summarises cover and points to the policy terms.[1][3]

Key Tax Probe Plus conditions to check

• Prior notice: No cover for an audit where you or your tax agent received verbal or written notice before the policy started.[3]
• Claim notification: Notify Vero within 90 days of first becoming aware of the first notice of a tax audit.[3]
• Time limit on fees: Fees incurred 12 months or more after the audit began are not covered unless the delay was caused mainly by the authority.[3]
• Tax agent requirement: Income returns generally must be prepared or reviewed by your tax agent before lodgement, with listed exceptions such as GST returns.[3]
• Late lodgement or payment: Audits that start because returns were lodged late or tax was paid late are excluded.[3]
• Routine enquiries: Routine enquiries not identified as part of, or preliminary to, a tax audit are excluded.[3]
• Tax, penalties and interest: Tax, penalty tax, interest, fines and amounts in an amended assessment are excluded.[3]
• Price and refunds: The premium includes stamp duty, GST and government charges but not a broker’s service fee; there is a 30-day cooling-off period, and later cancellations receive a pro-rata refund, less non-refundable government charges.[3]

Ask Accountancy Insurance or your accountant for the Audit Shield policy wording and check the same points, especially prior-notice rules, claim deadlines and any time limits on fees.

What happens after the audit

Many disputes do not end with the audit position, so check how each policy treats the next steps.

• Independent review: A small business with turnover under $10 million may be offered an ATO independent review of its audit position for income tax, GST, excise, luxury car tax, wine equalisation tax or fuel tax credit disputes; super, FBT and interest disputes are not eligible.[4] The offer must be taken up by email within 14 days, and the review happens before any assessment or amended assessment is issued.[4]
• Objections: Time limits to lodge an objection range from 60 days to 4 years depending on the decision, and there is no fee to lodge.[5]
• How Tax Probe Plus treats these stages: Its definition of professional fees excludes fees for a later objection, and an audit is treated as complete once the authority issues written findings, a decision or an assessment.[3] Ask Vero, through your broker, whether fees for an independent review after the final audit position would be covered.

Collect the same documents for each option

• the written quote for the proposed cover;
• the policy wording applying to that quote;
• the policy schedule naming the insured parties, insured amount and excess; and
• any endorsements that change the standard wording.

Which route fits which business?

• Consider Audit Shield when your accounting practice already offers it and you want cover arranged through the firm that prepares your returns, or when land tax or record-keeping reviews are a concern.[1]
• Consider Tax Probe Plus when you prefer to buy through a broker and want a published wording that sets out business, director, individual or SMSF options, notification rules and exclusions.[2][3]

Before choosing, compare the insured amount, excess, premium and exclusions in the actual quotes and schedules, and ask a registered tax agent how each policy would respond to the audits your business is most likely to face.

References

1. Tax Audit Insurance | Audit Shield | Accountancy Insurance (accountancyinsurance.com.au)
2. Tax Audit Insurance | Tax Probe Plus | Vero (vero.com.au)
3. Vero Tax Probe Plus Policy Wording (V10143 05/12/24) (vero.com.au)
4. Small business independent review | Australian Taxation Office (ato.gov.au)
5. Object to a decision | Australian Taxation Office (ato.gov.au)