Is Tax Audit Insurance right for me?

There’s nothing more frustrating than being targeted for a review or audit of your lodged returns instigated by Inland Revenue (IR). IR can take an interest in the taxation affairs of any New Zealand taxpayer at any time. In fact,  IR now has unprecedented access to data matching that makes it simpler and far more likely for previously untargeted taxpayers to encounter audit activity. 

Subsequently, responding to IR takes time and the cost of being properly represented can be considerable. In order to combat the costs relating to unplanned professional fees, thousands of New Zealanders opt to get a Tax Audit Insurance policy. Here at SME Financial, we recommend the Audit Shield Master Policy by Accountancy Insurance to all of our clients.

Read on below to understand more about how Audit Shield works and whether this insurance is right for you. 

Frequently Asked Questions

What is the Audit Shield Master Policy?

The Audit Shield Master Policy is a tax audit insurance policy that provides for the payment of our professional fees otherwise payable by you.  These fees would be incurred as a result of us being required to respond, on your behalf, to an audit, enquiry, investigation or review (audit activity) of your lodged returns instigated by IR.

What are the benefits for myself or my business?

As mentioned above, the fees which can be incurred for us to correctly respond to audit activity can be considerable. 

Having said that, in the event that you are subject to an audit in relation to your lodged returns, you can rest assured knowing that the professional fees associated with the response process (up to a prescribed limit) are covered. And, there is no excess and no minimum claim amount to your cover either. 

Moreover, another benefit is that all previously lodged returns are retrospectively covered automatically.

What services are included under the Policy?

All Professional fees that have been incurred in responding to audit activity will be covered under the Audit Shield Master Policy. This includes the fees sustained until the completion
of the matter, or until the cover limit is exhausted. Additionally, the fees of other external specialists (e.g. taxation lawyers) engaged or instructed by us to assist us in a response to audit activity are also covered. 

Is the Premium cost tax deductible?

Yes. A tax deduction should ordinarily be claimable for your premium payment if you are in business or self-employed.

What tax types or activities are covered?

• Dividend Withholding Tax
• Employer Returns
• Fringe Benefits Tax
• GST
• Imputation Credit Account
• Income Tax
• Non-Resident Withholding Tax
• PAYE
• Resident Withholding Tax

What is not included?

We have carefully selected the Audit Shield Master Policy because it provides the widest possible coverage for our clients. However, such items or circumstances as listed below are not covered:

• Actions in regard to any notices from IR that are educational or advisory in nature.
• Any IR audit that imposes final shortfall or culpability penalties of 100% or more, and/or the return is deemed to have been fraudulently lodged.
• Matters relating to Child Support, Working for Families, KiwiSaver, ACC or any other application, assessment or review of government benefits, entitlements, grants or subsidies.
• Costs for work incurred which should have been undertaken prior to the audit activity (e.g. outstanding lodgements).
• Audit activity where notification was given prior to the inception of cover, i.e. prior to our receipt of your premium payment.

We can help you make the right decision

Any business, trust, or individual can sign up for Audit Shield at any time, as long as we are your registered Tax Agent with IR. Not our client yet? No problem. Here is how you can easily Switch to Us.

With IR continuing to review or audit a vast number of lodged returns each year, it might be time to consider whether this cover is right for you. We can help you assess your individual circumstances so that you can make a well-informed decision. Get in touch with us today to be connected to one of our experienced Client Advisors.

Together we can achieve more.