Shield Yourself from Unexpected Tax Audit Costs with Audit Insurance
In today's complex tax landscape, the risk of an Inland Revenue (IRD) audit looms large.
Whether you're a small-medium sized business owner, property investor or a self-employed individual, the potential costs associated with an audit can be significant.
That's where the Audit Shield Master Policy comes in.
What is the Audit Shield Master Policy?
When you're selected for an IRD audit, it can be a stressful and time-consuming process. Your accountant will usually need to dedicate significant time and effort to respond to IRD's inquiries, which can lead to unexpected costs.
Our Audit Shield Master Policy is a comprehensive insurance solution designed to protect you from these financial burdens.
By participating in this policy, you'll be covered for the professional fees incurred by your accountant during an IRD audit (up to an agreed amount), including those associated with specialists like tax lawyers, if required.
Why You Need the Audit Shield Master Policy
IRD audits are becoming increasingly common, and the consequences can be severe. They can initiate an audit of your previously filed returns, regardless of their accuracy, including those that have not previously been under scrutiny.
Audits can cover many different tax types, including income tax, GST, payroll returns, and more. With our Audit Shield Master Policy, you can rest easy knowing that you're protected from these unexpected costs.
Benefits of the Audit Shield Master Policy
Comprehensive coverage: One Audit Shield policy can cover multiple entities or persons, giving you broad-reaching coverage and peace of mind.
Avoid expensive surprises: If you are subject to an audit, enquiry, investigation or review in relation to your filed returns, the professional fees associated with the response process (up to an agreed limit) are covered.
Retrospective protection: Previously filed returns are covered automatically.
Simple claim process: We'll handle the claims process on your behalf, making it as smooth as possible for you.
Reputable provider: The Audit Shield Master Policy is offered through 600+ New Zealand accounting firms, used by thousands of businesses and individuals each year, and is underwritten by Lloyd's, a globally recognised insurer.
Optional protection: The offering is entirely optional, and we are happy to serve you with no Audit Shield policy in place. However, we strongly recommend that all clients take out the insurance to prevent tax audits from causing major disruption to their business.
How the Audit Shield Master Policy Works
Enrolling in our Audit Shield Master Policy is simple. Here’s a brief overview of what to expect:
You'll pay an annual premium, which is typically tax-deductible for businesses and self-employed people.
Once enrolled, you'll be protected until the policy's expiration date.
We hold the Audit Shield Master Policy nominally in our business name. If you participate in our Audit Shield Master Policy, we will include you and your entities in our policy.
We receive the premium payment from you as an agent of Accountancy Insurance, which we pass on to them. Your payment includes a fee that we receive to cover the administrative costs of offering the Audit Shield Master Policy (the fee we receive is calculated based on the estimated time spent administering this offering and varies depending on the size and complexity of your business).
You can benefit from the offering as long as we are acting as your registered tax agent.
Frequently Asked Questions
Got questions? We have answers.
What is included in the Audit Shield Master Policy?
This insurance policy provides coverage for:
Professional fees that would otherwise be payable to us, which have been incurred in responding to audit activity. These fees are covered until the audit is completed or until the agreed cover limit is used up.
Fees of any other external specialist (e.g. tax lawyers) or relevant consultant engaged or instructed by us to assist us in a response to audit activity are also covered (up to the agreed limit).
What types of audits, enquiries, investigations and reviews are covered?
Dividend withholding tax
Income tax
Employer returns
Resident withholding tax
Non-resident withholding tax
Fringe benefits tax (FBT)
PAYE
Goods and services tax (GST)
Recordkeeping
Imputation credit account
What is not covered under the Audit Shield Master Policy?
We have carefully selected the Audit Shield Master Policy to provide the widest possible coverage for our clients. However, we do remind our clients that such items or circumstances as listed below are not covered:
Actions in regard to any notices from Inland Revenue that are educational or advisory in nature; or merely suggest, invite or propose actions to be taken by you; or act as a warning to you that you may be selected for audit activity at a future time; or do not compel you to take any action.
Any Inland Revenue audit that imposes final shortfall or culpability penalties of 100% or more, and/or the return is deemed to have been fraudulently lodged.
Any matter in relation to Inland Revenue Child Support, Working For Families, KiwiSaver, ACC or any other application, assessment or review of government benefits, entitlements, grants or subsidies and any form of activity involving a review relevant to you maintaining industry status, licence compliance, membership or any form of application, registration, or reregistration process.
Any fine or penalties imposed or for any amounts payable pursuant to an amended notice of assessment or adjustment, including but not limited to any additional tax, duty, government impost or similar payments.
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 cover being taken out.
How much does Audit Shield cost?
The cost of the policy varies depending on your specific circumstances. Please get in touch for a quote.
How does the claims process work?
Simply provide us with the necessary documentation, and we'll handle the rest.
Will I need to pay an excess or deductible to claim the insurance?
No, there is no excess payment required to take advantage of the Audit Shield Master Policy.
Is the cost tax deductible?
Yes. You can claim the insurance cost as a deductible expense if you are in business or self-employed.
Is it possible to arrange a pro rata premium for the Audit Shield Master Policy?
Yes, depending on your payment date, a pro-rata premium may be available. Please speak with us to discuss the specifics of this option.
What happens if the scope of an enquiry increases after beginning?
Any official Inland Revenue enquiries, investigations or reviews (for example, a risk review) that subsequently changes or increases in scope or continues, progresses, expands, escalates or evolves into an official audit are always considered to be the one claim matter under the Audit Shield Master Policy that commenced on the date of first contact made by Inland Revenue to either our clients or us.
Protect Yourself Today
Don't let an unexpected IRD audit derail your financial plans. With the IRD continuing to review and audit an increasing number of filed returns each year, protecting yourself has never been more important.
New Zealand taxpayers who decided to be protected by the Audit Shield Master Policy saved more than $1 million in professional fees (based on participation) during the 2023/24 financial year.
By participating in our Audit Shield Master Policy, you're taking a proactive step to safeguard your financial future.