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Tax Investigations Insurance

When you become a Protected Member of Self Employed Australia we cover the costs of professionally defending you in an investigation of your tax affairs by the Australian Taxation Office.  

Below is a summary of the membership benefits. This summary is not the actual policy. The full terms and conditions of the policy are here. To become a Protected Member you must agree to these terms and conditions.

Summary of your Protected Member Tax Investigations Benefits:

You are covered for up to $50,000 of Professional Services related to investigations of your lodged

  • Income Tax
  • Personal Service Income (PSI) Tax
  • GST liabilities
  • Company Tax
  • Self Managed Superannuation Fund obligations

Plus

  • Up to $5,000 loss of earnings in attending ATO investigation meetings.
  • Other costs associated with ATO compliance visits. (See policy details here.)

These benefits are

  • Provided as a Protected Member benefit by Self-Employed Australia
  • Underpinned by Self-Employed Australia group insurance held with Certain Underwriters at Lloyd’s of London.
  • Delivered by Self-Employed Australia’s small business tax specialist accounting partner, Fresh Numbers and Self Employed Australia’s tax partner lawyers.
  • Reinforced and backed by Self-Employed Australia’s proven public policy advocacy capacities

Main Conditions. (See full list of conditions in the policy here.)

Covers:

  • Tax investigations initiated after and while you are a Self-Employed Australia Protected Member.
  • Costs of defending tax claims against you that you dispute.
  • Claims accepted and costs pre-approved by Self-Employed Australia’s insurer.

Does not cover:

  • Tax and associated costs you are ordered or agree to pay.
  • Costs of litigation before a court or Tribunal.
  • False, fraudulent or tax avoidance scheme involvement.

Full terms and conditions are here.

Important: Maintain your membership

The Professional Expenses Insurance has no grace period. It is only available after you have become a Protected Member of Self Employed Australia. That is, if you have a tax audit that commences before becoming a member, that audit is not covered. Once your Self Employed Australia membership renewal date has passed, cover under the Professional Expenses Insurance will cease. If you then renew your membership you will not be covered for any investigations that commenced during the interim period.

How it works

Tax investigations insurance is a core component of Self-Employed Australia Protected Member benefits and covers costs associated with an investigation into your business affairs by the ATO.  Certain enquiries from the ATO, such as a request to examine your records, could have implications that are best handled by a specialist tax consultant, rather than a general practitioner.

A particularly common implication for self-employed people is the risk of being caught under the Personal Service Income (PSI) legislation that resulted in one IT contractor being ordered to pay $540,000 in back taxes, despite only billing a daily rate in the $800 range (see the story here).

Whilst PSI investigation insurance is a core element of Self-Employed Australia Protected Member cover, support provided covers most common investigations that a self-employed person may have to endure.  In the event of the ATO commencing any of the enquiries listed below, we will provide you, at no additional cost to you, with an expert representative from the accounting firm Fresh Numbers who will act as your appointed accountant during the ATO enquiry/audit process. Fresh Numbers specialise in small business recovery and tax enquiry work.

The Fresh Numbers representative will work with you and your existing accountant where required, handling communications from the ATO to maximise your chances of a successful outcome. 

As Gavin Waring from Fresh Numbers, one of Self-Employed Australia’s professional advisers, points out:

 “When the ATO finds out we’re on a case, they sit up and take note.  It definitely helps that we understand the inner mechanics of the system. ATO case officers know they have to play it by the book.”

How we finance it

Self Employed Australia is covered by a group Professional Expenses (Tax Investigations) Insurance policy through Certain Underwriters at Lloyd’s of London.

Self-Employed Australia is the only policyholder and only Self-Employed Australia has direct rights under the contract of insurance. These rights are held for the benefit of Self-Employed Australia Protected Members. Except where stated below, the policy pays up to $50,000 worth of Professional Fees in respect of any one claim and in aggregate for any one Protected Member in the Period of Insurance.

In order for Self-Employed Australia to claim under its policy, you must be a fully paid up Protected Member of Self-Employed Australia at the time that one of the events listed below occurs.  Compliance with the terms and conditions is required if you are to receive a benefit (see the full policy here).

Cases are highly unlikely to incur more than $50,000 of professional fees and therefore to fall outside the scope of the cover.  However, Self-Employed Australia has a separate fund available for use in exceptional circumstances, where we believe that the outcome of a case could have an impact on existing case law, and by default, impact on the future of self-employment.  That is why we decided to back IT contractor Rod Douglass over 2 years resulting in the ATO withdrawing its claim against Rod for $440,000 declaring in court that their (the ATO’s) accusations were baseless. Here’s Rod's story.

(Note that the use of the fund for legal cases is at SEA’s entire discretion.)

 




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Be Protected!


You can become a Protected Member

Only $40 a month (plus GST)

You receive:
Tax Audit Insurance $50,000
Unfair Contract help $10,000


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