Audit activity by the Australian Taxation Office (ATO) and other government revenue authorities continues to be shaped by targeted compliance programs, leveraging advanced data matching and artificial intelligence tools. These technologies enable authorities to identify discrepancies with unprecedented precision, ensuring that businesses, self-managed superannuation funds, and individuals remain under scrutiny.
This article examines the three most common Audit Shield claim categories compiled by the Accountancy Insurance claims team for the period 1 July 2025 to 31 December 2025 and were correct as of 1 January 2026. These were:
- Payroll Tax (All States) – 15.44%
- BAS (Pre & Post Assessment) – 12.64%
- Income Tax (Full/General/Combined) – 12.44%
Together, these three categories accounted for nearly 41% of all Accountancy Insurance claims lodged during the period.
The breakdown of the top three most common Audit Shield claim categories compiled by the Accountancy Insurance claims team for the period 1 July 2025 to 31 December 2025 were:
1. Payroll Tax Investigations (All States)
Payroll Tax Investigations continued as the most frequent claim type, representing 15.44% of all Accountancy Insurance claims for the period. This aligns with ongoing state revenue authority initiatives targeting employer compliance, particularly around grouping provisions and contractor classifications.
State breakdown:
- VIC: 29.53%
- NSW: 28.19%
- QLD: 24.16%
- WA: 16.11%
- TAS: 1.34%
- SA: 0.67%
The concentration of activity in Victoria and New South Wales reflects strong enforcement programs in these jurisdictions, while Queensland and Western Australia also remain significant contributors. An example of some issues identified in Payroll Tax Investigations include:
- Grouping of related employer entities.
- Contractors.
- Employees based in other states (requiring registration in other states).
- Employers not being registered when data (e.g., STP) shows they are over the Payroll Tax registration threshold.
- Data sharing with other government authorities (ATO, WorkSafe, icare, cross border state revenue authorities, etc.) is also a key contributing factor in identifying employers to target for Payroll Tax Investigation activity.
Claim proportion (frequency) 1 July 2025 to 31 December 2025: Payroll Tax Investigations (All States) accounted for 15.44% of all Accountancy Insurance claims.
2. BAS (Pre & Post Assessment) Audits and Reviews
BAS (Pre & Post Assessment) audits and reviews represented 12.64% of claims activity from 1 July 2025 to 31 December 2025, continuing an upward trend when compared with the period 1 July 2024 to 31 December 2024. The ATO’s focus on GST compliance remains a key driver, supported by enhanced data matching capabilities that compare BAS submissions against third-party data sources such as supplier reporting and banking transactions.
Breakdown:
- Post Assessment: 63.93%
- Pre Assessment: 36.07%
The dominance of post-assessment audits suggests a strong emphasis on verifying GST reporting accuracy after lodgement, particularly in sectors with high transaction volumes.
Claim proportion (frequency) 1 July 2025 to 31 December 2025: BAS (Pre & Post Assessment) audits and reviews accounted for 12.64% of all Accountancy Insurance claims.
3. Income Tax (Full/General/Combined) Audits and Reviews
Income Tax audits and reviews accounted for 12.44% of total claims from 1 July 2025 to 31 December 2025, marking a notable increase from the previous financial year, where it stood at 11.60%. It also trended higher trend when compared with the period 1 July 2024 to 31 December 2024, where it was 12.04%.
Claim proportion (frequency) 1 July 2025 to 31 December 2025: Income Tax (Full/General/Combined) audits and reviews accounted for 12.44% of all Accountancy Insurance claims.
Audit activity outside of the accountant’s control
Certain audit activities often fall outside of the control of the accountant, particularly when the client prepares and lodges their own returns. These include audits and reviews by the ATO and other government revenue authorities for:
- Payroll Tax (All States): 15.44%
- BAS (Pre & Post Assessment): 12.64%
- ATO (Individual Excess Super Contributions): 9.12%
- Land Tax (All States): 6.63%
- Employer Obligations (PAYG/SG/FBT): 5.80%
- WorkCover (All States): 3.52%
- Stamp Duty (All States): 1.24%
Collectively, these categories accounted for 54.39% of all Accountancy Insurance claims for the period 1 July 2025 to 31 December 2025.
Additional insights:
WorkCover Audits and Investigations
Although not in the top three categories, WorkCover audits and investigations accounted for 3.52% of claims during the period.
This represents an almost doubling in frequency during 1 July 2025 to 31 December 2025 when compared to the period 1 July 2024 to 31 December 2024. State breakdown:
- NSW: 55.88%
- VIC: 20.59%
- SA: 17.65%
- WA: 2.94%
- TAS: 2.94%
The concentration in New South Wales reflects ongoing compliance programs targeting employer obligations under workers’ compensation schemes.
The sustained prominence of Payroll Tax Investigations reflects state revenue authorities’ commitment to enforcing employer compliance, particularly considering increased inter-agency data sharing. Concurrently, the ATO’s integrated audit approach for income tax matters signals a broader compliance strategy aimed at capturing complex tax risks across multiple domains.
The second half of 2025 demonstrated a clear regulatory focus on payroll tax, GST compliance, and income tax audits, supported by advanced data analytics and collaborative enforcement initiatives. Looking ahead to 2026, we expect these priorities to persist.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients.
Find out why.