iscoverTrends and Insights from 1 July 2024 to 30 June 2025
Audit Shield claims activity across Australia
03 July 2025
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5 minute read
Each year, thousands of public practice accountants across Australia rely on Audit Shield to manage the financial risk of audit activity initiated by the Australian Taxation Office (ATO) and other government revenue authorities. The claims submitted through Audit Shield offer a unique lens into the types of audits being initiated. By examining the frequency and nature of these claims, we gain insights into where audit attention is intensifying, where it’s easing, and how compliance behaviours are evolving.
This article presents a comprehensive analysis of Audit Shield claims activity from 1 July 2024 to 30 June 2025, comparing it with the previous financial year to highlight notable shifts. Drawing on data submitted by firms nationwide, it explores the most common audit categories, emerging trends, and state-level differences. The aim is to provide a clear and practical overview of the audit landscape, helping accountants anticipate risk and better support their clients in a changing regulatory environment.
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The five most common Audit Shield claims activity categories (1 July 2024 – 30 June 2025):
- Payroll Tax (All States) – 14.73%
- Income Tax (Full/ General/Combined) – 11.60%
- BAS (Pre & Post Assessment) – 10.20%
- Income Tax (Rental Property) – 8.96%
- Income Tax (Other Specific) – 8.63%
The below pie chart shows the distribution of Audit Shield claims activity in Australia*
1. Payroll Tax Investigations (All States):
Payroll Tax Investigations (All States) remains the most frequent audit activity category for two consecutive years, accounting for 14.73% of the total claims from 1 July 2024 to 30 June 2025. This represents a slight increase from the previous year (14.64%). This consistency suggests continued scrutiny by state revenue offices, likely driven by evolving employment structures and cross-border workforce arrangements.
State breakdown (2023–2025):
- VIC: 39.93% (↑ increase of 8.91%)
- WA: 16.85% (↓ decrease of 9.06%)
- NSW: 28.21% (↑ increase of 8.50%)
- QLD: 10.99% (↓ decrease of 9.45%)
- SA: 1.83% (↑ increase of 1.10%)
- ACT: 2.20% (↑ increase of 0.74%)
Issues identified in Payroll Tax Investigations:
- 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 threshold
- Data sharing with other government authorities (ATO, WorkSafe, icare, etc.)
Claim proportion: 14.73% of all Accountancy Insurance claims
2. Income Tax (Full/ General/Combined) Audits and Reviews:
These made up 11.60% of total claims from 1 July 2024 to 30 June 2025—rising from 9.25% in the previous year, moving from fifth to second place. The increase may reflect broader ATO initiatives targeting general income tax compliance, especially among individuals and small businesses with diverse income sources.
Claim proportion: 11.60%
3. BAS (Pre & Post Assessment) Audits and Reviews:
New to the top five in 2024–2025, this category climbed to 10.20%, indicating heightened ATO focus on GST reporting accuracy and lodgement behaviour.
Technological advancements, including AI-driven systems, have boosted the ATO's ability to detect discrepancies in GST reporting. E-invoicing is another tool helping to identify irregularities quickly.
Accounting firm clients should ensure:
- Accurate and timely reporting
- Robust internal controls
Claim proportion: 10.20%
4. Income Tax (Rental Property) Audits and Reviews:
This new entrant accounted for 8.96% of claims. This aligns with the ATO’s increased interest in property-related income and deductions.
Common issues:
- Overclaimed deductions
- Insufficient documentation
- Undeclared rental income
The ATO cross-references data from banks, land titles, landlord insurance, and rental bond sources to detect discrepancies.
Claim proportion: 8.96%
5. Income Tax (Other Specific) Audits and Reviews:
This category dropped from 9.78% to 8.63% year-on-year but remained in the top five.
Includes:
- R&D Tax Offset
- Non-Commercial Losses
- Temporary Full Expensing
- Trust Distribution Compliance
- Personal Services Income
- Professional Firms Profit Allocation
Claim proportion: 8.63%
Audit Activity Outside the Accountant’s Control:
When clients self-prepare and lodge their returns, these audits may fall outside the accountant’s control:
- Payroll Tax Investigations – 14.73%
- BAS Audits and Reviews – 10.20%
- ATO Individual Excess Super Contributions – 8.42%
- Land Tax – 6.64%
- Employer Obligation Audits and Reviews – 6.64%
- WorkCover – 2.05%
- Stamp Duty – 0.86%
Total: These categories accounted for 49.54% of all Accountancy Insurance claims in FY 2024–2025.
Other Observation – Employer Obligation Claims Decline:
Employer Obligations (PAYG/SG/FBT) claims declined from 10.21% (FY 2023–2024) to 6.64% (FY 2024–2025). This may be due to the ATO’s shift in compliance strategy. Instead of launching audits immediately, the ATO is now prompting employers to self-lodge overdue Superannuation Guarantee Charge statements based on STP-reported data.
This approach represents a shift away from traditional audits, likely contributing to the decrease in claims for this category.
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