Get a quote
Login

Superannuation Guarantee Audit Insurance

Understanding SMSF Audits and ATO Review Risks

Self-Managed Superannuation Funds (SMSFs) must comply with strict regulations set by the Australian Taxation Office (ATO). Every year, SMSFs must undergo an independent audit to ensure compliance with superannuation laws and financial reporting obligations. However, in addition to routine audits, the ATO also conducts targeted reviews and full audits of SMSFs when compliance concerns are detected—such as breaches of investment restrictions, contribution caps, or pension requirements.

The ATO’s compliance programs are increasingly data-driven, using sophisticated tools to detect anomalies or risks within SMSF reporting. Common audit risks include related-party transactions, loans to members, inappropriate asset valuations, and late lodgement of returns. Once an SMSF is flagged for review, trustees must provide extensive documentation and evidence to defend their fund’s compliance.

Responding to an SMSF audit can involve considerable professional fees, as accountants, auditors, and legal advisors work to rectify breaches or challenge ATO assessments. Tax audit insurance from AuditCover covers these professional fees, ensuring trustees can focus on resolving the issues without the stress of mounting costs. In the FAQs below, we answer the key questions about SMSF audits and how to protect your fund.

Superannuation Guarantee Audit Insurance

The Superannuation Guarantee is a compulsory contribution that employers must make on behalf of eligible employees to a complying superannuation fund. As of 2025, the SG rate is 11%, and contributions must be made at least quarterly. Failing to meet SG obligations can lead to significant penalties, including the Superannuation Guarantee Charge (SGC), interest, and administrative fees.
The introduction of Single Touch Payroll (STP) means the ATO now receives real-time payroll and super data. This makes it easier to detect missed payments, underpaid entitlements, or timing issues. Increased regulatory and public scrutiny has also put super compliance under the spotlight, especially after several high-profile non-compliance cases.
Employers in sectors with casual or fluctuating workforces are particularly vulnerable. These include:
  • Hospitality and retail
  • Construction, cleaning, and labour hire
  • Aged care and early education
  • Startups and small businesses without formalised payroll processes
  • Businesses engaging contractors who may be deemed employees for SG purposes
For instance, a café that hires casual staff on rotating rosters might miscalculate SG entitlements due to irregular hours or overlooked allowances—potentially triggering an audit.
  • Late or missing super contributions
  • Underpayment due to incorrect classification of pay components (e.g. not paying SG on allowances or bonuses)
  • Employee complaints or whistleblower reports
  • Mismatches between STP data, BAS, and actual payments
  • Engaging contractors who meet the criteria of employees under super laws
Even a small oversight—like forgetting to pay SG on a bonus—can result in an audit, especially if the error repeats over multiple quarters.
If an employer fails to meet their SG obligations, the ATO may issue a Superannuation Guarantee Charge, which includes:
  • The unpaid SG amount
  • Interest from the due date
  • An administration fee per employee, per quarter
This liability is not tax-deductible and must be reported separately, adding further administrative burden.

SG audits often require extensive reviews of payroll records, award classifications, and employee contracts. In some cases, businesses must engage accountants, payroll experts, or legal professionals to correct underpayments and defend classification decisions.


AuditCover’s tax audit insurance reimburses the professional fees incurred in managing SG audits, including:

  • Reviewing historical payroll data
  • Preparing and submitting SG statements
  • Communicating with the ATO
  • Rectifying any errors or omissions
  • Advising on future compliance to avoid recurrence
AuditCover provides nationwide audit insurance that includes SG reviews by the ATO. Our solution supports employers and accountants with:
  • Fast, digital quoting and onboarding
  • Policy options that include SG, GST, Payroll Tax, and more
  • Seamless integration into annual tax planning workflows
  • Expert claims support and audit response assistance
If you run payroll, you need SG audit protection. Get a quote today. If you’re an accountant or payroll adviser, join the AuditCover Partner Program to provide your clients with comprehensive audit cover that includes SG compliance.

Get started with AuditCover today

Find out more about AuditCover and how you can make tax audit insurance smarter.

Get a quote
Request a demo

Links

Important information & Support

Audit Categories

© Copyright AuditCover, All rights reserved.

This insurance is issued by Auditcover Australia Pty Ltd (ABN 63 638 872 634, AFSL 535509) on behalf of the insurer HDI Global Specialty SE (ABN 58 129 395 544, AFSL 458776).

Linkedin
Scroll to Top