Tax Investigation Insurance 101
Your Protection from Tax Audits
Tax Investigation Insurance (TII) is a type of insurance which covers tax paying policyholders (business or personal) against the potential costs of a Provincial or Canada Revenue (CRA) action brought against the policyholder.
TII is a before-the-event (BTE) insurance, and taken out by those wishing to protect themselves against the professional fees charged by an accountant or tax lawyer representing the policyholder. These can include income tax, GST, PST or HST, payroll deductions, trusts and estates. The most common CRA requests are reviews, professional services audits and GST, PST or HST Audit
Coverage is simple, as soon as a policy is purchased your complete tax history is covered. This ‘before-the-event’ insurance coverage is renewed annually and covers you when you are audited (or reviewed, or if you appeal a ruling) by the CRA or Provincial Tax Authority.
TII is taken out by those wishing to protect themselves against potential professional fee costs that could be incurred following a CRA approach. These costs most often include fees for accountants to deal with CRA directly on your behalf.
When the CRA looks into your tax filings – whether minor review, or a full-scale audit – Tax Investigation Insurance pays your accountant and/or tax lawyer up to $50,000 to defend you.