You can insure here for the expense associated with an ATO Audit (Aust Tax Office= IRS).
I cannot imagine you can insure for the tax and associated penalties raised from an adverse audit result.If you could, you could make the most outrageous income reducing assertions to the Tax Office and when it said NO!, claim the "lost" amounts you were not entitled to, from the insurer.
The Audit process can be expensive, in terms of Accountancy and Legal advice, representation, etc.
Australia has a "self assessment" tax return regime, they accept what you say,(except if patent rubbish or they have a current blitz on something). But every now and then, someone gets audited.......
2005 Integrity 386 "Sojourn"