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Professional indemnity insurance

Generally, all registered tax and BAS agents are required to have professional indemnity (PI) insurance cover that meets our PI insurance requirement.

Overview

The Board has the power under the Tax Agent Services Act 2009 (TASA) to require a registered agent to maintain PI insurance. If an agent fails to maintain the PI insurance cover the Board requires, it may be in breach of the Code of Professional Conduct (Code).

PI insurance provides cover for agents against claims made by their clients who suffer loss due to negligence by an agent in providing tax agent or BAS service.

The Board views this as a strong consumer protection measure that ensures that there is some mechanism to compensate clients.

Some agents may not be required to have their own PI insurance policy, such as:

  • registered agents who are employees or contractors of a company registered agent that has a PI insurance policy that covers them, and

  • registered agents who do not charge or receive a fee or other reward for their services.

Even if you are not required to have your own PI insurance policy, you still need to notify us of your circumstances, that is that you have cover.

What you need to do

1. Consider what you must do to meet your obligation in relation to the PI insurance requirement.

All registered agents need to notify us of their PI insurance cover arrangements or of their circumstances which may mean that they do not need to have PI insurance cover by using the Agent Login and completing the Professional indemnity insurance form.

Agents with an existing PI insurance policy – if you have an existing policy that covers your practice during the 2011–2012 financial year, you should check that this meets the Board’s minimum requirements.

If it does, then this can be used to meet the Board’s PI insurance requirement. If it does not, you will need to obtain PI insurance cover that does meet our requirements when you renew your policy, or before 1 July 2012, whichever occurs first. Check your policy or discuss your cover with your insurer or insurance broker if you are unsure about its scope.

Agents linked to a registered company or partnership – may already have adequate PI insurance cover, but should check that this is the case.

If the registered company or partnership tax or BAS agent has a policy that covers you and meets the Board’s PI insurance requirements, then you do not need a separate policy for your individual registration.

Employees – you will most likely be covered by your employer’s policy. Check with your employer to ensure you are covered and that they have notified us about your cover. Alternatively, you can lodge a PI insurance form yourself to advise us of the details.

Contractors – if you are an independent contractor, but you do not charge separate fees to your clients because you are working for and on behalf of another registered agent who provides the tax agent or BAS services for a fee or other reward, you may be covered by that agent’s policy. Check with the registered agent to ensure you are covered and that they have notified us of your cover, or you can lodge a PI insurance form yourself to advise us of the details.

Alternatively, if you are an independent contractor who charges and receives a separate fee for the provision of tax agent or BAS services and the client relies on you for those services, you will need to obtain PI insurance cover that meets our requirements.

2. Obtaining adequate PI insurance cover (if you need to do this yourself)

If you are required to have your own PI insurance cover, you need to assess what is the most appropriate cover for your needs. Our Explanatory paper on Professional indemnity insurance provides information on the Board’s expectations.

Any PI insurance cover must, at the very least, meet the minimum requirements as set out in the Board’s PI insurance policy.

Some professional bodies offer affordable PI insurance policies for agents with low turnover. They may be able to provide you with advice on cost and options or information on other insurance brokers. 

Any PI insurance cover that is part of a Professional Standards Council (PSC) scheme will be considered to be adequate cover and will meet our PI insurance requirement.

3. Request an exemption

You may request an exemption from the Board’s PI insurance requirement. To do this, you need to apply in writing setting out details of your circumstances and email it to pii@tpb.gov.au

Generally, if you receive a fee or other reward for the provision of tax agent or BAS services, it is unlikely that you will receive an exemption, regardless of how small the fee or other reward may be. The Board does, however, consider all requests for exemption on their merits.

For franchisees, the Board will consider applications for exemption from the PI insurance requirement for franchise operations or similar operations if you can demonstrate that there are satisfactory arrangements for compensation for your clients.

    Note – Until you receive an exemption from the Board, you are subject to the Board’s PI insurance requirement.

4. How to notify us about your PI insurance cover arrangements

To notify us about your cover:

  • Go to Agent login at the top of the screen

  • Enter your User name – your registered agent number (RAN) and Password

  • Select Online forms

  • Select the PI insurance form that suits your circumstances

  • Enter your details.

If you have forgotten your password, just use the Forgotten password link and an automatic email will be sent to you with a password. 

5. Keep your PI insurance cover details up to date

Having PI insurance cover is an ongoing Board requirement for so long as you are a registered agent, unless you are exempt. When you renew your policy or take out a different one, we ask that you login to update your PI insurance details using the online form.

How to find an appropriate insurer

Your PI insurance cover should be obtained from an insurer either regulated by the Australian Prudential Regulation Authority (APRA), responsible for regulating the insurance industry, or operating under an exemption within the Insurance Act 1973 or the Insurance Regulations 2002.

The following are suggestions for finding appropriate PI insurance cover: 

  • View the APRA Register of Authorised Insurers to find an approved insurer.

  • Check the Insurance Council of Australia’s website at www.insurancecouncil.com.au for recommendations.

  • Check with a professional association to see if they can help you find appropriate cover.

  • Contact your insurance broker for advice.

  • Compare products and costs when purchasing PI insurance cover to find the best cover to suit your needs.

We cannot advise you about which insurer to use.

Further information

TPB (EP) 3/2010 Professional indemnity insurance provides a detailed explanation of our PI insurance requirement.

You can also contact us to discuss the PI insurance requirement by phoning 1300 362 829 or emailing us at pii@tpb.gov.au