You must act lawfully in the best interests of your clients. This is one of your obligations (item 4) under the Code of Professional Conduct (Code).

When representing your clients, you must advance and protect your clients’ interests to the best of your ability, in all circumstances to the extent that your actions are consistent with the law. Acting in the best interests of clients is not a justification for you to contravene or disregard the relevant laws.

The duty you owe to your client will be determined by the circumstances of the engagement, for example:

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by a letter of engagement, report, advice or other communication between the registered tax practitioner and the client

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the duties imposed by the Tax Agent Services Act 2009

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any relevant course of conduct between you and your client.


When acting for, or on behalf of, a client, you must only act where you are authorised to do so, and only if your actions are in accordance with or are sanctioned by the law.

Comparison with the Corporations Act For tax agents with a tax (financial) advice services condition 

The Corporations Act 2001 (Corporations Act) requires Australian financial services (AFS) licensees and their representatives to act in the best interests of the client in relation to the provision of personal advice to a retail client (the best interests duty).

However, the primary distinction between your obligation under the Code item 4 and the best interests duty under the Corporations Act is that the Code item 4 expressly requires you to consider the lawfulness of acting in accordance with client instructions and to decline to act if it would be unlawful. This Code item imposes an obligation on you to uphold the law in acting for clients rather than merely seeking to facilitate the client’s wishes/interests.

Examples involving Code item 4 

Claiming work-related deductions 

Michael works in the hospitality industry. He engages Rahul, a registered tax agent, to prepare and lodge his income tax return. He instructs Rahul to claim a deduction for work clothing for the black trousers he is required to wear. Although Michael might believe it is in his best interest to reduce his taxable income, Rahul is aware that Michael cannot claim the cost of his work clothing as an allowable deduction under the taxation law because the trousers are not protective or specific to his occupation. Rahul advises Michael accordingly and must not act in accordance with Michael’s instruction.

Failing to assess and advise clients of financial risks in an investment

Mr and Mrs Brown have engaged Michael, a registered tax agent with a tax (financial) advice services condition, to provide advice to them about retirement options. Michael recommends that his clients invest in a particular property through a unit trust. Michael correctly advises his clients on the superannuation and other taxation implications for the investment. However, Michael grossly fails to assess and inform his clients of the financial risks involved in the investment.

Michael has reasonably ascertained the liabilities, obligations and entitlements of his clients that could arise under a taxation law with respect to the investment and advised his clients accordingly. As such, Michael has acted lawfully in the best interests of his clients in relation to the tax (financial) advice service, and therefore has not contravened the Code.

While the Code has not been breached in this scenario, the TPB may find that Michael's conduct impinges on his fitness and propriety to be a registered tax agent.

Further, it is noted that the Australian Securities and Investments Commission is responsible for the regulation of financial services and Michael's conduct may impact on his obligations under the Corporations Act.

Consequences for failing to comply with this Code item

If you fail to act lawfully in the best interests of your client, the TPB may find that you have breached the Code and may impose sanctions for that breach.

Last modified: 1 January 2022