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Claiming a lien over client property exposure draft 2010

Exposure Draft

Claiming a lien over client property

This draft information sheet is also available as a PDF, download link provided at the end of page.

The Tax Practitioners Board (Board) has released this draft information sheet as an exposure draft and invites comments and submissions in relation to the information contained in it within six weeks. The closing date for submissions is 29 October 2010 after which time the Board will consider any submissions made and will then publish a final information sheet.

Any written submissions in relation to this exposure draft should be made by the closing date to the Secretary of the Board via email at tpbwebsite [at] ato.gov.au or by mail to:

Tax Practitioners Board
PO Box 9825


Please note that this document is in draft form, and when finalised, will be intended as information only. While it seeks to provide practical assistance and explanation, it does not exhaust, prescribe or limit the scope of the Board’s powers provided in the Tax Agent Services Act 2009.

In addition, please note that the principles, explanations and examples in this paper do not constitute legal advice. They are also at a preliminary stage only. The Board’s conclusions and views may change as a result of the comments the Board receives or as other circumstances change. This document is not a formal Board guideline for the purposes of section 60-15 of the Tax Agent Services Act 2009.

Document history

This paper was issued on 14 September 2010 and is based on the Tax Agent Services Act 2009, the Tax Agent Services Regulations 2009 and the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 as at 1 March 2010.

What is a lien?

A lien is defined as the right to hold the property of another as security for the performance of an obligation or the payment of a debt.[1]

Liens may arise in three ways:

  • by express contract
  • by implied contract, or
  • by legal relations between parties.

There are two kinds of liens:

(a) Particular (or specific) lien

A particular (or specific) lien is the right to retain a particular piece of property until the obligation in respect of that property has been settled by the owner.

In most cases, registered tax or BAS agents (registered agents) will be dealing with a particular (or specific) lien.

(b) General lien

A general lien is the right of a particular class of persons (for example, solicitors, bankers or stockbrokers) to retain possession of property until the owner of the property has settled all their outstanding obligations to that class of persons.

Registered agents will usually not have a right of general lien.

When can a registered agent claim a lien over client property?

A registered agent may claim a particular lien over client property for outstanding professional fees or charges.

To exercise a valid lien over client property, a registered agent must satisfy the following criteria:

  1. The registered agent must be claiming the lien in their own right, and not merely as agent of a third person
    The lien asserted by the registered agent must be in relation to a debt or demand due from the client to the registered agent.
  2. The registered agent must have actual or constructive possession of the client’s property
    The property must have been acquired with the consent of the client.
  3. The outstanding debt or demand must be connected to the property over which the lien is being claimed
    The debt or demand will usually be for outstanding professional fees or charges. For example, the property may be documents such as income tax returns or business activity statements which the registered agent has prepared for lodgement with the Tax Office and the outstanding fees relate to the preparation and lodgement of those returns or statements.

What type of property can be the subject of a lien?

It is widely accepted that registered agents can only claim a lien over property upon which they have expended labour and made more valuable. For example, the courts have said that a lien would attach over a general ledger, balance sheet and draft income tax return prepared by an[2] accountant.

However, a lien would not extend to invoices or a sales journal where those documents are provided to the agent only for checking and do not embody the result of the agent's labour.[3]


A letter of engagement (contract) may set out expressly whether the agent or client has ownership of documents in certain circumstances.

Subject to agreement to the contrary, the following documents are likely to belong to the client:

  • source documents – ledgers, receipts, invoices, journals
  • correspondence between the ATO and the client, notices of assessment, and
  • letters of advice, books of accounts, tax returns and financial statements prepared by an agent for the client (once paid for).

Working documents of the agent would not belong to the client unless the client specifically instructed the agent to prepare such drafts for them and had paid for them.

In summary, unless otherwise agreed, documents provided by a client or other person to a registered agent for the purpose of assisting the registered agent to undertake work for the client remain the property of the client or other person, and generally cannot be the subject of a lien.

However, documents coming into existence in the course of work undertaken by the registered agent for the client will usually belong to the registered agent and can be the subject of a lien.

Liens distinguished from trust money or property

Liens should be distinguished from money or other property held on trust. Under the Code of Professional Conduct in the Tax Agent Services Act 2009, if:

  • you receive money or other property from or on behalf of a client, and
  • you hold the money or other property on trust

you must account to your client for the money or other property.

Need more information?

For further information about the tax agent services regime, please visit the Board’s website at www.tpb.gov.au

  • [1] Hall v Richards (1961) 108 CLR 84; [1964] ALR 816
  • [2] Re Gleebs Pty Ltd (in liq) [1933] VLR 293, 39 ALR 300
  • [3] Re Gleebs Pty Ltd (in liq) [1933] VLR 293, 39 ALR 300