Issued: 24 May 2023

Last modified: 5 July 2023

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View the resources for our webinar, Engaging new clients this tax time. 

An optimised and efficient engagement process for new clients not only helps you work together more effectively, but also defines the relationship and what is expected from both you and your client. Join us as we discuss things you should consider when bringing on a new client.


Webinar recording

Questions and answers

We have compiled some of the questions we received during the webinar.

Engagement letters

We recommend you use an engagement letter for any services provided to clients, including an individual tax return. Remember, it does not need to be complex if you are dealing with simple tax affairs. However, even for simple dealings an engagement letter will ensure you and your client have clear expectations and that there is no misunderstanding of the services being provided.


Engagement letters are not required by law, but we highly recommend them as a means of avoiding uncertainty and to prevent any misunderstandings with clients and to assist in compliance with the Code of Professional Conduct. An engagement letter can be in the form of an email, but you should ensure that the client has acknowledged receiving and accepted the terms in the engagement letter or email.


We do not provide a template or example engagement letter, but many recognised professional associations can assist their members with templates. Our Practice note can also assist you in determining what to include in an engagement letter.


Registered tax practitioners are not prohibited from providing tax agent services to a minor (a person under 18 years of age). We recommend using an engagement letter to establish a clear understanding between you and the client, and to assist you to comply with the Code of Professional Conduct. Although minors are not prohibited from entering into contracts (such as an engagement letter), the law in relation to enforcing a contract differs between each State and Territory. If you have concerns regarding an engagement with a minor, you should consider obtaining legal advice prior to entering into the engagement.


We recommend reviewing your engagement letters annually. This ensures the terms of your engagement are reconfirmed or reviewed with the client. For ongoing clients, if there is no change in circumstances you would not need to issue a new engagement letter.


There are no requirements under the Tax Agent Services Act 2009 for what an engagement letter must contain. But it is important that any terms in the engagement letter have been acknowledged and accepted by the client, including when those terms have changed.


We recommend getting your client to acknowledge receiving and accepting the terms of your engagement letter. This may be in the form of a written signature, but may also be done electronically, such as via email correspondence.


Proof of identity

We do not require or recommend you retain copies or originals of ID documents used as evidence to establish the identity of a client or their representative. This recognises that the retention of identification documents may increase your risk of being targeted by criminals undertaking identity theft.


We require a contemporaneous record (for example, a checklist) to demonstrate that proof of identity steps were undertaken. Take a look at our practice note for further information.


Yes, we recommend that you make a record of the steps you have taken to identity the client and then delete the record.


You are required to exercise your professional judgement when making an assessment about if a client or individual representative is a well-established client and if it is necessary to undertake proof of identity (POI) checks.

If you decide it is not appropriate or necessary to undertake the POI checks, we still need you to retain a record of the assessment you have made. Take a look at our practice note for more details.


For an individual aged under 18, you can use a letter from a school principal issued in the past 3 months that details the individual’s name, residential address and when they attended the school. A student card is also acceptable, if available.


A letter of authority is a legal letter (including an email or emails) authorising a third party (agent) to act on an individual’s (principal) behalf in respect of discrete matters that are listed in the letter. If you were the deceased’s tax agent prior to their death, you will need to obtain a new letter of authority from the person managing the deceased’s tax affairs (i.e. the executor or administrator) before you can act on behalf of the deceased’s estate.


There is no requirement under the Tax Agent Services Act 2009 to obtain written approval from a client’s previous tax agent before taking on a new client. A previous tax agent also cannot transfer client information, including copies of contemporaneous POI records, to a new tax agent without the client’s consent. 

In addition, some tax practitioners must comply with the Accounting Professional & Ethical Standards Board’s (APESB) APES 110 Code of Ethics for Professional Accountants (including Independence Standards), which requires members in public practice to determine if there are any reasons for not accepting a new engagement when replacing a previous accountant.

For further information on the APESB’s requirements, tax practitioners should refer to the APESB website and guidance provided by their professional association.


To help protect the security of client information we suggest you:

  • use more secured methods than email to communicate this information – for example, a secure website, online mailbox or secure messaging

  • validate the email address with a recipient before sending any unencrypted email to them, to minimise the risk of unauthorised disclosure to a person who is not the intended recipient

  • only send this information by email as an encrypted or password protected attachment

  • maintain records of emails sent and received.


You only need to do this for the client and any person you are dealing with that purports to represent the client. For example, anyone instructing you on behalf of a non-individual client.


Payment for services

We recommend your letter of engagement include terms regarding how you will deal with any tax refund received on behalf of the client and if your client consents to fees being deducted from a refund. As disputes about fees often arise, the letter of engagement can limit the capacity for misunderstandings and provide the client with clear expectations about the basis on which fees are to be calculated and charged.


Record keeping

There are no mandatory requirements under the Tax Agent Services Act 2009 on how long to keep client records. However, under the Taxation Administration Act 1953 you must generally keep client records for 5 years from the date you lodge. The TPB also requires you to keep a record of POI checks you undertake in relation to each client for a minimum of 5 years after the engagement with the client has ceased.