Letters of engagement
One of the objectives of the Tax Practitioners Board is to ensure that tax agent services are provided in accordance with appropriate standards of professional and ethical conduct.
We recommend there be a written agreement (often called a 'letter of engagement') between a tax practitioner and their client setting out the terms and conditions of the arrangement between parties.
A letter of engagement helps both parties know and understand the expectations they are agreeing to in their contract. It will, define the rights and obligations of both parties and set out in writing the agreed terms and conditions for the work to be done.
We encourage tax practitioners to use letters of engagement as one means of ensuring they provide professional service to their clients. This will also help to avoid uncertainty and misunderstandings.
A letter of engagement usually covers:
- the work to be done
- who will do it
- how it will be done
- when it is to be done
- how much the work will cost.
A common understanding clarifies the responsibilities of the tax practitioner and the client and how the work is to be completed and paid for. It can assist in avoiding disputes over fees and the scope of work.
We do not provide a template or sample letters of engagement. However, we’ve provided some suggestions in the section below as to what you might consider including in your letters of engagement.
If you are a member of a recognised professional association, you may be able to get a template from them.
What to include in a letter of engagement
If you choose to use letters of engagement, you can include any number of points you or your practice need to cover. These might include:
- a description of the work to be performed
- arrangements for keeping client’s documents or of making copies of them
- whether you intend to pass the clients information to third parties and how you will get informed consent to do that
- explaining how fees are calculated, the frequency of billing and the timeframe for payment (disputes about fees are very common)
- how you will deal tax refunds received on behalf of your client and whether they consent to your fees being deducted from any refund (refer to the Board’s recommendation about passing refunds to clients within 14 days)
- your responsibility to provide services in a competent manner and within agreed time frames, including the lodging of documents with the Australian Taxation Office.
You may also want to include matters your clients will be responsible for, such as:
- to make all relevant information available in a complete and timely manner
- the consequences of errors or omissions
- to advise of changes in anything relevant to the services you provide.
- Letters of engagement TPB(I) 01/2011
- Webinar recording: Your questions answered - making the most of engagement letters
Last modified: 13 May 2019