Professional indemnity insurance for BAS agents
Professional indemnity (PI) insurance is a consumer protection mechanism to compensate your clients in the event they suffer loss due to an act, error or omission as a result of BAS services you provide.
You must maintain PI insurance that meets our requirements during your period of registration as a BAS agent.
If you fail to maintain PI insurance that meets our requirements, you will not be meeting an ongoing registration requirement and will be in breach of the Code of Professional Conduct (Code). This can result in termination of your registration.
Do you need to have your own PI insurance policy?
If you charge a fee or receive a reward for the provision of BAS services, you will need to have a PI insurance policy or cover that meets our requirements.
If you do not charge a fee or receive a reward (for example, you are an employee or contractor) you will not need to have your own PI insurance policy in order to meet our requirements. However, if you are an employee or contractor, you will be required to provide us with the name of your employer or principal and their registration number.
Regardless of whether you charge a fee or receive a reward, you have to notify us of how you meet our PI insurance requirements.
Summary of minimum PI insurance requirements
You need to maintain a policy or have cover that meets your needs as well as our requirements.
Amount of cover
Turnover of your business
Minimum aggregate amount of cover*
(inclusive of legal and defence costs)
|1||Up to $75,000||$250,000|
|2||$75,001 - $500,000||$500,000|
*Please note that what is an appropriate amount of cover for you may in fact be more than what is set as the minimum requirement.
The policy must provide legal and defence ‘costs exclusive’ or ‘costs in addition’ amount of cover.
Scope of cover
The policy must include civil liability arising from any act, error or omission in the provision of BAS services.
The policy must cover:
- you (or the BAS agent or tax agent taking out the policy)
- directors, principals, partners and employees who provide BAS services on behalf of you (or the BAS agent or tax agent taking out the policy)
- contractors, if they do not have their own PI insurance cover, then you (or the BAS agent or tax agent taking out the policy) must have cover that includes the work of contractors for which you (or the BAS agent or tax agent) are liable
- any other individuals or entities that provide BAS services on behalf of you (or the BAS agent or tax agent taking out the policy).
The policy must not have the effect of excluding cover for the work of contractors if the result is that there is no cover for the BAS services that are provided to the client.
Further, if exclusions in a PI insurance policy undermine the policy objective or remove a minimum requirement, the cover will not be adequate.
You must undertake an assessment of your financial situation and ensure that the excess is not set at a level which you cannot meet.
The excess for your PI insurance cover should not exceed 4% of your turnover, unless 4% of your turnover is less than $1,000, in which case the excess cannot exceed $1,000.
PI insurance cover must be provided by:
- an APRA approved insurer
- an insurer who is not APRA approved but otherwise permitted to provide insurance in Australia under the Insurance Act 1973
- an unauthorised foreign insurer if they are providing insurance in accordance with Part 2 of the Insurance Regulations 2002, or
- other insurance providers as approved by us.
Your policy must provide retroactive cover. This means your new policy must cover you to the earlier of:
- the retroactive date specified in the current PI insurance policy you are renewing, or
- the start date of your first PI insurance policy if you have had a series of continuous policies.
For further information about our PI insurance requirements, please refer to Professional indemnity insurance requirements for registered tax and BAS agents TPB(EP) 03/2010
Notify us of your PI insurance details
You will be required to demonstrate that you maintain PI insurance that meets our requirements on an annual basis through your annual declaration form or renewal application.
If you are a newly registered BAS agent, you must advise us of the details of how you meet our requirements within 14 days of receiving notification of your registration. You need to provide us the details of your PI insurance policy or cover, or the details of the registered tax practitioner who holds a PI insurance policy that covers you.
To advise us of your PI insurance arrangements:
- visit www.tpb.gov.au/myprofile
- enter your Username (your registration number) and Password and sign in
- select PI INSURANCE from the left hand side menu and update your details.
Last modified: 3 August 2016