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Professional indemnity insurance for BAS agents

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, and you must be able to demonstrate this, amongst other matters, in order to be eligible for renewal of your registration. 

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

Tier

Turnover of your business

(excluding GST)

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
3 Over $500,000 $1,000,000

*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.

Legal/defence costs

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.

Persons covered

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).

Exclusions

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.

Excess/deductibles

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.

Insurance provider

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.

Retroactive cover

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.

Consider additional features on your policy

We recommend you consider additional features to your PI insurance policy, including fraud and protection against cyber threats, including losses that an agent may suffer from a cyber-attack.

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

When you first become registered, you must advise us how you meet our PI insurance requirements within 14 days of receiving notification of your registration, unless you have already provided this information in your online application form. 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.

When you are renewing your registration, you must demonstrate to us that you have PI insurance that meets our requirements at the time of applying for renewal.

To advise us of your PI insurance arrangements, visit My Profile.

Watch our video which provides instructions on updating PI insurance details via My Profile.

You must also update your details whenever there is a change in your policy, including every time the policy is renewed. You can update your policy details via My Profile or provide details on your online renewal application or annual declaration form.


Further information


Last modified: 1 January 2021