Your current schedule
Your current policy schedule and the professional services definition on it.
BOOKKEEPER AND BAS AGENT INSURANCE
Adding Tax Agent Services to Your BAS Practice: Does Your PI Insurance Change?
Yes, in almost every case. A PI policy written for bookkeeping and BAS services will generally not cover tax agent services unless they appear in the professional services definition, subject to the wording of your policy. The definition has to be widened before you lodge the first return, your turnover estimate may push you into a higher TPB tier, and the premium moves with the mix of work. Here is what to change and what it cost a client who did exactly this.
BeforeUpdate cover before the first tax return
~$700Bookkeeper moving to majority tax work (indicative)
Carry acrossOriginal retroactive date to be preserved
EndorseMid-term change, no need to wait
Premiums and outcomes described are specific to this client and indicative only. Your own terms will depend on your circumstances and the insurer.
THE SHORT ANSWER
Does a registered BAS agent need to change their professional indemnity insurance when they start offering tax agent services?
Yes, in almost every case. A PI policy written for bookkeeping and BAS services will generally not cover tax agent services unless they appear in the professional services definition, so the policy should be endorsed or re-placed before the first tax return is lodged. The limit should be checked against the TPB tier for your new fee estimate ($250,000, $500,000 or $1,000,000 by turnover), and the original retroactive date should be carried across, back to the earlier of your previous policy's retroactive date or the start of your first policy. On Tank's placements the change has added a few hundred dollars a year for a sole practitioner. Cover always turns on the policy wording and the schedule.
Mid-term endorsement is the usual route. The likely uninsured gap is the period between lodging your first return and updating the policy, so do the policy first. Figures are indicative only, not a quote.
- Must change
- Services definition
- May change
- Limit and TPB tier
- Should not change
- Retroactive date
- Real example
- ~$700, majority tax work
A bookkeeper's policy usually reads something like "bookkeeping, BAS preparation and lodgement, payroll processing". Tax agent services, which under the Tax Agent Services Act include preparing and lodging income tax returns and giving advice on tax liabilities, are a different activity with a different rate. If they are not in the definition, a claim from a tax return you prepared can be declined on scope.
| What changes | Why | What we do |
|---|---|---|
| Professional services definition | Tax agent services must be named, with the split between bookkeeping, BAS and tax work | Endorse the existing policy or re-place it with the new definition before the first return is lodged |
| Limit and TPB tier | Tax work usually lifts fee turnover, which can move you from $250,000 to $500,000 or $1,000,000 under TPB(GS) 06/2010 | Re-estimate the year's fees with the new services and pick the limit against the new tier, not the old one |
| Retroactive date | TPB(GS) 06/2010 requires retroactive cover to the earlier of your previous policy's retroactive date or the start of your first policy | Ask for the original retroactive date in every endorsement or replacement quote, and tell you if a market will not match it |
7 Insurers returned terms on the same submission Same risk
$700 Placed with the specialist market, from Indicative
$1,600 Highest quote on that submission, up to Same risk
Kept Original retroactive date preserved On placement
We re-quoted the risk with the new services definition. Seven insurers returned terms from approximately $700 to $1,600 for the same submission. The specialist market that writes tax practitioners as a class came in lowest, at approximately $700, with the original retroactive date preserved. Bookkeeping-only PI the year before had been quoted from approximately $450, so the move to majority tax work moved the PI premium by a few hundred dollars a year. Figures rounded up and indicative only.
The order of operations matters: the policy change should be in place before the first return is lodged. Full case study: solo bookkeeper to tax agent.
Registration status and structure
Applied, approved, or approved in a director's personal name while trading through a company. The insured name on the policy has to match how you will practise.
The fee split
The expected split of fees between bookkeeping, BAS services and tax agent services for the next twelve months.
What the tax work includes
Anything beyond individual and small business returns: trusts, superannuation fund returns, financial statements, ASIC compliance or tax planning. Each is quoted, but each is rated.
Any financial product advice
That is a separate licensing question and a separate PI tier, and bookkeeper policies typically exclude it.
FREQUENTLY ASKED QUESTIONS
BAS Agent to Tax Agent FAQs
Not necessarily a new policy, but the existing one has to be changed. The professional services definition must include tax agent services before you provide them, the limit has to meet the TPB tier for your new fee estimate, and the retroactive date should be carried across. Mid-term endorsement is the usual route where the insurer will rate tax work, but it depends on the insurer, so ask before you assume it. If the current insurer will not rate tax work competitively, re-placing with a specialist market and asking for the original retroactive date is the alternative.
Only if tax agent services are named in the professional services definition. A policy written for bookkeeping, BAS preparation and payroll does not cover income tax returns by implication. Check the schedule before lodging the first return.
On our placements the increase for a sole practitioner has been a few hundred dollars a year. One bookkeeper moving to majority tax agent work was placed at approximately $700, after quotes ranging up to approximately $1,600 from other insurers. One practice with staff doing tax and ASIC work placed $2,000,000 at approximately $2,100. Indicative only, not a quote.
The tier is set by fee turnover excluding GST, not by the type of registration, so it changes only if your fees change. Adding tax work usually lifts fees, so re-estimate the year and check whether you cross $75,000 or $500,000. If you do, the minimum moves to $500,000 or $1,000,000.
Usually, and the TPB's guideline expects continuity: your cover should run back to the earlier of your previous policy's retroactive date or the start of your first policy. Insurers are not obliged to grant it, so we ask for that date in every replacement quote and tell you if a market will not match it.
The policy should cover the entity that provides the services and the individual registrant. In practice that means the company as the insured with you named as a principal, or you as the insured with the company noted, depending on the insurer's wording. Tell us how the registration and the invoicing are set up and we will match the insured name to it. See PI for a new BAS or tax agent registration for the structure question in more detail.
QUOTE REQUEST
Add tax agent services to your cover
Send your current schedule and the expected split between bookkeeping, BAS and tax work. We will come back with the endorsement or replacement options and the cost of each.
Specialist broker review Australian business insurance
Update the Policy Before the First Return
We work to endorse or re-place bookkeeper PI for tax agent services with the original retroactive date preserved. With the schedule and the new fee split in hand, terms usually come back within a day or two.