Aggregate, not per claim
The minimum is the total the policy will pay across the whole policy year. One large claim can use most of it.
BOOKKEEPER AND BAS AGENT INSURANCE
How Much PI Cover Does a BAS Agent Need?
The Tax Practitioners Board sets the minimum by your fee turnover: $250,000 for turnover up to $75,000, $500,000 for turnover from $75,001 to $500,000, and $1,000,000 above that. The minimum is the floor, not the answer. Here is the full TPB table, what the TPB recommends on top of it, and where our placements usually land.
$250KTurnover up to $75,000
$500KTurnover $75,001 to $500,000
$1MTurnover over $500,000
Ex GSTTurnover is fees received
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
How much professional indemnity insurance does a registered BAS agent or tax agent need in Australia?
A registered BAS agent or tax agent must hold professional indemnity insurance with a minimum aggregate limit set by the Tax Practitioners Board: $250,000 if annual fee turnover (excluding GST) is up to $75,000, $500,000 for turnover of $75,001 to $500,000, and $1,000,000 for turnover over $500,000. Each figure is inclusive of legal and defence costs. The TPB also requires retroactive cover if you held a previous policy, and recommends automatic reinstatement, fidelity cover for practices with staff, and run-off cover when you cease practising.
On our placements, most sole practitioners have chosen $500,000 or $1,000,000 rather than the floor, because the premium difference has usually been small. Call us with your expected fee turnover and we can talk through which TPB tier applies and what the limit options look like.
- Source
- TPB(GS) 06/2010, TASA 2009
- Basis of limit
- Aggregate, costs inclusive
- Turnover measure
- Fees received, ex GST
- Typical placed limit
- $500K to $1M
| Tier | Annual turnover (fees received, excluding GST) | Minimum aggregate cover |
|---|---|---|
| Tier 1 | Up to $75,000 | $250,000 inclusive of legal and defence costs |
| Tier 2 | $75,001 to $500,000 | $500,000 inclusive of legal and defence costs |
| Tier 3 | Over $500,000 | $1,000,000 inclusive of legal and defence costs |
Three details in that table catch people out.
Inclusive of legal and defence costs
Lawyers' fees come out of the same limit unless the policy pays costs in addition. On a $250,000 limit, defence costs alone can be a large share, which is why a costs-in-addition wording or a higher limit is worth pricing.
Fees received, excluding GST
If you have no prior-year figures because you are newly registered, the TPB expects a reasonable estimate of the coming year. See PI for a new BAS or tax agent registration.
| Feature | What the TPB says | Why it matters to you |
|---|---|---|
| Retroactive cover | Where you held an immediately previous policy, the guideline requires retroactive cover to the earlier of the retroactive date in your most recent policy or the start of your first policy | Work you did three years ago can be claimed on today. A new policy with a fresh retroactive date leaves that work uninsured. |
| Automatic reinstatement | The guideline recommends the benefit of at least one automatic reinstatement, if not multiple or unlimited | If a claim uses up the limit, the policy restores it for the rest of the year instead of leaving you bare. |
| Fidelity (innocent party fraud) | The guideline recommends innocent party fraud or dishonesty cover for the actions of employees, partners or directors, except for sole practitioners | Covers losses caused by a dishonest employee, partner or director. Relevant the moment you take on staff or an offshore contractor. |
| Run-off cover | The guideline recommends run-off cover if you propose to cease providing tax agent services during your registration period | Claims arrive after you stop practising. See run-off cover for BAS agents. |
| Excess you can pay | The guideline expects you to consider how you would fund the excess and any gap | A $2,500 excess on a $250,000 policy is a different proposition for a sole trader than for a practice with staff. |
$650 $500,000 limit placed, new tax agent Placed, indicative
$600 $500,000 quote, accountant registering Quoted, not placed
$900 $1,000,000 options started from Same submission
One placement and one quoting exercise from our book, with figures rounded up and indicative only.
New tax agent, company structure, fees around $75,000
A newly registered tax agent trading through a company, with the licence held in the director's name, asked which limit made sense. Tier 1 meant $250,000. Across six insurers, every $250,000 quote returned on that submission came back higher than a $500,000 quote from a specialist market, which we placed at approximately $650 a year. See the case study.
Accountant registering as a tax agent, fees around $50,000
On a quoting exercise for an accountant in metropolitan NSW who held $250,000 previously, a $500,000 quote came in at approximately $600, the $250,000 quote at approximately $1,100, and $1,000,000 options from approximately $900. The gap between the cheapest option on the table and a $1,000,000 limit was a few hundred dollars.
On our placements, sole practitioners under $75,000 have mostly taken $500,000 or $1,000,000 rather than the $250,000 floor, because the premium step has been small and some client engagement terms specify $1,000,000. Practices with staff or offshore support have generally gone to $1,000,000 or $2,000,000. Our bookkeeper PI cost guide has the premium bands behind those choices.
Two more situations change the answer: adding tax agent services to a BAS practice (see adding tax agent services), and a practice that also does HR or payroll consulting, which some insurers treat as a different occupation and price or refer separately.
Certificate of currency
Shows the insured name, the limit, the retroactive date and the policy period. Make sure the insured name matches your registration, whether that is you personally or your company.
Policy schedule and wording
So the professional services definition can be checked against the services you actually provide (BAS services, bookkeeping, payroll, tax agent services if registered).
Your turnover estimate
Your own note of the figure you used to pick the tier. If turnover crosses into the next tier mid-year, tell us and the limit can be increased by endorsement rather than waiting for renewal.
One structural point: if you are individually registered but only work as an employee, or as a contractor whose work is covered under the principal's policy, and you do not personally charge a fee, the guideline contemplates that you may be covered under that policy. Check that the wording actually extends to your services, and tell the TPB how you meet the requirement.
FREQUENTLY ASKED QUESTIONS
TPB Minimum Cover FAQs
It meets the TPB minimum if your fee turnover is up to $75,000 excluding GST. Whether it is enough depends on the size of your clients and what a single error could cost them. The limit is an aggregate that also has to fund legal costs, so many sole practitioners choose $500,000 or $1,000,000. On our placements the step up in premium has often been a few hundred dollars, though it varies by insurer and by practice, and some engagement terms specify $1,000,000.
Aggregate. The tiers in TPB(GS) 06/2010 are minimum aggregate amounts of cover, inclusive of legal and defence costs. The TPB recommends at least one automatic reinstatement so the limit is restored if a claim exhausts it during the year.
No. Turnover for the tier table is the total fees you receive for tax agent or BAS services, excluding GST. If you are newly registered with no prior-year figures, use a reasonable estimate of the coming year and keep a note of how you arrived at it.
If you are individually registered but only provide services as an employee, or as a contractor covered under the principal's policy, and do not personally charge a fee or reward, the TPB's guideline contemplates that you may be covered under that policy. You still have to satisfy yourself that the policy answers your own registration, and tell the TPB how you meet the requirement. If you do any work in your own name for a fee, the requirement applies to that work in your own right.
Maintaining PI insurance that meets the TPB requirements is an ongoing condition of registration. A lapse has to be disclosed and can lead to the TPB taking action against your registration. Because PI is written on a claims-made basis, a lapse also leaves a gap: claims notified during the gap have no policy to respond, even for work done while you were insured.
No. The TPB sets the requirements and does not endorse a scheme or insurer. Its guideline lists the categories of insurer it accepts; see the TPB's PI insurance page for the current position. Member schemes and broker-placed policies both work, as long as the policy meets the guideline.
RELATED GUIDES
More for Bookkeepers and BAS Agents
QUOTE REQUEST
Get a BAS agent PI quote
Tell us your expected fee turnover, whether you hold BAS or tax agent registration, and whether you have staff. We will confirm the TPB tier and come back with limit options.
Specialist broker review Australian business insurance
Cover Written to Meet the TPB Requirement
Certificate of currency issued on placement, retroactive date checked against your previous policy, and limit options above the floor so you can see what the next tier actually costs.