Obligation to keep proper client records

Under section 30 of the Tax Agent Services (Code of Professional Conduct) Determination 2024 (Code Determination), you must keep records that correctly record the tax agent or BAS services you have provided, or that are provided on your behalf, to each of your clients (including former clients).

The records must: 

• be in English, or readily accessible and easily translated to English 
• be retained for at least 5 years after the service has been provided
• show the nature, scope and outcome of the tax agent or BAS service provided
• refer to information you considered in providing the tax agent or BAS service
• include all advice received from the client
• include all advice provided to the client, and for more complex matters:
  • the relevant facts
  • assumptions and reasoning that formed the basis of any advice provided (including the basis and the method of any calculations, determinations, or estimates used).

This obligation applies to each tax agent or BAS service that you provide to your client. For further information on what tax agent and BAS services include, refer to:

• Tax agent services
• BAS services.

This obligation does not just refer to keeping or retaining records but also extends to making or creating records which can then be retained.

When does this obligation apply

This obligation applies from:

• 1 July 2025 – for tax practitioners with 100 or less employees 
• 1 January 2025 – for other tax practitioners.

We consider a tax agent or BAS service is ‘provided’ when it is completed. 

The obligation therefore applies to services completed on or after the relevant application date (either 1 July 2025 or 1 January 2025). If you started providing a tax agent service before the relevant application date and completed providing the service after the relevant application date, these record keeping requirements will apply to those services.

Who is covered under this obligation

The obligation to keep and retain certain records applies in relation to tax agent services (including BAS services) provided by you personally and/or ‘on your behalf’.

The phrase ‘on your behalf’ includes (but is not limited to) services provided by entities that you employ, use or otherwise engage to provide tax agent services on your behalf. 

The obligation therefore covers records of tax agent services provided by:

• employees and other entities (including contractors) where you are required to exercise adequate supervision and control
• entities with which you maintain (or are required to maintain) a: 
  • supervisory plan in connection with the employment of, or use of, one or more nominated supervising tax practitioners
  • remote supervisory arrangement, as is the case with an outsourcing or offshoring arrangement.

If you employ, use or otherwise engage another entity to provide tax agent services to a client on your behalf, you remain responsible for ensuring the obligation is met. 

You should ensure: 

• those entities understand the record-keeping requirements and have the requisite skills, knowledge and resources to comply with those requirements
• there is adequate processes and procedures, and supervisory and review arrangements, in place to ensure proper records are kept that correctly record the tax agent or BAS services provided.

Examples of records that must be kept

We consider that, at a minimum, you must keep and retain the following types of records: 

• client details – name, contact information, date of birth, bank and employment details
• letters of engagement (or other agreement setting out the terms and conditions of the engagement) 
• file notes relating to proof of identity or client verification checks undertaken, including relevant authorising documentation for representatives of clients (noting that we do not recommend that you keep copies of identity documents) 
• client permissions (including consent to disclose client information) 
• agreements to offshore or outsource services to clients, including confidentiality agreements
• records that explain or evidence an essential part or element of the tax agent service provided to the client, or steps taken to provide the service (for example, advice or opinions provided to the client and records of source documents sighted or reviewed to ascertain the client’s state of affairs)
• key communications and records of discussion with the client, including requests for further information and responses
• key communications with third parties in connection with the provision of the service, including the Australian Taxation Office (ATO) and other government agencies 
• copies of advice received from third party advisers or consultants (for example, any advice you may have sought from lawyers or consultants on behalf of your client) relevant to the tax agent service provided
• tax invoices issued to the client evidencing the nature of tax agent services provided
• records that a client must keep and retain under a taxation law, where the record is: 
  • essential to explaining or evidencing an essential part or element of the tax agent service provided to the client (or steps taken to provide the service); and/or
  • subject to a recordkeeping agreement between you and your client, in which you have agreed to keep and retain the record for the client
• records evidencing the receipt and handling of money or property held in trust and disbursement instructions and authorities in connection with the provision of the tax agent service
• other records that evidence compliance or non-compliance with the Code of Professional Conduct as it relates to the provision of tax agent services to clients.

We do not expect you to record every detail relating to a tax agent service. When deciding what records to keep and whether they contain adequate detail, you must exercise your professional judgement. It is not necessary for separate records to be kept and retained for different services if the same record explains more than one service (or part of a service) provided to a client. It is also not necessary to duplicate the general accounting records of a client that you obtained to provide a tax agent service.

How should records be kept

Records can be kept and retained in paper or electronic format. Electronic records must be in a form that is readily accessible and able to be retrieved as required. It is generally not necessary to retain a hard copy of the information contained in an electronic record unless a particular law or regulation requires you to retain a paper copy.

If you make copies of paper or electronic records, they must be a true and clear copy of the original record.

If you provide the service in Australia, the records should be kept in English. If the service is provided in a country outside Australia (for example, under an outsourcing or offshoring arrangement), the records can be kept in another language, provided they are readily accessible and easily translated to English.

You should have adequate procedures, policies, systems and controls in place to protect the security and confidentiality of client records, ensure client information is not compromised and mitigate the risk of identity theft, fraud, financial loss and reputational damage. Records should also be made and stored in a way that protects the record and information from being changed or damaged.

How long records need to be kept

You must retain records for at least 5 years after the tax agent service has been provided. A tax agent service is considered to have been ‘provided' from the date the service is complete. When a service is considered complete will be determined based on the facts and circumstances of the engagement. 

Generally, there are no mandatory requirements to return, destroy or de-identify client records or information after a certain period or an engagement has ended. However, once the 5-year period has lapsed, you should consider whether you need to take steps to return, de-identify and/or destroy records (as appropriate), having regard to any recordkeeping arrangement with the client and relevant privacy laws.

Records containing tax file numbers (TFNs) and TFN information

For records that include TFNs and TFN information, you must comply with the requirements of the Privacy (Tax File Number) Rule 2015 (TFN Rule) issued under the Privacy Act 1988. 

You should refer to guidance provided by the OAIC for further information relating to collection, storage, use, disclosure, security and disposal of clients’ TFN information.

Your client obligations to keep and retain tax records

Clients are required to comply with obligations under the taxation law to keep and retain certain records relating to their tax affairs. The ATO is responsible for administering the taxation law that imposes these requirements. For more information about recordkeeping obligations, refer to the ATO’s website. 

The records you must keep may include the records a client must keep and retain under the taxation law (for example, records you have reviewed or taken into account to provide the tax agent service). However, the scope of the obligation extends to cover all aspects of the services provided, including the terms of engagement, advice given, decisions made and client communications.

Your record-keeping obligation under this Determination does not replace or override the separate obligations imposed on clients to keep and retain records under the taxation law. 

You should discuss record-keeping arrangements with your client to ensure they understand their obligations, and the consequences of not keeping adequate records. 

We consider a letter of engagement serves as an important mechanism for documenting the agreement between you and your client about what records need to be kept and by whom, to ensure: 

• you comply with your record-keeping obligation under the Code Determination
• the client meets their recordkeeping requirements under the taxation laws. 

The engagement letter may also cover record-keeping arrangements at the end of an engagement. When an engagement ends, you should discuss the arrangements for recordkeeping and return of client records with the client.

Further information

For detailed information about how this obligation applies, including some practical case studies, refer to TPB(I) 47/2024 Obligation to keep proper client records of tax agent services provided.

Helpful resources

• FAQs – Code Determination
• Code Determination webinar series – help shape our guidance products on ‘Keeping clients informed’ and ‘Keeping proper client records’

https://www.tpb.gov.au/obligation-keep-proper-client-records - © Tax Practitioners Board

Accreditation Points Allocation:

0.20 Tax (Financial) Advice

Total CPD Points: 0.20