Letters of engagement: A practical approach from the TPB

The TPB has released a practice note that is intended to provide practitioners with practical guidance and help in relation to them using letters of engagement with their clients.

The practice note was first released as a draft in early May this year, with submissions to it closing early June. The new practice note (a link to it is below) replaces a previous guidance from 2001.

The TPB says it considered the new guidance necessary so that practitioners can establish a clear understanding between them and their clients about what is expected, especially in relation to possible disputes over fees and about the scope of the work that is to be completed. The letter also assures clients that the tax agent complies with TASA requirements.

It says a letter of engagement is generally the starting point in the ongoing communication between a tax practitioner and client about:

  • what is to be done
  • who will do it
  • how it will be done
  • when it is to be done
  • how much the work will cost.

While letters of engagement are not a specific requirement of the code of professional conduct in TASA, the TPB strongly encourages their use in that these mechanisms can avoid uncertainty and misunderstandings.

The Tax Agent Services Bill 2009 has an explanatory memorandum (EM) that makes a number of references to how letters of engagement can be used and how they are relevant in the business of tax practitioners. For example, the EM suggests that the taxation rights and obligations that are relevant to a tax practitioner could be outlined in the letter of engagement between the tax practitioner and client.

Advising a client of their rights and obligations under the taxation laws that are materially related to the tax agent services that a tax practitioner provides is one of the requirements in Code item 12 in the TASA (see paragraph 11).

The practice note (TPB(PN) 3/2019) lists suggested matters to include in letters of engagement (paragraph 15 and 16), the approach recommended to be taken for recurring or ongoing client arrangements (paragraph 17), and provides other reference material (para 18 on).

The TPB has not however provided a template or example letters or similar agreements for tax practitioners.

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Website Comments

  1. Aziz Kotani
    Reply

    Does anyone have a link to a template for a letter of engagement?
    Thanks

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