Practice administration

Proof of identity for registered agents

You'll need to provide proof of identity (POI) information when contacting us or when we contact you.

POI details may include information from a notice of assessment, lodged return or activity statement, provided it is no more than 5 years old.

When you contact us

Step 1 – Quote your Registered Agent Number (RAN)

If you phone us on the registered agent phone line (13 72 86), you must provide your RAN.

Step 2 – Identify the account you want to access

You can identify the client account you want to access by providing one of the following:

• Australian business number (ABN)
• tax file number (TFN)
• name.

Step 3 – Provide POI for the account

The POI we need depends on whether your RAN is already on the account and for which taxpayer role, as shown below.

POI requirements by access type

Access type 1: Registered agent listed on the client's account for the role	Access type 2: Registered agent listed on the client's account but not for the role	Access type 3: Registered agent not listed on the client's account
You must provide details from an ATO generated notice or lodged return that is no more than 5 years old and relates to the client. These could include: a notice of assessment sequence number a document identification number (DIN) a correspondence reference number the date and name or title of a letter or notice we have sent you that may or may not have a unique identification number but can be confirmed by our systems income amounts deductions claimed.	You must refer to an ATO generated notice or lodged return that is no more than 5 years old and is relevant to the role. You must also provide one of the following relating to the client: their TFN (if not already provided as an identifier) their date of birth, if applicable their address – business, postal or email. Where another registered agent is listed on the account for a role, the notice you refer to must be more recent than any authority a taxpayer has provided for that role. Note: Our systems only support one registered agent against a role. Where you are the registered agent for the client and another registered agent is listed on the role, you must provide details from the latest lodged activity statement or tax return or another type of ATO generated notice specific to the role.	You must refer to an ATO generated notice or lodged return that is no more than 5 years old and is relevant to the role. You must also provide one of the following relating to the client: their TFN (if not already provided as an identifier) their date of birth, if applicable their address – business, postal or email. Where another registered agent is listed on the account for a role, the notice you refer to must be more recent than any authority a taxpayer has given for that role. You must also provide verbal assurance that you have a signed authority. Note: Our systems only support one registered agent against a role. Where you are the registered agent for the taxpayer and another registered agent is now listed on the role, you must provide details from the latest lodged activity statement or tax return or another type of ATO generated notice specific to the role.

When we contact you

Step 1

If we contact you and can identify the name of your practice at the beginning of the conversation without any prompting, we will not ask for any further POI. However, if we can't, we will ask for your RAN and the name of your practice.

Step 2

Our officers will identify themselves clearly by providing their full name and the section in which they work. If at any stage you have doubts about the person contacting you being an ATO employee or you want a more formal confirmation, ask for the officer's contact details, including:

• their full name
• their extension number, if available
• the name of their team leader and their extension number.

You can ask the officer if you can phone them back on 13 28 69 between 8.00am and 5.00pm, Monday to Friday.

You can also ask the person phoning to confirm their identity by either emailing you or sending a secure mail message via Online services for agents.

When you write to us

When writing to us, always include your RAN. This helps prevent unnecessary delays in processing your correspondence, see Proof of identity requirements for registered agents (PDF, 325KB)This link will download a file.

Proof of identity checks for clients

In order to avoid errors and help stamp-out tax fraud through identity crime, it is important you take steps to check the true identity of individuals asking you to act on their behalf. We've seen increasingly sophisticated attempts by criminals and their accomplices to commit refund fraud by stealing the identities of taxpayers and posing as those taxpayers. These people may also be part of a larger fraud network.

Carefully checking proof of identity documents and questioning discrepancies in information provided by people is an important first step to stop these attempts.

It's also essential that you manage your online security

Verifying individual identities

Identity crime can happen to anyone at any time. We strongly recommend you perform identity checks for:

• all new clients before accepting them as clients
• existing clients, in particular when personal information has been altered or information relating to tax affairs is inconsistent with information you already hold (and have previously verified) about their tax affairs
• all representatives of clients (whether they claim to represent new or existing clients).

It is always best to check original documents to verify an identity. You may be able to use the Document Verification Service (DVS) which is a national online system that helps businesses build greater confidence in the identities of their clients. The DVS allows you to compare a client’s identifying information with a government record. Businesses must meet certain eligibility criteria and pay a fee to use this online system. Find out more at IDMatchExternal Link.

If you or your staff cannot confirm the identity of an individual, or you suspect fraudulent documents are being used, you can notify us of the incident so that we can stop any other attempts to use that identity.

Learn more about:

• How to verify or report a scam
• Agent client verification methods

Clients attending agent premises

New clients

For new clients that attend your premises (face-to-face), at least one piece of current photo identification documents can be used, including the following:

• passport (including an overseas passport with evidence of Australian immigration status)
• drivers licence
• government or student identity card, if applicable.

If the client is unable to provide photo identification, they'll then need to provide two documents:

• one of the following primary documents
  • Australian full birth certificate
  • Australian citizenship certificate or Extract from the Register of Citizenship by Descent.

and

• one other document from the following
  • last year's notice of assessment
  • Medicare card
  • recent bank statement (not credit card).

Temporary residents also need to provide a current valid passport.

Some temporary visa holders have work rights, although some classes of visas only allow limited work rights (for example, working holiday and student visas). Australian visa details should be checked to verify both:

• the working rights attached to the visa type
• that the individual is a resident for tax purposes.

Discrepancies or claims that seem inconsistent with the individual's work rights or personal circumstances warrant your further attention.

Existing clients

For concerns regarding existing clients, you can use the following details to ensure your client's identity has not been stolen:

• tax file number (TFN)
• full name
• date of birth
• current residential address
• current contact telephone number
• current bank details
• employment details (including the employer's address and phone number) where applicable.

For temporary residents, check the details of their current valid passport.

It's unlikely the holder of a stolen identity would be able to verify these details without discrepancies with the information you already hold.

Where there are any discrepancies with information you already hold, the discrepancy should be checked directly with the client to see if it matches information you already hold.

Online interactions with new clients

An increasing number of agents are accepting new clients from online channels rather than those clients coming to their premises. There is a heightened risk for you dealing with information in an online environment, particularly with clients you have not physically met.

For any online or electronic transaction, you still need to take appropriate steps to be satisfied that the:

• client is a genuine taxpayer
• client is who they say they are and the identity has not been stolen
• information they are providing to you is correct and can be substantiated.

We strongly recommend that you use an appropriate level of scrutiny to check information provided through electronic and online channels.

For new online clients, a wide range of personal details can also be compared against existing ATO information on Online services for agents:

• TFN
• full name
• date of birth
• current residential address
• current contact telephone number
• Medicare number
• current bank details
• employment details (including the employer's address and phone number) where applicable.

If you're not satisfied the identity of the client is correct, then you should consider not accepting the person as a client.

Online interactions with existing clients

If you receive information from an existing client to prepare and lodge a tax return or activity statement via an online channel, you should use the recommended identity checks for existing clients to validate the information.

If the information you receive is inconsistent with the information and usual reporting patterns you hold for that client, you should make additional checks.

Preparing tax returns for clients

Questions to ask your client

You need to ask reasonable and direct questions to work out your client's income position, and the deductions and tax offsets they can claim.

When working out your client's deductions, ask them whether they have already incurred the expenditure in the relevant year. Also ask questions to understand whether the expenditure is allowable as a tax deduction.

If the substantiation rules apply, ask your client what evidence they have available that is necessary (for example, receipts) to support the deduction.

You do not have to sight receipts and records

You do not have to sight the receipts and records. However, if they're available, examine them as part of the tax return preparation process. It's good professional practice to:

• ask your client to provide all the relevant documentation relating to their claims
• make note of the evidence you've seen and the evidence your client advises you they have, even if they haven't produced it for you.

You do not have to audit tax returns you prepare

You do not need to conduct tax audits on tax returns you prepare to ensure they are correct. However, you're expected to adopt reasonable professional care.

You should ask questions to obtain the relevant information you need to prepare the tax return. However, we understand you have to rely on the accuracy of the information your clients provide.

If your client will not produce their records

If you have good reason to believe your client is making a false claim or omitting income, carefully consider whether or not to continue preparing their tax return. However, if you have reasonably ascertained what records the client has to support their claims and you have no good reason to doubt the accuracy of that information, you can rely on it when preparing the tax return.

Carefully advise your clients about the:

• relevant substantiation rules or other requirements to support their claims
• significance of the declaration they have to sign on their tax return.

Do not include a claim that is clearly not allowable

You must not knowingly include a claim in a tax return that is clearly not allowable.

The Tax Practitioners Board can apply a wide range of sanctions where breaches of the Code of Professional Conduct have occurred. The Board will tailor its response to the severity of any misconduct, which includes making false or misleading statements.

This means that as a registered tax agent, you must not include a claim on a tax return if you know:

• your client has not incurred the relevant expenditure
• the claim is not allowable.

For example, you must not include a claim for total work-related expenses (other than car, meal allowance, award transport payments allowance and travel allowance expenses) that exceeds $300 if you have not reasonably ascertained that your client has kept evidence to prove the total amount.

If your client instructs you to include a false claim

If your client instructs you to include a false claim, advise them of their responsibility to lodge a correct tax return and the possible consequences of not doing so. Also explain your responsibility as a professional registered tax agent.

Try to persuade your client to exclude any false claims. If they insist on lodging a false tax return, neither you nor your staff should have anything further to do with the preparation of that tax return.

Record keeping

By law, you and your clients must keep business records, either paper or electronic:

• generally for 5 years after they are prepared, obtained or the transaction is completed, whichever occurs latest
• in English or in a format that we can access and understand.

Some records may need to be kept for longer periods, such as records relating to capital gains tax events. However, shorter record keeping periods apply for some records for individual clients with simple tax affairs.

While you and your clients are not required by law to keep records of tax returns, schedules, activity statements, tax objections or notices of assessment, we recommend you keep a copy for 5 years.

See also:

• TR 96/7 Income tax: record keeping – section 262A – general principles
• TR 2018/2 Income tax: record keeping and access – electronic records
• PS LA 2005/2 Penalty for failure to keep or retain records

Taxpayer declarations

If you give a document to us in the approved form on behalf of a client, your client must make a signed declaration in writing stating both of the following:

• They have authorised you to give the document to us.
• The information they have provided to you to prepare the document is true and correct.

Your client must give you a signed declaration before you lodge any document on their behalf. Once your client makes the declaration and gives it to you, you can return it, or a copy of it, to them.

Examples of documents that must be in the approved form include tax returns and activity statements.

The declaration can be given:

• in paper form
• electronically
• by fax.

Certain requirements must be met when providing a declaration electronically.

Most of your clients must keep their declaration, or a copy of it, for 5 years after they make it, depending on their circumstances.

Reporting cash transactions

Cash is often used legitimately to pay for goods and services. However, it is illegal for people to use shadow economy activities to hide income and avoid tax and superannuation obligations.

Shadow economy activities include businesses 'skimming' cash takings, paying 'cash-in-hand' wages, operating off-the-books and not recording or reporting all sales and purchases.

Below are ways you can assist your clients to correctly record and report cash sales, cash expenses and cash drawings.

Determining the best practices you use in your business will depend upon the type of tax practitioner services you provide (BAS or tax agent).

It is possible that even if you adopt these or other practices that a business you service may still under-report income and may still come under our scrutiny.

The relevance of these practices may vary depending on the following:

• The size and nature of your clients' businesses – for example, an established larger business would be expected to have strong record-keeping systems and controls. A review of their record-keeping processes, rather than of source records, may be more appropriate.
• The relationship you have with your clients – for example, in an initial engagement interview with a new client you may undertake a more comprehensive review of their record-keeping systems.

Best practice examples

Ask clients what records or evidence they have to support income and expense amounts

You could:

• sight a sample of source records, such as invoices, or last month's till tapes or electronic point of sale records
• sight source records during initial client engagement
• sight source records when anomalies appear
• make a note of the records sighted and the evidence your client advises you they have, even if they haven't produced it for you.

Advise clients of the consequences if records are not correct, complete or maintained appropriately

You could:

• advise that our risk models, or our Small business benchmarks, may identify them as a compliance risk if amounts reported in returns are unreasonable or are outside the benchmark for their industry
• explain the consequences if they're unable to substantiate income and expense amounts reported in their returns
• advise of possible compliance actions, including audits, financial penalties and prosecution
• advise of the consequences of providing incomplete, incorrect or misleading information for preparation of their returns or activity statements.

Sight or perform reconciliations, for example:

• check the differences between total sales and banking
• check that reported sales reconcile with till tapes or electronic point of sale records
• check the differences between reported amounts in activity statements and income tax returns.

Check figures are reasonable, for example:

• check the consistency of current amounts with previously reported figures
• compare with our Small business benchmarks or other industry benchmarks
• check income reported is consistent with your clients' lifestyle, including property and motor vehicle purchases
• use the Personal living expenses comprehensive worksheet
• check if profit and loss and cash flow are reasonable
• separate income received by cash from other payment methods and use ratios to compare cash income to non-cash income
• discuss figures with your clients if the figures appear unreasonable.

Ask sufficient questions to satisfy yourself the information your client provided is correct and complete

You could:

• ask direct questions to get the information you need to work out your client's income position
• enquire further about the completeness and correctness of information if there are grounds to doubt the information your client provides.

Ask clients to explain the processes they use to record and report cash transactions. For example, ask them to explain:

• their processes for recording sales from all income streams as they occur
• how they pay the business owner, staff and suppliers
• processes for recording expenses and drawings paid out of cash takings
• how they reconcile sales records.

Provide record-keeping advice or services, in an engagement interview or on an ongoing basis

You could:

• assess the record-keeping requirements of the business and the record-keeping capability of your clients to provide tailored advice or services
• recommend or set up a suitable record-keeping system for your client, such as a computerised or manual accounting system, or recommend they engage a bookkeeper
• review your client's records to ensure they have the processes and systems in place to manage tax records, including cash sales and expenses
• advise your clients of their obligation to maintain source records of all sales, such as cash register rolls or electronic point of sale records, including their obligation to provide those records if we request them
• advise your clients that it is illegal to possess or use software or electronic systems that manipulate or falsify original electronic point of sales records
• advise your clients in relevant industries that a separate sequentially numbered invoice book is recommended, and that invoices should be issued (and copies maintained) for all sales
• provide education to your clients who choose to calculate and lodge their own activity statements.

Maintain contact with clients throughout the year

You could:

• prepare or obtain a copy of your client's activity statements to maintain contact on a quarterly basis
• visit your client's business during the financial year.

See also

• Tax Practitioners BoardExternal Link
• The cash and hidden economy

Changing your details

As a registered tax agent or BAS agent, you must notify the Tax Practitioners Board (TPB) of any changes to your contact detailsExternal Link. This will automatically update some of our records.

You also need to update your contact details in your practice management software to ensure these details are accurate when you lodge. Contact your digital service provider if you need help.

Records we automatically update

We use the data the TPB sends us to automatically update your practice details, as well as the postal address on your client’s income tax and fringe benefits tax role, providing:

• you have added them to your client list for these roles
• the postal address for the client is the same as your prior address.

You can check the My details screen in Online services for agents to verify if we have your latest practice contact details.

Details you need to update with us

Update your contact details with us for selected communications and notifications

Communications or notifications	Action required	Find out more
Activity statements and related notifications	You can update the contact details on your client’s activity statement role using Online services for agents.	Add client
Practice mail – email notification	You can change your email address for these notifications	Practice mail
Tax professionals newsletters and alerts	You must subscribe to receive these free weekly newsletters. By subscribing to either newsletter you'll also receive Tax professionals alert emails. To change your email address, select unsubscribe at the bottom of a newsletter you have received, then subscribe to enter your new email address.	Tax professionals newsletters
Tax professionals alerts about system availability	You must subscribe to receive these email alerts. To change your email address, select unsubscribe at the bottom of an alert you have received, then subscribe to enter your new email address.	Tax professionals alerts and dashboards
ATO website – email updates	You must subscribe to receive these updates. To change your email address, select the link in an email update message you have received.	ATO website subscriptions

Retiring, selling or restructuring your practice

If you're a registered agent and thinking of retiring, selling or restructuring your practice, there are a number of actions you need to take.

You need to let us know straight away of your changing situation. You should also inform the Tax Practitioners BoardExternal Link if your requirement for a registration changes.

Restructuring your practice can result in requiring a new ABN when using a Digital ID, such as myID, using Digital ID and Relationship Authorisation Manager (RAM). You'll need to make sure your ABN details are updated in the in the Australian Business Register (ABR). You will also need to link your myID to your new ABN in RAM.

If you are restructuring your practice and are lodging through practitioner lodgment service (PLS) you may need to take some steps to enable easy lodgment.

The Tax Practitioners BoardExternal Link website provides for information about how to register a new business entity.

Informing clients

You should inform your clients about your practice changes in writing. Your letter should explain the reasons for the changes – usually selling, retiring or restructuring.

As a:

• retiring agent, you may take the opportunity to introduce the new or receiving registered agent
• transferring agent, you should also inform your clients about their right to either continue with the new registered agent or assume responsibility for their own tax affairs.

Transferring clients

We can process a whole-of-practice transfer to a new registered agent or entity if certain requirements are met. Some examples where this may happen are when:

• a practice is sold
• a sole practitioner becomes a company
• a sole practitioner becomes a partnership
• an existing partnership adds or removes a partner
• two or more partnerships or companies merge
• a practice now operates under a trust.

We cannot perform a whole-of-practice transfer for a portion of a client base.

Your clients' new registered agents (tax agents or BAS agents) are responsible for updating their client details with us.

Note: Clients included in the client-to-agent linking process are not required to complete an agent nomination as part of a whole-of-practice transfer.

Deleting clients from your list

You should delete those clients you no longer represent from your client list, as well as those clients you have had no contact with for some time.

If you are the selling or retiring agent, it is in your interest to remove all clients from your client list, either through a whole-of-practice transfer or by deleting clients. This will ensure their mail is not sent to you in the future.

You can individually delete clients using Online services for agents or the practitioner lodgment service (PLS).

Requesting a whole-of-practice transfer

Before completing and submitting your request you need to:

• register for the PLS, if necessary
• update your address with the Tax Practitioners BoardExternal Link
• update your client list, removing clients as necessary
• have consent from all your clients to transfer their information in compliance with Australian Privacy Principles
• check if any tax returns need to be re-keyed on the new RAN.

To request a whole-of-practice transfer include the following information:

• the registered agent name and RAN of both agents
• the new postal address and roles you want the transfer to apply to – for example, income tax, activity statements, fringe benefits tax
• a signed authority from both registered agents for the transfer to take place
• a signed statement indicating that all your clients consent to transfer their information

For tax agents, include whether you want all the further return not necessary (FRNN) clients transferred. If not, they will need to be deleted or to have given their consent for the transfer.

Send your request to us online

Use Online services for agents as follows:

• Select the topic General questions/problems/help
• Select the subject Whole of Practice Transfer
• Attach your whole-of-practice transfer request to the message.

If you have any queries about whole-of-practice transfers, phone us on 13 72 86 and use Fast Key Code 3 2.

A whole-of-practice transfer takes 28 days to process.

See also

• Risk assessment
• Feedback and complaints
• Online security
• Our services for people with disability
• News services
• Support and communication