Client engagement letters
Client Engagement Letters in Australian Tax Services
Why Client Engagement Letters Matter
A client engagement letter is one of the most important documents in a tax practice — and one of the most commonly overlooked. In the context of providing tax services in Australia, a well-prepared engagement letter is not merely a formality. It is a foundational document that defines the professional relationship between the registered tax agent and their client.
Under the Tax Agent Services Act 2009 (TASA) and the obligations set by the Tax Practitioners Board (TPB), registered tax agents must take reasonable steps to ensure their clients understand the services being provided. An engagement letter gives practical effect to this obligation. It sets out clearly what the agent will do, what falls outside the scope of their engagement, and what is expected from the client in return.
Beyond regulatory compliance, engagement letters serve a critical risk management function. In the event of a dispute — whether about fees, missed deadlines, or the scope of work — a signed engagement letter is the first document any professional indemnity insurer or complaints body will ask to see. Without one, the agent is exposed.
They also help set client expectations from the outset, reducing misunderstandings about deliverables, turnaround times, and responsibilities. A client who knows exactly what they have engaged you for is far less likely to be dissatisfied than one who assumed services were included that were never discussed.
How Often Should Engagement Letters Be Re-Issued?
As a best practice, engagement letters should be re-issued and re-signed annually — ideally at the start of each financial year or at the commencement of each new tax compliance cycle. This annual reconfirmation serves several purposes:
- It ensures the scope of services remains current and accurately reflects what is being provided for that year
- It provides an opportunity to update fee arrangements, terms, and conditions
- It gives both parties a chance to identify any changes to the client's circumstances that might affect the engagement
- It creates a clear, dated record of consent and agreement for each service period
In addition to annual re-issuance, a new or revised engagement letter should always be issued whenever there is a change in scope — for example, if a client initially engaged you for individual tax returns and subsequently requires business activity statements, SMSF compliance, or advisory services. Each material change to the nature of the work warrants a fresh document.
A common mistake is to rely on a single engagement letter signed years ago. Courts, the TPB, and professional indemnity insurers will scrutinise whether the letter in place actually reflects what was agreed at the time the relevant services were provided.
Engagement Letter Template
A standardised engagement letter template for use across the practice is available here:
All team members should use this template as the starting point for new and renewed engagements. Do not use informal or ad hoc letters — consistency in documentation is essential for both compliance and risk management purposes.
Important: Where to Send Engagement Letters for Signature
All completed engagement letters must be sent to the following address for execution:
Please do not send engagement letters to the general inbox (wegotyou@). Routing all engagement letters through the above address ensures they are reviewed, properly executed, and filed in a consistent and traceable manner. Letters sent to other addresses may not be actioned or stored correctly, creating gaps in the practice's records.
Engagement letters are a small investment of time that provide significant protection — for the practice, for the client, and for the integrity of the services being delivered. Make them a non-negotiable part of every new engagement and every annual renewal.