A tax expert says unregistered bookkeepers could face fines or suspension if they fail to acquire mandatory insurance by July 1, but many are unaware of the new requirements.
Registered tax agents have been sent a written reminder to notify the Tax Practitioners Board of their professional indemnity insurance before July 1 or face being in breach of their professional obligations.
But senior tax adviser Tong Greco says unregistered bookkeepers, often working part-time in small businesses, aren’t notified of the insurance requirements because they are not members of any professional associations.
It’s believed the majority of the 26,000 registered tax agents already have PI insurance because most are members of professional accounting bodies and it is mandatory for them to do so.
To date, no one has been prosecuted for not registering as a tax or BAS agent, but industry experts believe that could soon change.
“The penalty for not being registered is $27,500. When we see a prosecution… I think you will see a lot of interest in the registrations,” Greco says.
For those who are not members of accounting bodies, the cost of buying PI insurance is likely to be higher, which should serve as an incentive for them to join such a group.
Paul Drum, head of business and investment policy at CPA Australia, says over the last decade, PI insurance has gone through “peaks and troughs” and could be thousands of dollars for individuals.
“However, if you go through a professional body, it could be much cheaper; in the low hundreds,” Drum says.
According to Matthew Addison, executive director of the Institute of Certified Bookkeepers, standalone creditable policies for PI insurance start at $400.
“We would also recommend that they would need to be keeping in touch with what is happening in their environment, and adding to their professionalism, through membership of a creditable, relevant, professional association,” Addison says.
Dale Boucher, chairman of the Tax Practitioners Board, said in his letter to tax agents that individuals who decide to start a business must inform their board of their intentions.
“If your circumstances change, such that it affects your requirement to have PII cover in any way – for example, you go into business on your own – you are hereby directed to notify the board within 30 days of those circumstances changing,” Boucher said.
“If you fail to maintain PII cover that the board requires you to maintain, you may be in breach of the Code of Professional Conduct.”
“The board may impose a sanction for any breach of the code… Possible sanctions include a written caution, an order, suspension or termination of your registration.”