Sometimes you may become incapacitated due to an unforeseen event (for example, a health condition) and may not be able to run your practice in the short or long term. This can negatively impact your clients, employees and practice more generally. Depending on the circumstances, this may also impact on your ability to comply with your obligations under the Tax Agent Services Act 2009 (TASA).  

It is important to have a plan in place to minimise disruption to your clients and your practice caused by your incapacity. For example, if you are a sole tax practitioner, your plan might allow for another registered tax practitioner to step in as a ‘caretaker’ during your absence.

In the case of a registered company or partnership tax practitioner, it is important that there continues to be a sufficient number of registered individuals to provide tax agent services if one of its supervising tax practitioners becomes incapacitated for a period of time.

We appreciate that incapacity can be due to difficult circumstances and this guidance is designed to assist you in making appropriate arrangements, should these circumstances arise.

What should your plan or arrangement include?

When developing your plan or arrangement to address these types of events consider the following: 

• the structure of your business, in particular, whether the business is a sole registered tax practitioner or there are other supervising registered tax practitioners involved
• how your business could continue should you or other key individuals (such as supervising registered tax practitioners) within the business become incapacitated in the short or long term
• identify an authorised contact to speak to the Tax Practitioners Board (TPB) and the Australian Taxation Office (ATO) on your behalf (for example, to notify of the incapacity and to request any necessary extensions for lodgements with the ATO and a registration renewal if due with the TPB)
• identify one or more registered tax practitioner/s who could act as a caretaker in your absence (or in the absence of a key individual), specifying responsibilities, authorities and the extent of assistance to be provided
• specify circumstances that would initiate a caretaker registered tax practitioner stepping in
• engage with a caretaker registered tax practitioner to ensure they are willing to step in under certain circumstances, and the terms of them doing so
• if possible, specify the period in which the caretaker registered tax practitioner can assist clients for short or long term absences
• specify who is responsible for informing the clients of the situation and if client permissions have already been obtained for the caretaker registered tax practitioner to have access to client files
• ensure there are resources available to the caretaker registered tax practitioner and staff in the practice
• obtain legal advice and assistance to ensure the caretaker registered tax practitioner has the appropriate legal authority to make business decisions, such as preparing a power of attorney
• where it may not be possible for you to complete the minimum amount of continuing professional education hours required, keep appropriate records in relation to your situation
• ensure that the caretaker registered tax practitioner is covered by professional indemnity insurance that meets the TPB’s requirements
• regularly review your plan or arrangements to ensure it remains up to date.

What should be done with client files?

The maintenance of your client files in the event of your incapacity will depend on:

• any caretaker plan or arrangements you have in place
• the structure of your business.

Written communications with clients (such as, letters of engagement or other modes of written communication, e.g. email communications) will be particularly beneficial in outlining your caretaker plan or arrangements to minimise any disruption to your clients and practice. 

We recommend that a written communication with the client :

• inform the client clearly that, in the event of your incapacity, information relating to their affairs may be disclosed to another registered tax practitioner who will act as a caretaker, and
• seek the client’s permission in relation to such disclosures to ensure that, if necessary, the caretaker registered tax practitioner can perform work for the client (for example, by a return signed letter of engagement or consent from the client).

For further information refer to Letters of engagement.

Caretaker to notify clients

A registered tax practitioner who steps in for you as a caretaker should, as soon as possible, notify clients that they have:

• stepped in as caretaker due to your incapacity, and
• taken over your client files and will be responsible for providing tax agent services (including BAS services) while you are incapacitated.

Further information

• Supervision and control - tax agents
• Supervision and control - BAS agents
• TPB(I) 36/2021 Supervisory arrangements under the Tax Agent Services Act 2009
• Seeking mental health support
• Death of a tax practitioner

Contact us

If you have any questions or need any further information or assistance, contact us.