TASA updates: How engagement letters can help you meet new compliance rules

Getting client engagement right is the key to running a thriving accounting or bookkeeping firm. From the first interaction with a potential client to delivering ongoing services, how you engage with clients shapes their experience, builds trust, and ensures long-term relationships. But great client engagement isn’t just about strong communication—it also means setting clear expectations and staying compliant with industry regulations.

With recent updates to the Tax Agent Services Act (TASA), accountants and bookkeepers in Australia now have more requirements around client communication, with certain updates now being mandatory. The good news? With the right approach, you can use your engagement letters to easily and effectively comply with this section of the updated rules.  

Client engagement refers to the various interactions between a professional service provider and their clients. These interactions can range from email communications and social media posts to formal contracts and face-to-face meetings. In the context of accounting and bookkeeping, effective client engagement ensures that clients are informed, satisfied, and confident in the services provided.

A robust client engagement strategy not only helps in acquiring new clients but also plays a pivotal role in retaining existing ones. Engaged clients are more likely to trust your expertise, seek your advice, and refer your services to others. Therefore, investing time and resources into developing effective client engagement practices is crucial for the long-term success of your firm and helping you retain great clients. 

An engagement letter is a formal agreement between your firm and a client that outlines the terms and conditions of the services to be provided. It serves as a contract that defines the scope of work, responsibilities of both parties, fees, and other essential details. Engagement letters are vital tools for setting clear expectations and protecting both the practitioner and the client from potential misunderstandings or disputes.

Benefits of using engagement letters:

• Clarity: They establish a clear understanding of the elements of engagement, ensuring both parties are on the same page regarding the services to be provided.
• Risk management: By detailing the scope of work and responsibilities, engagement letters assist in avoiding uncertainty and misunderstandings, especially over fees and the scope of work to be completed.
• Professionalism: They demonstrate a commitment to providing a professional service to clients, enhancing the firm's credibility.

In Australia, while engagement letters are not a specific legal requirement under the Tax Practitioners Board (TPB) Code of Professional Conduct, the TPB strongly recommends their use. According to the TPB, "A letter of engagement is one means of ensuring you are providing a professional service to your clients."

From July 1, 2025, new requirements under TASA 2024 will come into effect, introducing mandatory client disclosure obligations for tax professionals to increase transparency, accountability and client protection in the industry. 

The new TASA requirements mean tax professionals must now provide: 

• A clear disclosure about their business operations and responsibilities. 
• Information on how clients can verify the practitioner’s registration on the TPB public register. 
• A process for clients to file complaints with the TPB, if necessary. 

Accountants and bookkeepers can provide this disclosure in multiple ways, including their website, email communications, or within their client engagement letters.  

While it’s not mandatory to include disclosure in your engagement letters, it’s considered best practice among Australian accounting bodies to do so. Here’s why. 

• Engagement letters create a clear audit trail—ensuring you can prove the client received and acknowledged the disclosure when signing.
• It’s a structured and consistent way to meet compliance requirements without adding extra admin work.
• It helps avoid disputes by ensuring clients fully understand their rights and your responsibilities before work begins.

Engagement letters are a critical foundation of the accountant-client relationship. They provide clarity, define the scope of services, and protect both parties by reducing the risk of disputes. If you don’t include the required disclosure somewhere in your client communications, you risk:

• Failing to meet TPB regulations, leading to compliance breaches.
• Increased risk of disputes if clients claim they weren’t informed of key details about your business.
• Inconsistencies across client communications, making it harder to demonstrate compliance if audited.

Since engagement letters are the primary document where accountants outline client agreements, it makes sense to include the TASA disclosure there—helping to safeguard your firm and provide clarity for clients.

To stay compliant and maintain strong client relationships, follow these key steps:

While the disclosure can be included elsewhere in your client communications, engagement letters provide a seamless way to ensure clients receive and acknowledge it with a signature. It’s recommended that  every engagement letter include: 

• A direct link to the TPB public register.
• The TPB complaints process and how clients can file a complaint.
• A clear outline of practitioner and client responsibilities.
• Disclosure of past disciplinary actions, if applicable.

Under TPB(PN) 3/2019 guidance, separate engagement letters should be issued for each entity receiving services, including:

• Spouses should have separate engagement letters.
• A business owner and their company should have distinct agreements.
• Directors and shareholders need individual contracts.

This avoids disputes, ensures clarity, and protects your firm from liability in case of business sales, divorces, or company dissolutions

The TPB recommends reviewing engagement letters annually to:

• Ensure compliance with evolving regulations.
• Update fees and scope of services.
• Reconfirm client responsibilities and expectations.

A structured annual re-engagement process also provides an opportunity to assess pricing, services, and client needs—leading to stronger client relationships and increased revenue.

Manual engagement processes increase the risk of errors and inefficiencies. By leveraging automation:

• Engagement letters can be pre-filled and templated to maintain compliance.
• Digital signing speeds up client approvals.
• Billing and engagement terms are integrated, reducing disputes over scope and fees.
• Annual re-engagements become effortless.

Ignition helps accountants and bookkeepers simplify compliance and streamline client engagements. 

With Ignition, you can:

• Use pre-built, TASA-compliant engagement letter templates.
• Automate annual re-engagements to stay aligned with TPB recommendations.
• Ensure all required disclosures are included, from TPB register links to complaints procedures.
• Digitally send and sign engagement letters, eliminating manual paperwork.
• Integrate billing with engagement terms to prevent payment disputes.
• Collect payments automatically, reducing debtor days.

The TASA 2024 client communication updates are designed to increase transparency and consumer protection, but they don’t have to create more admin work for your firm.

By including the required disclosure in your engagement letters, you can:

• Easily demonstrate compliance with TASA 2024.
• Create a clear audit trail of client acknowledgment
• Reduce compliance risks while maintaining strong client relationships.

With Ignition, accountants can automate client engagements, reduce admin, and ensure every agreement is fully compliant—so you can focus on delivering great service to your clients.