The Australian Taxation Office (ATO) and Tax Practitioners Board (TPB) have just published the final version of client verification requirements for tax professionals:

• ATO guidelines  
• TPB Practice Note TPB(PN) 5/2022 
• TPB summary of minimum requirements  

When do these new requirements apply?

The new proof of identity (PoI) requirements will become mandatory in the latter half of 2022 (the TPB and ATO will confirm the start date in due course). However, both agencies recommend that tax practitioners start adopting these guidelines in their practices now.

The TPB flagged that: “If you fail to properly verify a new or ongoing client’s and/or their representative’s identity, you may breach an ongoing registration requirement, the Code of Professional Conduct  (in particular, Code items 1, 7 and 9) or the civil penalty provisions in the Tax Agent Services Act 2009.”

ATO and TPB guidelines: a comparison

The ATO and TPB collaborated on this project and their guidelines are closely aligned (e.g. on the types of identity verification documents to use, how to deal with situations in which clients do not have standard identity documents and record keeping).

While the ATO’s guidelines are primarily for tax and BAS agents who use the ATO’s online services, the TPB’s guidelines apply to all tax practitioners regardless of whether they use the ATO’s online services or not.

Tax and BAS agents using the ATO’s online services and following the ATO’s guidelines will also meet the TPB’s requirements.

Do the PoI requirements apply only to individual clients?

No. PoI applies to those representing clients and also requires the sighting of legal documents demonstrating the authority of an individual to engage the tax practitioner on behalf of a non-individual client.

Does an existing client’s identity need to be verified?

Although the guidelines relate mainly to the on-boarding of new clients, professional judgment should be used to determine whether a PoI process is necessary for a well-established client (the TPB guidance says it “requires that the registered tax practitioner retains a record of their assessment about the appropriateness of undertaking the [PoI] steps”).

Was CA ANZ consulted?

Yes. CA ANZ made a submission  on the draft version of the guidelines and some of our recommendations were taken on board.

What should CA member firms do now?

1. Review current procedures. CA ANZ recommends that all member firms review their current tax-related PoI procedures in light of the latest guidance. Some CA member firms’ existing PoI arrangements will already meet the new requirements. Others will need to adapt.
2. Be aware privacy aspects. The PoI requirements carry an added risk for CA firms: identity verification documents are typically protected by privacy laws. Encrypted communication channels should be used where documents cannot be sighted in person. Firms should not retain copies or originals of identification documents. Rather, a checklist approach is recommended to demonstrate that the PoI documents were sighted.
3. Staff training. The TPB and ATO hosted a joint online presentation  on the new requirements in June 2021 which, although based on the draft guidelines and feedback received at that time, accords with the final guidelines published in January 2022. This presentation may be useful for staff training.