Professional indemnity for accountants, bookkeepers, tax agents and BAS agents.

The professional body rule, which is the one most accountants meet first. If you hold a Public Practice Certificate from CPA Australia or the Institute of Public Accountants, or a Certificate of Public Practice from CA ANZ, your body's own by-laws require you to hold professional indemnity insurance. These are professional obligations, not statute, and they are enforced by discipline rather than by a court penalty: the sanction is your practising certificate or your membership. The trigger is providing public accounting services under a certificate. A member in salaried employment who does not practise publicly is not caught by them.

Each body sets its minimum against a different base, which is why quoting one figure across the profession is always wrong. CPA Australia bands on the practice entity's prior-year practice fee income, and a practice under $10 million of fee income sits at a $2 million minimum sum insured. CA ANZ bands on the engagement fee rather than on turnover, starting at $2 million where the engagement fee is under $100,000 and rising through $5 million, $10 million and $20 million as the fee for a single engagement rises. The Institute of Public Accountants bands on prior-year fee income excluding GST, at $2 million below $10 million and $10 million at or above it, with a lower figure for limited certificate holders.

Registration as a tax or BAS agent, which is the statutory one. The Tax Agent Services Act 2009 makes maintaining professional indemnity insurance that meets the Board's requirements a condition of being registered and of renewing, and item 13 of the Code of Professional Conduct makes it a standing obligation for as long as you are registered. Registered tax agents and registered BAS agents sit on the same table, and it is banded on the turnover of the business excluding GST: $250,000 of cover up to $75,000 of turnover, $500,000 from $75,001 to $500,000, and $1,000,000 above $500,000. Those are minimum aggregate figures, and the Board sets them in its own published requirements rather than in the Act or the regulations, which is why they can move without any change to the law.

There is a separate and much higher band for a tax agent whose registration carries a tax (financial) advice services condition: $2,000,000 for any one claim and in the aggregate where total revenue is $2,000,000 or less, scaling with revenue up to a maximum of $20,000,000.

The Board also sets conditions beyond the amount. Legal and defence costs must be exclusive of the limit or in addition to it, or the limit must be increased enough to absorb them. The excess must not exceed 4 per cent of turnover, or $1,000 where 4 per cent of turnover comes to less than $1,000. Retroactive cover has to reach back to the earlier of the retroactive date on the policy you are renewing or the start of the first policy in a continuous series. The insurer generally has to be APRA-authorised.

An AFS licence, which is where accountants who advise on financial products end up. An accountant who gives financial product advice, which can include advice on establishing or winding up a self managed super fund, needs an Australian financial services licence or an authorisation under someone else's. The Corporations Act requires a licensee providing financial services to retail clients to have arrangements for compensating those clients, and the regulations make those arrangements subject to holding adequate professional indemnity cover unless the licensee is exempt. ASIC's guidance sets the expectation at $2 million for any one claim and in the aggregate where retail-client revenue is $2 million or less, scaling with revenue to a $20 million maximum. Those figures are ASIC's stated expectation rather than a figure written into the law, and ASIC is explicit that it is up to the licensee to determine what is adequate and that it will not approve a licensee's arrangements.

This is the point every generic article on the subject misses, and it is the one with real money attached.

Take a practice with $600,000 of turnover. Under the Tax Practitioners Board table it needs $1,000,000 of aggregate cover. Under CPA Australia's by-laws, sitting well under the $10 million fee income band, it needs a $2 million minimum sum insured, and defence costs must be in addition to that or the cover lifted by at least half again. Those are not two views of the same requirement. They are two requirements, and satisfying the smaller one does not discharge the larger.

Add a limited licence for self managed super fund advice and a third figure joins, on a fourth measuring base. Add a single large engagement and the CA ANZ base moves, because that body measures the engagement fee rather than the practice's income, so one unusually big job can lift the required limit for a practice whose turnover did not change at all.

The regimes also disagree about what the number even means. CPA Australia and the Institute of Public Accountants require defence costs to sit outside the limit, or the limit to be lifted to compensate. CA ANZ requires an uplift of at least a quarter where costs are inclusive. So a $1 million costs-inclusive policy and a $1 million costs-exclusive policy are not the same policy, and only one of them will satisfy a body that has ruled on the point.

The practical consequence: a certificate of currency showing a number tells you almost nothing about compliance. What matters is which number, against which base, on which costs basis, and whether the excess sits inside the cap the regime allows.

This is the sharpest distinction on the page and it is worth understanding before you need it rather than after.

CPA Australia, CA ANZ and the Institute of Public Accountants all require run-off for a minimum of seven years after a member ceases to practise, retires, or the practice merges. That is a firm obligation of membership, and it survives the end of the practice itself.

The Tax Practitioners Board takes the opposite position: it only recommends run-off, and does not require it.

The reason this matters more than a technical inconsistency is that tax and accounting work has a long tail, and this cover answers on the day a claim arrives rather than on the day the work was done. An error in a return can surface years later, after an amended assessment, an audit or a dispute. If you have retired and cancelled the policy, there is nothing left to respond, whatever any regulator did or did not require. The mechanics of that, and what run-off actually costs, are on the main Professional Indemnity Insurance page.

If you are a member of a body and also registered with the Board, the body's seven-year requirement is the one that binds you, because the highest applicable obligation is the one that applies.

Charging is what bites, not the insurance. Under the Tax Agent Services Act, providing a service you know or ought reasonably to know is a BAS service, for a fee or other reward, while not registered, is a civil penalty contravention. The maximum is 250 penalty units for an individual and 1,250 for a body corporate, which at the current penalty unit is up to $91,000 and $455,000. Advertising that you will provide BAS services while unregistered is a separate contravention, at a maximum of 50 penalty units for an individual and 250 for a body corporate, so up to $18,200 and $91,000. That means a website or an ad can breach the Act before a single client is served.

BAS agents sit on the same turnover-banded table as tax agents: $250,000, $500,000 or $1,000,000 of minimum aggregate cover depending on turnover.

So the useful question is not "do I need insurance". It is "is what I do a BAS service". The Board publishes worked examples on both sides of that line.

Working under the instruction and supervision of a registered tax or BAS agent is the other lawful route, and it keeps a bookkeeper outside both the registration requirement and the insurance requirement that follows it.

Two things worth adding. A bookkeeper who is not registered and does not need to be still faces the ordinary commercial reasons for holding cover: client engagement terms, software partner programs, association membership and the plain fact that a payroll or reconciliation error can cost a client real money and generate a real claim. And the line between the two lists above is not always obvious in a live client relationship, which is where most of the exposure actually sits.

The first thing we do is establish which regimes you are actually under, because almost every practice we look at is under more than one and has been sized against one of them. A practice that has satisfied its Tax Practitioners Board minimum and holds a practising certificate is very often carrying less than its professional body requires, and the gap is invisible on a certificate of currency because a certificate shows a number, not a basis.

The second is that we read the costs position rather than the limit. Whether legal and defence costs sit inside your limit or on top of it decides whether you actually have the cover your by-laws require, and all three accounting bodies have written rules about exactly that. It is also the mechanic that decides what is left for the client's loss after a contested claim has run for two years.

The third is the excess. Each of the three professional body rules and the Board's own requirements caps it, and each caps it differently: as a percentage of turnover, as a percentage of the policy limit, as a fixed figure per principal, or as the lower of two tests. A policy with an attractive premium and an excess above the cap is not a compliant policy, however good the price looks.

The fourth is run-off, raised before it is needed rather than after. The point to raise it is when a partner is retiring, when a practice is merging, when a book is being sold, or when someone first mentions winding down, not at the renewal after it has happened. By then the decision has usually already been made by default.

One boundary worth being straight about. What your professional body's by-laws and the Board's requirements oblige you to hold is a question for them, and for your own adviser where the answer affects your certificate or your registration. This page sets out what those regimes say so you know which questions to ask, and every figure on it can be changed by the body or the Board without any change to the law. What your policy actually does about it is our side of the table.