Engagement letters for AU tax agents, APES 305 in plain English

Yes, most Australian tax agents re-engage clients annually with updated dates and a refreshed fee schedule. APES 305 requires terms to be documented for each engagement, and a fresh letter is the cleanest way to reset the period, scope, and pricing. A 'standing' engagement letter that runs indefinitely is hard to defend if the work, fees, or contact people change.

APES 305 requires the terms to be agreed in writing before commencement of work. If the client refuses to sign, you do not have an engagement. Practically, many firms accept email confirmation ('I agree to the engagement letter dated X') as a written acceptance, but you need positive acknowledgement, not silence. Starting work without acceptance is the single largest contributor to fee disputes and PII denials.

You can include a limitation-of-liability clause, but its enforceability depends on proportionate-liability legislation in your state and on the terms of your PII policy. Many policies require certain language to preserve cover. Check with your professional body (CA ANZ, CPA Australia, or IPA) and your PII broker before drafting your standard clause, and never represent that your liability is more limited than it actually is.

An email exchange can satisfy the 'in writing' requirement under APES 305, but it must still cover the mandatory elements, scope, period, fees, responsibilities, confidentiality, and termination. Most firms use a PDF engagement letter attached to an email with an explicit 'reply YES to accept' instruction, then retain the reply in the practice management system. A bare email saying 'great, let's proceed' is not enough.

Any material change in scope, pricing, or parties. Examples: client acquires a new entity, a one-off advisory matter arises outside the compliance scope, the client requests work in a new service line (e.g. SMSF audit), the fee structure changes from hourly to fixed, or a key signatory changes. Issue a variation letter or a fresh engagement, do not absorb the change silently.

An engagement letter is the professional-practice document required by APES 305 and the TPB, it covers the specific accountancy/tax engagement, the period, and the practitioner's obligations under professional standards. A service agreement is a more general commercial contract often used for technology platforms, outsourced services, or multi-party arrangements. Tax agents typically need the engagement letter; some firms use both (engagement letter for the professional work plus a master services agreement for the broader commercial relationship).