A disqualified entity (DE) is an entity (including an individual) that is not a registered tax agent, BAS agent, or a 'qualified tax relevant provider' (QTRP) and has had an event specified in the Tax Agent Services Act 2009 (TASA) occur in the last 5 years, which disqualifies them from providing tax/BAS agent services on behalf of a registered tax practitioner.  

Under the TASA, registered tax practitioners cannot employ or use the services of a 'disqualified entity' to provide tax/BAS agent services on their behalf, without approval from the Tax Practitioners Board (TPB). This means that practitioners must exercise due diligence when employing or using individuals and other entities to ensure they are suitable to provide tax agent services on their behalf.

For a full definition of what is a disqualified entity refer to Draft TPB(I) D51/2023 Code of Professional Conduct – employing or using a disqualified entity in the provision of tax agent services without approval.

The new measures are intended to maintain the integrity of the taxation system, reduce tax fraud and evasion, and protect consumers by ensuring that those employed or used by tax practitioners have the appropriate ethical and professional attributes to be engaged in the tax profession.

Subject to transitional arrangements, if a registered tax practitioner intends to employ or use (or continue to employ or use) a disqualified entity to provide tax agent services on their behalf, the registered tax practitioner must apply to the TPB for approval. 

An application to the TPB to approve the employment or use of a disqualified entity must be made in the approved form (which will be available from 1 January 2024), accessed by logging in to My Profile and accompanied by the relevant information as specified on the form.  

At the time of application registered tax practitioners should also ensure that the disqualified entity has provided written consent by the registered tax practitioner to make an application for approval to the TPB. Written consent can be provided using the Disqualifying events declaration and consent form.

Transitional provisions apply to tax practitioners who employ or use a disqualified entity before 1 January 2024. Code Items 15 and 16 will not apply until after 31 December 2024, unless a registered tax practitioner enters into, extends or renews a contract with the disqualified entity on or after 1 January 2024. If this happens, requirements will apply from the date of entering, renewing, or agreeing to extend the arrangement.

The TPB will typically decide an application for approval within 60 days of receiving the complete application, or within a longer period if agreed between the TPB and registered tax practitioner.

If a tax practitioner engages a disqualified entity prior to 1 January 2024, they will have 12 months (until 31 December 2024 (inclusive)) to either cease employing the disqualified entity to provide tax agent services, or obtain TPB approval to continue.

Example case study 

Joe, a tax practitioner employs Sarah one month prior to 1 January 2024, to provide tax agent services on his behalf. At 1 January 2024 Sarah is a disqualified entity and continues to provide tax agent services on Joe’s behalf. Sarah’s contract with Joe is not renewed or extended throughout the year. Joe has until 31 December 2024 (inclusive) to either cease employing Sarah to provide tax agent services, or obtain TPB approval to continue.

The transitional period considers the time that you were engaged by the tax practitioner and when you became a disqualified entity. If you are already a disqualified entity and engaged by a tax practitioner prior to 1 January 2024, then you have until 30 January 2025 (inclusive) to notify the tax practitioner in writing that you are a disqualified entity. However, you must notify the tax practitioner before you renew or extend the engagement with the tax practitioner after 1 January 2024.

Example case study

Prior to 1 January 2024 Ben meets the disqualified entity test and is employed by Jasminder. Ben continues to be a disqualified entity and is still employed by Jasminder on an ongoing basis for the next 12 months. Ben must notify Jasminder in writing that he is a disqualified entity by 30 January 2025.

In the case of someone becoming a disqualified entity after 1 January 2024, the transitional period does not apply. A disqualified entity must notify their employer (or the tax practitioner who uses their services) within 30 days after they become aware (or ought to be aware) that they are a disqualified entity.

Example case study  

Rohan is not a disqualified entity and is employed or used to provide tax agent services on behalf of Mary. In February 2024 Rohan becomes a disqualified entity (for example if his application for registration is rejected by the TPB because he is not a fit and proper person). In this example, Rohan has 30 days from when his application is rejected to notify Mary in writing that he is now a disqualified entity. 

If you are a registered tax practitioner and you do not comply with the disqualified entities requirements, you may be in breach of the Code of Professional Conduct. We may impose sanctions for the breach.

If you are a disqualified entity and you do not notify the tax practitioner who employs or uses your services that you are disqualified, you may be liable for civil penalties. Refer to the civil penalty provisions for further information.

For further information, refer to:

• Code obligations when you employ, use or have an arrangement with a disqualified entity
• Draft TPB Information Sheet D51/2023 Code of Professional Conduct - Employing or using a disqualified entity in the provision of tax agent services without approval
• Draft TPB Information Sheet D52/2023 Code of Professional Conduct - Prohibition on providing tax agent services in connection with an arrangement with a disqualified entity

Our application form has a combined file size limit of 20 MB, you’ll receive an error message if you attempt to attach files larger than the maximum size limit. We would suggest either trying to compress the file or save in a PDF format to reduce the size.

We only accept Australian addresses.

The online form is the TPB’s application form for seeking approval to employ or use a disqualified entity to provide tax agent services on your behalf. The Disqualifying events declaration and consent form is evidence of you having undertaken due diligence when engaging entities to provide tax agent services on your behalf. It also provides for a disqualified entity’s declaration of consent for you to seek the TPB's approval, and their notification in writing to you that they are a disqualified entity. 

We recognise that these are new obligations and our guidance will not be finalised until after 1 January 2024. We will be pragmatic in addressing any compliance concerns you may have between 1 January 2024 and the date our guidance is finalised. Nevertheless, it's crucial that you familiarise yourself with and establish processes in your practice to adhere to Code Items 15 and 16.