Errors in processing
Claims that a coding, payroll or reconciliation error caused a client a financial loss.
Bookkeeper Professional Indemnity
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Bookkeeper Professional Indemnity
Professional indemnity for bookkeepers and registered BAS agents.
A bookkeeping error rarely stays small. A misapplied GST code, a payroll run against the wrong award rate or a missed lodgement date turns into ATO penalties, interest and back pay the client will look to recover. Payment redirection fraud is the other common exposure, and that generally needs cyber or crime cover rather than professional indemnity.
What is it?
Bookkeepers handle payroll, accounts payable and receivable, bank reconciliation, Single Touch Payroll and BAS preparation, usually in Xero, MYOB or QuickBooks. Anyone providing BAS services for a fee must be registered as a BAS agent with the Tax Practitioners Board, and TPB registration requires professional indemnity insurance that meets its published minimum requirements. Unregistered bookkeeping work sits outside that regime but carries the same practical exposure.
What does bookkeeper professional indemnity cover?
Lodgement and deadlines
Penalties and interest flowing from a late or incorrect lodgement.
Funds transfer and cyber
Compromised email leading to a redirected payment, generally addressed by cyber or crime cover.
What affects the cost?
- BAS agent registration status
- Client numbers and payroll volume
- Whether you initiate payments
- Annual fee income
- Limit required by the TPB
Worth raising on the call
- The TPB sets minimum professional indemnity requirements that scale with turnover.
- Holding client bank authority raises exposure well beyond data entry work.
- Superannuation guarantee errors are among the most expensive bookkeeping claims.
Claims we are commonly asked about
Award rate set up incorrectly
Payroll runs for two years against a classification set wrong at onboarding, leaving staff paid under the applicable modern award. The employer faces back pay, superannuation shortfall and interest, and commonly looks to the bookkeeper for the difference plus the cost of the remediation project.
Input tax credits claimed in error
GST is claimed on supplies that were never creditable, and an ATO review issues an amended assessment with penalties and general interest charge. The claim usually centres on the penalties and interest rather than the tax itself, because the tax was always payable.
Supplier payment redirected by fraud
A compromised mailbox lets a fraudster reissue a familiar supplier invoice with new bank details, and the payment run goes out before anyone checks. Funds are rarely recovered once they move, and this type of loss is generally pursued under cyber or crime cover rather than professional indemnity.
Worth confirming in the wording
- Worth confirming whether your limit, excess and policy terms actually meet the Tax Practitioners Board professional indemnity requirement for your turnover band if you are a registered BAS agent.
- Worth confirming how the wording treats client money lost through payment redirection or employee dishonesty, since that is commonly handled by cyber or crime cover rather than professional indemnity.
- Worth confirming whether ATO penalties, general interest charge and fines are contemplated at all, because insurers treat penalties differently to compensation for loss.
Common questions
Do I need professional indemnity to be a BAS agent?
The Tax Practitioners Board requires registered BAS and tax agents to hold professional indemnity insurance that meets its published minimum requirements, and those minimums scale with your turnover. If you provide BAS services for a fee you generally need to be registered, so the insurance requirement follows. Check the current TPB requirement against your policy schedule rather than assuming last year's limit is still adequate.
Does it cover ATO penalties my client was charged?
It depends on the wording. Some policies contemplate penalties and interest flowing from a covered error and others limit or exclude them, and a few respond only to the client's consequential loss. This is one of the more important clauses for a bookkeeper to read closely, subject to the policy terms and any sublimits.
What does bookkeeper professional indemnity cost?
It varies with the risk rather than sitting at a standard price. The usual drivers are your BAS agent registration status, annual fee income, client numbers and payroll volume, whether you hold bank authority or initiate payments, your claims history and the limit required by the TPB or your clients. Getting the same submission to several insurers is the practical way to see the range.
I only do data entry, do I still need cover?
Data entry work still creates exposure, because a coding or reconciliation error can flow through to a lodgement or a payment. Practice size does not change the size of a superannuation or payroll error. Many accounting firms and clients also require contractors to hold their own cover as a term of the engagement.
General information only. Cover, limits and exclusions depend on the PDS, TMD, eligibility, underwriting and the policy terms. See professional indemnity insurance for the wider picture.
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