What You Need to Know
The Australian Taxation Office (ATO) is expanding its client-to-agent linking system to include individual taxpayers and sole traders, introducing an additional security step when appointing a new registered tax or BAS agent.
Client-to-agent linking is designed to help protect taxpayers against identity theft, fraud and unauthorised access to their tax and superannuation information.
The system already applies to entities with an ABN, excluding sole traders, including companies, partnerships, trusts, not-for-profits, joint ventures, cooperatives and superannuation funds.
The next stage will extend these protections to individuals and sole traders.
What is ATO client-to-agent linking?
Client-to-agent linking is the process the ATO uses to confirm that a taxpayer has authorised a registered tax or BAS agent to access their information and act on their behalf.
Under the existing system for most ABN entities, the client must nominate their registered agent through ATO Online services for business before the agent can access their account.
For individuals and sole traders, however, the ATO is developing a different process intended to make linking easier.
How will client-to-agent linking work for individuals and sole traders?
Under the proposed system, the registered tax or BAS agent will initiate the nomination through ATO Online services for agents or compatible practice software.
The individual or sole trader will then need to review and confirm the request before the agent can be added and access their tax information.
This is an important distinction from the current process for companies, trusts and other ABN entities, where the client initiates the nomination.
The ATO has indicated that client-to-agent linking will ultimately become a mandatory onboarding step for new individual and sole trader client relationships.
When will the new rules start?
There is nothing individuals and sole traders need to do immediately.
The ATO is planning a pilot of the new client-to-agent linking process during 2027, allowing the system to be tested before full implementation.
Existing arrangements remain unchanged in the meantime.
The new process is particularly relevant if you are planning to change accountants, appoint a new tax agent or BAS agent, or change the authorisations provided to an existing agent.
Why is the ATO making this change?
Registered tax and BAS agents can access significant amounts of sensitive financial and taxation information on behalf of their clients.
Client-to-agent linking adds another layer of protection by helping ensure that only an agent who has been properly authorised can access a taxpayer's information and act on their behalf.
For taxpayers, it means greater control over who can access their ATO records. For accountants and registered agents, it provides greater certainty that the client has authorised the relationship.
Cashflow Financial Can Help
While the expanded system is not yet fully in place for individuals and sole traders, it is worth being aware of the change, particularly if you are considering appointing a new accountant or changing your current accounting arrangements.
At Cashflow Financial, our accounting team can help you understand the ATO requirements, guide you through the client-to-agent linking process when it applies and make the transition to a new accountant as straightforward as possible.
Speak with the accounting team at Cashflow Financial at our Wollongong or Sutherland office to discuss your tax, accounting and business needs. We are here to help.