For tax agents
Client money and tax payments: AML/CTF boundaries for tax practices
Handling client money is not a single yes-or-no category under the AML/CTF Act. Table 6 item 3 concerns receiving, holding and controlling—including disbursing—or managing a person's money, accounts, securities, virtual assets or other property as part of directly advancing a transaction in the course of business. The Act then sets boundaries and exclusions for particular circumstances. A tax practice should examine what authority it has, what transaction is being advanced, where the property sits and whether a statutory exclusion applies. The fact that an amount appears in a client account does not answer those questions by itself.
See the tax agents AML/CTF workspaceDistinguish control from influence and administration
AUSTRAC reads receiving, holding and controlling as a composite concept. It commonly involves the practice receiving the client's property, retaining it for a period and controlling when and where it is disbursed. Managing is different: the property need not be held by the practice, but the practice has authority and discretion to decide or direct how it is dealt with. Authority to redirect funds, substitute a payee or materially vary a payment points toward management.
Routine implementation of fixed, pre-determined obligations is less likely to amount to managing where the practice has no discretion over the payee, amount, timing, conditions or purpose. Access credentials or payment-processing capability alone should not be treated as decisive. Document the mandate, practical controls and actual discretion instead of relying on the label 'bookkeeping', 'tax payment' or 'bill pay'.
Apply all item 3 elements before considering an exclusion
The service requires more than contact with money. The receiving-and-controlling or managing activity must occur as part of assisting the person in planning or executing a transaction, or otherwise acting for them in a transaction, and it must directly advance that transaction. It must also occur in the course of carrying on a business. Map those elements to the facts before recording the outcome.
If the conduct meets item 3, consider the boundaries in subsections 6(5C) and 6(5D) and the applicable Rules. These include payment for the practice's own goods or services, certain payments reasonably incidental to a non-designated service, payments under a court or tribunal order, specified payments to or from government bodies and other listed recipients, conduct covered by another designated service, and circumstances specified in the Rules.
Treat the tax-payment and incidental-payment rules carefully
AUSTRAC's guidance identifies tax payments made to the Australian Taxation Office as an example of payments covered by the government-body boundary. That does not create a blanket exemption for every service described as tax-related. Ask what is being received or managed, who receives the payment, what transaction is advanced and whether some other designated service applies to the same conduct.
The reasonably-incidental boundary is also applied at business level. It is intended to prevent a business that provides non-designated work from becoming regulated only because it handles routine ancillary payments supporting that work. If the same legal entity provides other designated services, the condition may not be available. Do not assess one department in isolation from the services of the reporting entity as a whole.
Record authority, flow of funds and the legal reasoning
For each material arrangement, retain the engagement, account mandate, authority matrix, payer and recipient, purpose, expected payment pattern, permitted discretion, transaction connection and the table 6 analysis. If the practice relies on an exclusion, record which provision or guidance applies and the facts that satisfy it. A checkbox marked 'ATO payment' or 'incidental' is not enough where the underlying payment flow is unclear.
Continue monitoring the arrangement for changes. A fixed payment service can change if the client authorises the practice to select recipients, vary the purpose, redirect funds or hold money pending a discretionary decision. Unexpected third-party funds, unexplained offshore payments, personal expenses routed through business accounts or instructions inconsistent with the mandate should trigger review under the practice's risk assessment and escalation procedures.
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Is paying a client's ATO liability always a designated service?
No. AUSTRAC identifies tax payments to the ATO as an example within a statutory payment boundary, but the practice must still assess the actual activity and whether another designated service applies. Record the recipient, authority, transaction and provision relied on.
Does access to a client's bank account mean the practice manages the money?
Not necessarily. The key issue is substantive authority and discretion. Implementing fixed instructions without power to redirect funds or vary their purpose is less likely to be management than deciding who is paid, when, how much or for what purpose.
Can the incidental-payment boundary be assessed per team or engagement?
No. AUSTRAC explains that the relevant condition applies at business level. Consider all services provided by the same legal entity. A practice that provides another designated service cannot assume its bookkeeping or tax team is a separate business for this analysis.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.