For tax agents
Company, trust and SMSF formation: AML/CTF duties for tax agents
A tax agent is not regulated merely because of the professional title. The trigger is providing a designated service with the required Australian geographical link. Assisting a client to create a company or an express trust is one of the professional services in table 6 of the AML/CTF Act. An SMSF establishment ordinarily includes creating an express trust, so the formation work requires a service-level assessment even when the broader engagement is described as tax or superannuation advice. The practical question is not whether tax advice was also given. It is whether the practice took active steps that directly advanced the creation of the legal structure.
See the tax agents AML/CTF workspaceSeparate advice from the act of creating the structure
General advice about possible structures may influence a client without directly advancing a creation. The position changes when the practice accepts instructions and begins the preparatory or execution steps needed to create the entity or arrangement. AUSTRAC identifies activities such as drafting or reviewing constitutions, shareholder agreements and trust deeds, preparing corporate-trustee documents, and registering applications with ASIC as examples capable of directly advancing a table 6 creation service.
Record the point at which the engagement moves from options or tax consequences into implementation. A short scope note should identify the client instruction, the proposed structure, the work the practice will perform and the table 6 item considered. This protects the practice from treating the entire relationship as captured while also preventing a formation service from being hidden inside a broad annual-tax engagement.
Identify every customer the creation service gives you
For a company-creation service, table 6 identifies the instructing person and, for the creation of a company, the proposed beneficial owners and directors as customers of the service. For the creation of an express trust, the customer population includes the instructing person and the proposed trustee, settlor and beneficiaries. The precise facts still matter, but the file cannot stop with the person who signed the engagement letter.
Map the proposed structure before choosing verification checks. Establish who is acting for whom, verify the representative's authority, follow ownership and control to the relevant individuals, and record the intended purpose of the company or trust. Where a corporate trustee, layered owner or representative is involved, keep the chain understandable enough that a reviewer can see why each relevant person was identified and how the conclusion was reached.
Complete the compliance steps before providing the service
A reporting entity must have its AML/CTF program in place before it provides a designated service. Initial CDD is also ordinarily completed before the service begins. The practice should therefore scope the work early, apply its customer-type procedures, assess customer and service risk, check relevant PEP and targeted-financial-sanctions information, and escalate any higher-risk features under its program before formation documents are lodged or executed.
Formation is not automatically high risk, but it can present elevated risk when the structure lacks a credible commercial purpose, uses unexplained offshore layers, changes controllers without a clear reason, involves reluctant or inconsistent parties, or appears designed to conceal the person giving instructions. Those facts do not prove wrongdoing. They require the risk-based inquiries, corroboration and approval pathway stated in the practice's program.
Keep a formation record that can be reviewed later
A defensible file connects the scope decision to the actual work performed. Retain the engagement and instructions, service classification, formation or trust documents, ASIC or other registration evidence, customer and representative details, authority records, ownership and control analysis, verification evidence, screening outcomes, risk assessment, approvals and any enhanced due diligence. The record should show the sequence, not merely a folder of identity documents.
After formation, reassess the service relationship. Routine tax return preparation or SMSF administration does not become a designated service solely because the practice previously established the structure. Later work that changes the legal form of a body corporate or legal arrangement, including through a merger or demerger, can trigger item 6. Nominee or trustee arrangements, registered-office services, business transactions or discretionary management of client property can create separate triggers under other items. Treat each material change as a fresh scoping event and preserve the reasoning.
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Is every SMSF engagement a designated service?
No. Establishing an SMSF ordinarily includes creating an express trust and should be assessed as a table 6 creation service. Routine accounting, tax return preparation or administration for an existing SMSF is not automatically designated. Assess the actual steps provided in the engagement.
Does referring the client to a lawyer avoid the tax practice's AML/CTF duties?
A referral alone may not directly advance the creation, but labels and outsourcing do not decide the issue. If the tax practice plans, prepares, coordinates or executes steps that directly advance the creation, it must assess its own service. Each business is responsible for the designated services it provides.
Can longstanding-client knowledge replace CDD for a new structure?
No. Existing information may be useful and may be reused where the law and the practice's program permit, but the practice must establish that required KYC information remains reliable and current and must complete the CDD required for the new designated service and its customer population.
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.