Outsourcing & Offshoring

Offshoring tax work: TPB requirements for Australian accounting firms

Australian accounting firms can use outsourcing and offshoring arrangements, but moving preparation work outside the firm's Australian office does not make the Tax Agent Services Act or Code of Professional Conduct disappear.

The practical obligations depend on the structure of the arrangement.

Published 27 August 2026. Last reviewed 27 August 2026. Technically reviewed by the Taxpartna tax team.

Important issues can include:

competence
supervision and control
review
confidentiality
client permission
information security
record keeping
reasonable care
quality management

For firms that use offshore preparation teams, one of the most important questions is therefore:

How does the Australian practice retain sufficient control and review visibility over the completed tax file?

This guide explains the issue from that perspective.

This article is general information only. It is not legal or tax advice and does not replace the relevant legislation, current TPB guidance or the registered practitioner's own judgement.

Can Australian tax practices offshore tax work?

Yes.

The TPB has long recognised outsourcing and offshoring arrangements in the tax profession.

Its current Guidance Statement TPB(GS) 31/2018 explains how existing Code obligations can apply when firms use these models.

Offshoring can include arrangements such as:

work performed by an overseas office within a wider organisation
employees located overseas
an external offshore accounting provider
an overseas contractor
technology or infrastructure hosted outside Australia

Not every model creates identical obligations. The legal entities involved and the nature of the service matter.

Outsourcing and offshoring are not necessarily the same thing

A firm can offshore without outsourcing. For example, an Australian accounting group may employ staff in an overseas office.

Likewise, a firm can outsource without offshoring by engaging an external Australian service provider.

The distinction matters particularly for:

third-party confidentiality
supervision
contractual arrangements
client disclosure and permission

Firms should therefore understand the actual legal and operational structure rather than simply describing everything as "our offshore team".

Does offshoring transfer responsibility?

It depends partly on who is providing the service.

Where an unregistered third party provides tax agent services on behalf of the practitioner, TPB guidance places particular emphasis on supervision, control and responsibility for the quality of that work.

The TPB also distinguishes an arrangement where the outsourced provider is itself a registered tax practitioner. Its guidance treats the review and supervision responsibilities differently in that situation.

That distinction is important. A firm's policy should identify whether people performing tax work are:

employees
contractors integrated into the practice
external third parties
registered tax practitioners
unregistered providers

The answer can affect the firm's responsibilities.

What does adequate supervision look like?

There is no universal staff-to-supervisor ratio or single offshore supervision template that fits every practice.

The TPB identifies a range of factors relevant to whether supervisory arrangements are adequate. These can include:

the competence and experience of the person doing the work
complexity of the work
level and depth of oversight
geographic proximity
whether there is substantive supervision rather than superficial checking
periodic or spot checks
quality-assurance mechanisms
training
control over how work is performed
documented processes
escalation of matters beyond a preparer's knowledge or authority

This means "the manager checks it at the end" may not, by itself, describe the whole supervision framework.

Good supervision begins before final review. It includes:

clear procedures
appropriate staff training
defined responsibilities
access to technical support
escalation
feedback
quality controls

Review and supervision are related but not identical

A final tax review cannot compensate for every weakness in staff supervision.

Consider an inexperienced preparer completing complex trust work with little Australian tax training. A five-minute reasonableness check at the end may not demonstrate a robust supervision process.

On the other hand, the final review remains an important control. It can test whether the completed file:

is internally consistent
contains required support
reflects the firm's final decisions
contains unresolved questions
is ready for practitioner sign-off

The two processes work together.

How should offshore-prepared tax work be reviewed?

A practical review should be risk-based rather than treating every line item identically.

Step 1: Confirm the file is complete

Before technical review begins, ask:

Are the current-year financial statements present?
Is the correct tax return version present?
Are material workpapers included?
Are supporting documents available?
Are prior review queries resolved?

An incomplete file creates review noise and wasted senior time. For more on this, see handling an incomplete tax file.

Step 2: Trace major values

Check important amounts across the file. For a company, this might include:

accounting profit
taxable income
tax payable
related-party loans
dividends
losses
major deductions
material tax adjustments

The review should identify where apparently final documents disagree.

Step 3: Review technical-risk areas

Depending on the client, that may include:

Division 7A
base-rate entity treatment
PSI
franking accounts
trust distributions
Section 100A
CGT
tax losses
international issues

The review process should be proportionate to the risk.

Step 4: Challenge unsupported conclusions

A completed workpaper is not necessarily a supported workpaper. Ask:

What is the source?
Is a client representation enough in this circumstance?
Does the file contain the agreement or resolution referred to?
Was last year's treatment copied forward?
Has something changed this year?

Step 5: Identify stale versions

Distributed teams can create version-control problems. For example:

1offshore preparer completes return
2manager updates financial statements
3tax reconciliation is changed
4original return remains in the tax software
5reviewer sees documents that no longer agree

The review process should focus on the final file, not assume that every document was updated simultaneously.

Step 6: Record material review points

Specific notes reduce back-and-forth. Instead of:

"Please check loan."

use:

"Director loan is $96,400 in the balance sheet and $89,600 in the supporting workpaper. Confirm final balance and update affected schedules."

Step 7: Escalate judgement-heavy matters

Offshore preparation can support scale. It does not remove the need for registered practitioners and experienced reviewers to deal with issues requiring Australian tax knowledge and professional judgement.

Confidentiality and client permission

Confidentiality deserves specific consideration where an external entity is involved.

Code item 6 generally prevents a practitioner from disclosing information relating to a client's affairs to a third party without client permission unless there is a legal duty to disclose it.

An external outsourced or offshore provider can constitute a third party.

The TPB recommends that client communications concerning disclosure clearly explain relevant matters such as who may receive the information and where disclosure may occur.

The precise position depends on the arrangement. Firms should therefore review:

engagement letters
client permissions
provider structure
legal entities involved
access arrangements
information-security controls
confidentiality obligations

Do not assume that sharing the same brand makes an overseas company the same legal entity.

Information-security controls

Depending on the arrangement, controls might include:

secure access
encryption
multi-factor authentication
access permissions
audit trails
segregation of duties
restricted downloading
data-location policies
confidentiality agreements
approved communication channels
controls over printing or local storage
processes for staff departures

Security should be assessed in the context of the actual service provider and information involved.

Record keeping where work is performed offshore

The TPB's record-keeping rules apply to relevant tax agent services provided by the practitioner or on their behalf. A firm's documentation process therefore needs to work across locations.

The final client record should not depend on:

an employee's personal email
an offshore chat thread nobody in Australia can access
a workpaper version stored outside the firm's document system
undocumented verbal instructions
review notes that disappear after the job is completed

Relevant working papers, advice, source information and review evidence should be retained according to the firm's obligations and policies. See tax agent record-keeping requirements.

Offshore-preparation quality-control checklist

Consider whether your firm's process addresses:

Who is actually providing the offshore service?
Is the provider a separate legal entity?
Is the person providing a tax agent service registered or unregistered?
Are responsibilities clearly defined?
Is appropriate client permission in place where required?
Are confidentiality controls documented?
Are staff trained in relevant Australian tax concepts?
Do preparers know when to escalate matters?
Can Australian supervisors see the underlying work?
Are periodic quality reviews performed?
Are material figures traced between workpapers and returns?
Is missing evidence clearly identified?
Are review queries tracked to resolution?
Are final versions clearly distinguishable from drafts?
Does the practitioner have enough information to reach their own conclusion?
Is the completed review retained in the client file?

Common problems in distributed tax workflows

The return was prepared before the accounts were final

Later financial-statement changes never reach the tax return.

The workpaper uses last year's assumption

The preparer rolls a tax treatment forward without confirming whether the underlying facts remain the same.

Supporting evidence exists but is not in the file

The preparer says a document was sighted but the reviewer cannot locate it.

A technical issue is treated as a preparation task

The preparer reaches a conclusion that required practitioner judgement.

Review notes are unclear

The Australian reviewer identifies a problem but writes a vague note that generates several unnecessary rounds of work.

Different file versions circulate

The preparer, manager and reviewer are working from different documents.

These are not exclusively offshore problems. They are workflow problems that can become more visible when preparation and review are physically separated.

Where Taxpartna fits

Taxpartna does not replace staff supervision or the practitioner's obligations when using outsourcing or offshoring arrangements. Its role is narrower.

Once a completed tax file is available, Taxpartna can act as an additional QA layer. It reads the submitted workpapers and supporting documents and can help the reviewer identify:

cross-document mismatches
single-source values
information that cannot be located
unreconciled workings
defined compliance matters requiring attention

The reviewer remains responsible for deciding what the issue means and whether the file is ready for sign-off.

That can be particularly useful in a distributed workflow:

preparation -> manager review -> Taxpartna QA -> practitioner assessment -> sign-off

Taxpartna augments the review. It does not replace supervision or registered practitioner responsibility.

Add another QA layer to completed tax files See Taxpartna features

Related resources

Primary sources

Important information. This article is general information only and is intended to support professional review. It does not replace TPB(GS) 31/2018, current TPB guidance or the registered tax practitioner's judgement. Taxpartna is a quality assurance assistance platform and does not provide tax advice, prepare returns or give final sign-off.