“Can I get everyone’s opinion on charging a fee for tax returns as a % of refund? Have been told by a client about an agent lodging tax returns, getting wonderful results and charging a % of said refund…”
Within hours of this post going up in the Small Business Accountants & Advisers Brains Trust Australia, the replies came flooding in quickly, and not one of them said it was a good idea.
The message from the industry was clear: don’t do it.
Charging a percentage of a tax refund might seem client-friendly or results-driven, but it’s actually one of the fastest ways to destroy trust, break ethical guidelines, and potentially get investigated by the TPB.
And that’s not just opinion. The official guidance from CAANZ, CPA Australia, and the TPB all points in the same direction.
Here’s the breakdown – and what you should be doing instead.
What does “charging a percentage of a refund” actually mean?
Let’s spell it out.
You do a client’s tax return. They get a $4,200 refund. Your fee is 15% of the refund. That’s $630.
It sounds simple. But here’s the catch:
• What happens if the refund is just $200?
• What if they owe tax?
• What if the return is audited and the refund is reduced or reversed?
Now your entire business model is tied to something you don’t control – and worse, you’ve just created an incentive to inflate claims to increase your own pay.
That’s where the trouble begins.
It creates a conflict of interest – and all three industry bodies say so
If you benefit financially from increasing your client’s refund, you’re no longer independent. Your objectivity is compromised.
CAANZ and CPA Australia: strong guidance
Both CAANZ and CPA Australia follow the APES 110 Code of Ethics for Professional Accountants. Section 410 makes it clear:
“A self-interest threat to objectivity is created when a Firm may receive a contingent fee for providing Professional Services.”
Contingent = tied to the result. That’s exactly what a refund-based fee is.
Both bodies expect members to avoid these situations – or put safeguards in place. But in practice, there are no reasonable safeguards for a pricing model that financially rewards you for maximising refunds.
If you’re a member of CAANZ or CPA, the writing is on the wall. Don’t do it.
The TPB sees this as a red flag
The Tax Practitioners Board Code of Professional Conduct doesn’t outright ban percentage-based fees – but it doesn’t have to. It clearly states:
• You must act in your client’s best interests
• You must manage conflicts of interest
• You must act with integrity and honesty
Charging a % of the refund directly conflicts with these principles.
In fact, in its 2023 Senate submission, the TPB went further:
“Performance-based fees may create a perception (if not a reality) that the practitioner’s financial interest conflicts with their professional and ethical duties.”
They also noted this type of model undermines trust in the tax profession and can lead to agents encouraging or enabling inflated refund claims – whether consciously or not.
There are already real-world examples of this going wrong
Practitioners have been deregistered or faced disciplinary action for similar fee arrangements.
In one case, an agent was charging 20% of refunds. Many of the clients were construction workers and warehouse staff – none of whom had any idea their deductions were exaggerated. The ATO audited dozens of the returns. Most were reversed. Some clients had to repay thousands. The agent was struck off.
Even if you’re doing everything ethically, this pricing structure invites suspicion.
If it looks like a red flag, and smells like a red flag… it’s going to get treated like one.
It also creates major client issues
Aside from ethics and compliance, refund-based pricing is a nightmare when it comes to client relationships.
What happens when:
• The refund is lower than expected, and they question your value?
• The ATO withholds or offsets part of the refund?
• They receive a bill instead of a refund?
You’re left trying to justify your value based on a result you don’t fully control. That’s a poor experience for the client – and an even worse one for you.
You’re also sending a message: “The more I get you back, the more I get paid.” That’s not trust – that’s a transaction.
It attracts the wrong clients
These pricing models bring in refund-hunters, not long-term, value-aligned clients.
You’ll end up with people who:
• Shop around for the biggest refund
• Push for aggressive deductions
• Disappear when you talk about strategy, forecasting or advisory
They’re the first to go silent when the ATO comes knocking – or worse, blame you for everything that goes wrong.
And “R&D does it” isn’t an excuse
Some point to R&D consultants, who often charge based on the refund outcome. But:
• That area is highly regulated
• Many of those firms are now under ATO or ASIC scrutiny
• Even there, the trend is shifting away from outcome-based pricing
If anything, R&D contingency models prove the point: when the money is tied to the outcome, it invites questionable behaviour.
Here’s how you should be charging
There are better, safer, and more scalable pricing models that maintain trust, professionalism and compliance.
Some examples:
• Fixed-fee per return – based on complexity (e.g. individual, sole trader, company)
• Tiered pricing – bundled services including BAS, GST advice, tax planning
• Monthly subscription – predictable income, client access to services year-round
• Value-based – tied to the actual work or outcome you control (e.g. time saved, advice implemented), not the tax result
These models build client loyalty, trust and recurring revenue – without ethical compromises.
The summary: it’s not illegal, but it’s clearly wrong
Let’s be clear: charging a % of a client’s tax refund isn’t technically illegal. But based on the guidance from:
• CAANZ
• CPA Australia
• TPB
…it’s unethical, unprofessional and high-risk.
It creates a direct conflict of interest. It puts your registration at risk. It attracts the wrong clients. It breaks down trust. And it opens the door to behaviour that goes against everything the industry stands for.
If you’re serious about running a professional, compliant, and client-centric practice – don’t do it.
Final word: the fee isn’t worth the fallout
You didn’t become an accountant to cut corners. Charging a percentage of a refund might seem clever in theory – but it’s a reputational time bomb.
There are too many good pricing models out there that build trust and grow your firm the right way.
Let the agents who want to take shortcuts find their own path. You’ve got bigger things to build.
Want more insights like this – practical, ethical, and real?
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