Delegating authority is a normal part of running and growing a business in Australia. Whether you need a staff member to handle routine admin, an accountant to liaise with the ATO, or a lawyer to correspond with a regulator, having a clear letter of authority to act on behalf helps things get done without bottlenecks.
But what exactly should a letter of authority include? When is it legally effective? And how do you avoid giving away more power than you intend?
In this guide, we’ll step through how a letter of authority works in Australia, common use cases, what to put in one, and the risks to watch. By the end, you’ll have a practical checklist you can use to draft a document that suits your business and protects your interests.
What Is a Letter Of Authority To Act On Behalf?
A letter of authority to act on behalf is a written instruction from a business (the principal) authorising a specific person or organisation (the agent) to do certain things in the principal’s name. It can be narrow (e.g. collect documents) or broader (e.g. communicate with a regulator, make certain decisions, sign specified forms).
At its core, it answers four questions: who is acting, for whom, for what purpose, and for how long. Because it’s simple and quick to implement, businesses use it for day-to-day delegation and to streamline dealings with external parties.
If you’re new to the concept, this overview sits alongside our explainer on an authority to act form, which breaks down common formats and when they’re used.
Key elements you’ll normally include are:
- Principal details: The legal name, ABN/ACN (if relevant) and address of the party giving authority.
- Agent details: The individual’s or company’s legal name and contact details.
- Scope: A clear description of what the agent is allowed (and not allowed) to do.
- Duration: Start date and end date, or an “until revoked” statement.
- Execution: How it’s signed, by whom, and any witnessing or acceptance required.
Clarity is everything here. The more precise your scope and limits, the less room there is for misunderstanding or disputes later.
When Will Your Business Use One?
You can tailor a letter of authority for many practical situations. Common examples include:
- Accounting and tax administration: Authorising your accountant or bookkeeper to access financial records or liaise with the ATO (for example, about BAS or payroll queries). For tax questions or advice, make sure you’re working with a registered tax or BAS agent.
- Legal representation: Enabling your lawyer to correspond with a regulator, respond to a complaint or manage a specific file on your behalf.
- Operational delegation: Allowing your operations manager to approve purchase orders up to a limit, sign delivery dockets, or implement defined policies while you’re away.
- Government registrations and filings: Authorising a team member or adviser to lodge forms with ASIC or update your business details.
- Vendors and consultants: Letting a third-party consultant undertake steps under a Consulting Agreement (for example, contacting suppliers to collect data) where a formal letter of authority helps them deal with external parties efficiently.
If you operate in a regulated sector (for example, financial services, real estate or conveyancing), there may be prescribed forms or extra wording required by the relevant authority or industry body. In most cases, there’s no “state-specific” template you must use in Victoria or elsewhere, but the recipient may have its own format. Always check the recipient’s requirements before you issue the letter.
How To Draft an Authority To Act (Step-By-Step)
You don’t need a long or complicated document. You do need one that’s accurate, specific and properly signed. Use this step-by-step checklist as you draft.
1) Identify the parties and capacity
Set out the full legal name, ABN/ACN and address of the principal and the agent. If the principal is a company, include the capacity of the signatory (e.g. director, sole director). This helps recipients quickly confirm the authority comes from the right person.
2) Define the scope with precision
Describe what the agent is authorised to do and any limits. Helpful phrasing is “to for the limited purpose of .” Consider including:
- Specific tasks (e.g. “submit BAS for Q1 FY2024–25” or “negotiate and execute supply agreements up to $20,000 including GST”).
- Information access (e.g. “access month-end sales reports” or “view account statements”).
- Financial caps, approval thresholds or categories excluded from the authority.
- Whether the agent can further delegate (usually, prohibit sub-delegation unless you expressly allow it).
3) Set the timeframe and triggers
Insert a start date and either an end date or “until revoked in writing.” If it’s for a single transaction, link the authority to a clear trigger (e.g. “until settlement is complete”). Tying the authority to time or milestones reduces the risk of it drifting on longer than you intended.
4) Decide how it will be executed
Make sure the letter is validly signed. If your company is the principal, consider executing in accordance with section 127 of the Corporations Act to give counterparties confidence; our primer on signing under section 127 explains the options.
For the mechanics of signing, it’s worth revisiting what constitutes a valid signature and when a wet-ink or electronic signature will be accepted. Many recipients accept secure e-signatures, but banks and certain agencies may have stricter rules.
Some businesses also ask the agent to counter-sign the letter to confirm they accept the responsibilities and limits you’ve set.
If the authority relates to a specific contract (for example, a consultant engaged on a fixed scope), reference that document in the letter. Provide a primary contact at your business for queries, and indicate how the agent should escalate issues that fall outside scope.
6) Keep a clear record
Save a signed copy where your team can find it quickly. If external parties will rely on it, send it from an official email account or on letterhead so they can validate it without delay.
Simple template starter
Date:
To whom it may concern,
authorises to act on our behalf for the limited purpose of .
This authority starts on and ends on . The Agent must not enter into commitments exceeding or delegate this authority to any other person.
Signed for and on behalf of :
____________________________________
Name:
Position:
Date:
Accepted by the Agent:
____________________________________
Name:
Position:
Date:
Is a Letter Of Authority Legally Binding in Australia?
Yes-when it’s properly authorised and executed, a letter of authority is generally binding as between the principal and the agent, and can be relied on by third parties who receive it. It functions as a clear expression of authority within the scope you define.
A few important limits to keep in mind:
- Who can grant the authority: The person signing for the principal needs legal power to do so (for example, a sole trader, a director with appropriate internal authority, or someone expressly authorised under your governance documents).
- Statutory and fiduciary duties: Some duties can’t be delegated (e.g. certain directors’ duties). Use these letters for operational delegation-not to offload non-delegable legal obligations.
- Form requirements from the recipient: Some institutions (banks, government agencies) insist on their own forms or verification. If a recipient requires its own template, you’ll need to follow that process even if your letter is otherwise sound.
- Email vs formal letter: Many organisations accept an emailed authority if it’s clear and verifiable, but high-value or sensitive matters often require a signed letter (sometimes with identity checks). Confirm the recipient’s policy first.
- Power of attorney vs letter of authority: A letter of authority suits everyday business tasks. More significant powers-particularly for property transactions or broad financial decisions-may require a power of attorney, which is a different instrument with stricter witnessing and, in some cases, registration or lodging requirements depending on the jurisdiction and the asset involved.
How To Limit, Monitor and End The Authority
Good governance is about staying in control. Build these safeguards into your letter and your internal processes.
Use clear limits
- Task-based scope: Tie the authority to specific tasks or a single transaction (e.g. “for the ABC tender only”).
- Money caps: Set dollar thresholds for approvals or commitments.
- No sub-delegation: State that the authority can’t be delegated unless you consent in writing.
- Information boundaries: Define what records the agent may access (and what’s off-limits).
Monitor and communicate
- Internal register: Keep a simple register of live authorities (who, what, when it ends) so you can review and update them.
- Notify third parties: When granting or revoking authority that external parties rely on (e.g. a bank), notify them in writing and keep proof of delivery.
- Expiry reminders: Use calendar reminders to avoid “set and forget” risk, especially for authorities that auto-renew until revoked.
End the authority cleanly
State in the letter how revocation works (for example, “revoked when we email notice from a company domain”). When it’s time to end it, send a short revocation notice to the agent and any third parties who relied on it. If the authority is linked to a larger agreement and you’re ending that engagement, a formal Deed of Termination may also be appropriate.
Authorities typically end on the date you set, once the task is completed, when revoked in writing, or if relevant business changes occur (e.g. a change in control of the company). If a dispute arises about the timing or scope of revocation, contemporaneous written records will be your best friend.
What Other Documents Should You Have?
A letter of authority is one tool in your broader legal toolkit. Depending on your business model and stage of growth, consider these foundational documents and policies:
- Employment Contract: If you’re delegating to employees, a well-drafted Employment Contract sets clear expectations, duties, confidentiality obligations and IP ownership.
- Privacy Policy: If you collect personal information (for example, customer data through your website or CRM), a Privacy Policy explains how you handle that data and helps you comply with the Privacy Act.
- Shareholders Agreement: If you have co-founders or investors, a Shareholders Agreement manages decision-making, share transfers and dispute resolution so you’re aligned at the top.
- Company Constitution: If you operate through a company, a fit‑for‑purpose Company Constitution supports good governance, including who can authorise what internally.
- Consulting or Services Agreements: When engaging contractors or consultants, use written terms (such as a Consulting Agreement) to define deliverables, confidentiality, IP and authority boundaries.
You won’t need every document on day one, but most growing businesses quickly benefit from putting these foundations in place. They work alongside your letters of authority to create clarity for staff, advisers and counterparties-and they reduce the chance of costly misunderstandings.
Practical drafting tips and common pitfalls
- Don’t grant blanket powers unless truly necessary: Narrow is safer. If things change, you can issue a new letter with adjusted scope.
- Use plain English: Write your scope in everyday terms so anyone can see what’s in and out.
- Match the recipient’s requirements: If a bank, the ATO or ASIC requires a particular form or verification, follow that process even if you’ve drafted your own letter.
- Keep tax boundaries clear: For ATO and BAS matters, ensure a registered tax or BAS agent is authorised where advice or lodgements are involved.
- Train your team: Make sure managers understand when to ask for a letter of authority rather than accepting informal “permission.”
Key Takeaways
- A letter of authority to act on behalf is a practical way to authorise someone to do specific tasks for your business-be clear about who, what, and for how long.
- Define scope precisely (tasks, caps, information access) and include start/end dates or “until revoked” wording to stay in control.
- Execution matters: ensure the right person signs and consider company execution methods under section 127 for added certainty.
- Check whether the recipient (bank, ATO, ASIC or another agency) has its own form or verification steps-follow those where required.
- Build good hygiene around delegation: keep a register, notify third parties when granting or revoking, and use a Deed of Termination when an underlying engagement ends.
- Support your authorities with core documents like an Employment Contract, Privacy Policy, Shareholders Agreement and Company Constitution as your business grows.
If you’d like a consultation on creating, reviewing or updating a letter of authority to act on behalf for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
