If you’re in business, you’re likely using a tax accountant to prepare your business tax returns, business activity statements, and financial reports. If you’re an individual taxpayer, you’re likely using a tax agent to prepare your personal tax return each year. But how can you be sure that the accountant or tax agent you’re working with is in fact a registered tax agent and a professional accountant?
In Episode 4 of the Small Business All Figured Out podcast, Corinne and Sheryl discuss what you need to know to ensure that you’re working with a professional accountant, bookkeeper or registered tax agent.
To listen, click play below.
The ATO and the Tax Practitioners Board (TPB) continually warn the public to be weary of dealing with an unregistered tax agent because there are, unfortunately, a number of people and businesses out there posing as registered tax practitioners.
These rogue practitioners are essentially ‘fooling’ the public and putting taxpayers and businesses at considerable risk. The Tax Practitioners Board (TPB) received 75 complaints about unregistered tax advisers within the six months to March 2019. The TPB takes these complaints very seriously and in July 2019 there were 37 cases being investigated. The worst of these cases are brought to the Federal Court of Australia for prosecution.
The risks of using an unregistered tax practitioner
As a business owner or an individual taxpayer, knowing whether your accountant is appropriately qualified and registered should matter to you. Using an unregistered tax agent can cost you thousands of dollars in tax bills and penalties, not to mention cause you unnecessary stress.
Did you know that only Registered Tax Agents have the legal right to charge a fee to prepare and lodge tax returns? Furthermore, are you aware of the risks associated with using the services of a non-professional accountant or unregistered tax agent?
These risks include:
- Costly errors – as a result of the unregistered tax agent lacking competence
- A lack of security and privacy – unregistered tax agents may misuse your personal and confidential information for their own selfish gain. Sharing your personal information with an unregistered agent puts your personal and financial affairs at risk.
- Unethical conduct – failure to comply with professional and ethical standards.
- No professional indemnity insurance cover – therefore no compensation is available in the event you suffer any losses due to an error caused as a result of their service.
- A lack of legal recourse in the event that something goes wrong i.e. ATO fines, penalties, audits with no protection from the Safe Harbour Provisions.
What are Safe Harbour Provisions?
Safe Harbour is a part of the Taxation Administration Act 1953 which states that you will not be liable for penalties under certain circumstances if you have used a registered tax agent. For instance, if your tax agent failed to lodge a document on time or made an error after you’d provided all accurate documents, your tax agent will be held accountable. However, you will be held accountable for any such errors caused by an unregistered tax agent.
Why should you use a Registered Tax Agent?
When you use the services of Registered Tax Agent you will avoid the risks outlined above. You’ll also have peace of mind and confidence that your tax agent has the relevant experience, qualifications and competence to prepare your individual tax returns, business tax returns, and business activity statements.
And, should a situation arise where the Registered Tax Agent has allegedly breached any of their obligations you have some recourse to pursue this matter.
What education and experience should a Registered Tax Agent have?
Generally, a registered tax agent needs to have completed an appropriate Australian university degree which includes the specific subjects of Australian Taxation Law and Commercial Law. They must have at least 12 months relevant experience in the past 5 years.
They must hold an appropriate level of professional indemnity insurance cover and they are reviewed annually to ensure that they meet the ‘fit and proper person test’ and comply with the TPB’s Code of Professional Conduct.
Furthermore, Registered Tax Agents must maintain their technical knowledge of tax law by undertaking regular education. And where a registered tax agent is also a member of a professional accounting body, the level of ongoing education required is even greater.
Tax Time Tips
- Check your tax practitioner is registered on the TPB register or ask if they can provide you with their Tax Agent Number and Certificate of Registration.
- Check if your accountant or tax practitioner holds a professional membership with one of Australia’s three accounting bodies, being CPA, CA or IPA.
- Never share your myGov password with anyone – doing so puts your personal information at risk.
- You should never be charged a fee by anyone to lodge or prepare your tax return through your myGov. If you are charged a fee, this could mean you’re dealing with an unregistered practitioner.
Australian tax law is complex and the benefits of using a Registered Tax Agent are considerable. Choose your tax agent wisely and ensure that they are appropriately registered to competently handle your individual tax returns and business tax returns.
We’re Registered Tax Agents and Accountants in Melton who have a thorough knowledge of the tax law to deal with even the most complex of tax matters.