How do you know if your tax agent is a good one or not? Is the size of your refund the best way to judge?
Tax Agents are governed by the Tax Agent Services Act 2009 (TASA), the Tax Agent Services Regulations 2009 (TASR) and other sections within legislation such as the Tax Administration Act 1953. These laws provide certain obligations that tax agents must abide by and a professional code of conduct. This code contains four main areas:
- Honesty and Integrity
Some of the ways tax agents can demonstrate they are meeting these obligations is by using letters of engagement when you use their services. These documents explain what the agents obligations are and, just as importantly, what your obligations are and also what to do if you are not happy with the outcome. They can’t hang on to your refund – you must get it within two weeks of them receiving and if they have a trust account it must be audited annually.
One of the most important obligations a Tax Agent has is that they must take reasonable care in ascertaining a clients affairs. This doesn’t mean they have to do a complete audit but it does mean they need to be satisfied that you have the documentation to substantiate your claims. They also have to make sure they apply tax laws correctly. They also cannot knowingly include something they know is false even if you tell them to.
How do you know if your agent is taking reasonable care? They should ask questions about your deductions, what you can claim and what you can’t. They should be able to explain why something is not claimable. If you use a computerized system like MYOB they should be checking that expenses included in the system are actually deductible. A good example is systems with payroll where a superannuation expense is shown in the profit and loss but a creditor is in the balance sheet as it hasn’t actually been paid. To be deductible to a business superannuation must be physically paid to a complying fund within the allowable time limits.
At the end of the day the final responsibility for the information in your tax return is yours. If the ATO decide to take a closer look the onus will be on you to provide substantiation and reasons as to why items have been included in your return. This is why you need to be sure that your tax agent understands tax law and is honest about what is included in your return. It is the taxpayer that cops the fines and interest if an audit goes against you, although if you can prove the tax agent didn’t take reasonable care you may be able to avoid penalties.
The tax agent that gets you the biggest refund isn’t the one you want. You want an ethical, honest and well trained tax agent that gets you the correct assessment.
If you want know more about Tax and BAS agents obligations they can be found on the Tax Practioner Board website.
If you want to find a registered tax or bas agent in your area you can search here.