So does your bookkeeper need to be a BAS agent?
This morning someone in my network shared an article from Accountants Daily about myth busting bookkeepers and BAS agents – you can read the article here. I’m a firm believer that a good bookkeeper is one of the most valuable tools a business can have. I’ve written an article on Linkedin about who needs bookkeepers. I also understand why we have regulations about what a bookkeeper who is not a BAS agent or effectively controlled and supervised by a BAS agent can do. This provides protection for you the client. If you aren’t using a registered agent then you can’t access the Safe Harbour provisions under the legislation.
The thing is I think it’s really important to know who your bookkeeper is and it is actually illegal for a bookkeeping business that is not a BAS or TAX agent to charge a fee for providing BAS services.
So here’s my take on some of the myths accountants daily have busted, a bit more information on where these myths come from!
Myth number one: “Data going overseas should not be allowed”
Well yes this is just silly. Basically if you do anything online your data is going overseas. The issue is when using a BAS or Tax Agent is you need to be informed and give consent if your data is going overseas. In fact, under the Code of Professional Conduct regarding confidentiality of client information even if your agent uses offsite data storage systems they need to have your signed consent. This means they have to let you know what information of yours will be disclosed, to whom it will be disclosed to and where the disclosure will be made. For us we do this in a signed engagement letter – something all agents need to provide and that you need to read.
Myth number two: “All people working in a bookkeeping business have to have a BAS agent registration”
No they don’t. There does need to be somebody in the business however that does hold a BAS agent registration.
We need to take a step back and look at who needs to be a registered BAS agent. If someone, or an entity, is charging a fee and is not an employee of the business for which the BAS services are being provided there needs to be a registered BAS or Tax agent either completing the service or providing sufficient and effective supervision and control of the person completing the service.
Examples of BAS Services are:
- Applying to the Registrar for an ABN on behalf of a client
- Coding transactions, tax invoices and transferring data onto a computer program for clients through processes that require the interpretation or application of a BAS provision (this means dealing with transactions that include GST)
- Confirming figures to be included on a client’s activity statement
- Completing activity statements on behalf of an entity or instructing the entity which figures to include.
- Confirming the withholding tax obligations for the employees of a client
- Preparation and provision of a payment summary that may include reportable fringe beneifts amounts and the reportable employer superannuation contributions
- Registering or providing advice on registration for GST or PAYG withholding
- Services under the Superannuation Guarantee (Administration0 Act 1992 to the extent they relate to a payroll function or payments to contractors
- Dealing with superannuation payments made through a clearing house
- Completing and lodging the Taxable payments annual report to the ATO on behalf of a client
- Sending a TFN declaration to the Commissioner on behalf of a client
So basically if you contract a bookkeeper to process transactions that include GST or to do your payroll there needs to be a BAS agent in the business you are paying for the service.
How do you know if there is a BAS agent providing adequate supervision and control? To start with check whether whoever you are paying for the service is a registered BAS or Tax Agent. You can search the register here.
The Tax Practitioners Board says that BAS and Tax Agents must ensure that any agent services provided by them or on their behalf are provided competently. When the entity that sends you the bill is a company or partnership they have to have enough registered agents to provide supervision and control. This is a difficult one to check. The TPB looks at lots of things to determine if the BAS or Tax agent really is supervising. Some things they consider is the actual physical location of the person performing the work as compared to the agent, ensuring that proper workpapers are prepared, ensuring the workers engaged to do the work have an adequate level of education. You can find more information including actual cases where there wasn’t adequate supervision and control here.
Why do we care about these rules?
We have recently taken over a practice where there wasn’t adequate supervision and the agent resigned when the tax practitioners board investigated. In this case the agent was operating as a sole trader. He resided in Canada for at least the last five years and his worker was here in Australia. They did have online workpapers but the TPB felt that due to him physically not being in the same country the supervision wasn’t there. It is something that has to be considered on a case by case basis.
The best course of action is to ask who is the registered agent and be sure you can contact them directly if you have any concerns.
Remember – if the person doing all this work is your own employee none of this matters.
Myth number three: “Business owners should not be using bookkeepers or bookkeeping firms who are based outside of Australia.”
Another silly comment. Australian business can choose their BAS and Tax service provider. If that includes an off shore service and they are comfortable and provide consent go for it.
Personally, we have a business value that we employee local staff. We are firm believers in growing our local economy and to do that we need to provide employment opportunities locally. That’s our choice – everyone gets to make their own.
So why do we think it is important to know what the rules are around your bookkeeper and BAS agent?
Because we have seen business owners unknowingly choose unqualified bookkeepers and their financial information ends up a dogs breakfast. Tax returns can’t be prepared and GST returns need to be amended. It is not just the financial cost to fix the problem – but the stress, anxiety, staff morale – the works. Asking a few simple questions at the start of your working relationship with your bookkeeper and/or BAS agent will help you develop into a formidable team.
You can find our recommendations for a BAS agent here.