Small Busienss to benefit from New Tax Laws

Small Business Benefits from New Tax Laws
Many business owners will not be aware of the commencement of the new Tax Agent Services Act 2009 that commenced on 1 March this year. Among a number of reforms, including the centralisation of the administration of tax practitioners under a single national Tax Practitioners Board, the Act will establish a new category of registered agents - BAS agents - in addition to general Tax Agents.

The need for a regulatory regime for independent bookkeepers contracting directly with small business clients to provide them with account keeping and BAS preparation services is long overdue. The absence of appropriate regulatory controls over practitioners who can provide these services and the increasing trend for small businesses to outsource their bookkeeping services, has resulted in an influx of unqualified, inexperienced bookkeepers to enter the market for these services. Another contributing factor was the reliance upon the various software programs to produce compliant reports upon which BAS and income tax returns are based without the input of an appropriate level of accounting expertise. The consequences were numerous errors and omissions in both BAS and general income tax returns based upon the data produced or excessive costs accountants were forced to impose on clients to rework the accounts.

As a contrast the new law will require BAS agents to obtain a Certificate IV qualification in Accounting or Bookkeeping that includes an educational element covering BAS preparation and demonstrate they have at least 1,400 hours experience in account keeping over the preceding three years.

The legislation also includes a Code of Professional Conduct that imposes high standards of honesty and integrity; competency; independence, acting in the best interests of a client; confidentiality; the requirement to obtain professional indemnity insurance cover; and a commitment to maintain the knowledge and skills relevant to the tax agent service a BAS agent provides. There are an array of sanctions for non compliance with the Code that can invoke varying orders or directions from the Board from simple cautions to suspending a registration depending upon the severity and frequency of the offence(s).

The Act also imposes civil penalties for breaches of the law, including providing services if the individual is unregistered; advertising tax agent services; or employing or using the services of a deregistered entity.
A feature of the legislation from the viewpoint of small business owners/proprietors is the so-called ‘safe harbours’ provision that effectively ensures that in certain circumstances , taxpayers who engage a BAS agent and provide them with all the relevant information to enable them to prepare and lodge a document (for example a BAS) on time or that includes a false or misleading statement, will not be liable for an administrative penalty that results from the BAS agent failing to take reasonable care.

Association of Accounting Technicians Australia is the leading professional association representing BAS agents and other paraprofessional accountants (bookkeepers) engaged in account keeping roles in small businesses in this area. The Association ensures its members are appropriately qualified and experienced; maintain their knowledge and skills through continuing education programs and are subject to high ethical standards.

Therefore to avoid the risk of penalties for non compliance after 1 March 2010 small business owners/proprietors are urged to engage a registered BAS agent and to ensure the account keeper you engage has an appropriate level of professionalism, their preference should be for an AAT Australia member.

Robert Hutt is the part time Technical and Education Manager of the Association of Accounting Technicians Australia (www.aat.org.au