Background:
Prior to the
introduction of GST into Australia a bookkeeper's job was mainly one
of keeping the books up to what was known as “trial balance stage.”
It did not matter whether the bookkeeper was employed or contacted
to the business.
This all changed in 2000 when not only was GST introduced but the ATO
introduced the Business Activity Statement (BAS) which required business’s
to report monthly or quarterly on their GST, PAYG, FBT and provisional tax
obligations.
Overnight a bookkeepers role changed to one of keeping the books
and
preparing the BAS. For the employed bookkeeper life continued to be
reasonably straight forward – they continued to keep the books and in
addition either lodged the BAS for the business owner or sent it to the
Accountant for completion or checking and lodgement.
Contract Bookkeepers:
However for contract bookkeepers things were very different. Many business
owners were too small to justify employing a bookkeeper and consequently
opted to use a contact bookkeeper for as many hours as was required. Other
business owners balked at paying their Accountant the same high fee that
they charged for doing Income Tax returns for completing the BAS.
As a result of this demand the number of “contract bookkeepers’ grew
enormously and before anyone realised it around 8% of all BAS returns were
being lodged with the assistance of a contract bookkeeper.
Some people and organisations think that it is possible to be a contact bookkeeper
without giving GST or BAS advice – in other words only “keeping the books.”
They are dreaming. Whilst business owners may want their bookkeepers to be
everything from a filing clerk to a marriage counselor the core reason for
hiring a contact bookkeeper is to do the BAS.
The old legislation — Income Tax Assessment Act of 1936:
For the first couple of years after the introduction of GST contact
bookkeepers happily went about their business of “doing the BAS” and
charging their clients a fee for their service.
Then one day someone realised that a BAS
return was a Tax return and that under section 251L
of the Income Tax Assessment Act of 1936 (ITAA36) a bookkeeper may
not take a fee for giving “tax advice” (e.g. GST, PAYG, FBT etc) or lodging
a BAS return unless they are either:
Furthermore to be in breach of the Act is a criminal offence subject to a
$22,000 fine.
Well this realisation has been a slow happening and even today many
bookkeepers do not realise that they have been breaking the law – or
they
think they have been
getting around the law by various slight of hand which would be
unlikely to hold up in court. The reality is that the only reason that
bookkeepers are getting away with it is because the ATO has not
appeared to want to prosecute bookkeepers under the “old”
ITAA36
law.
It is true that on the ATO web site there were two examples that relate to
the use of so-called commercial accounting software packages to assist in
BAS preparation. These examples are the subject of an Australian Bookkeepers
Network (ABN) discussion paper that can be read at
http://www.austbook.net/upload/pdf/Norm&Barry.pdf.
ABN concludes that "While BAS-like reports
produced by commercial software packages provide some comfort against arithmetical error and the like, this is only a
very small part of the BAS preparation process. The accuracy and
completeness of the BAS-like report is still dependent on the manner in
which it has been configured by the bookkeeper, and the manner in which the
taxpayer’s transactions have been dealt with by the bookkeeper for GST and
income tax purposes. This requires a perceived competency on the part of the
bookkeeper, a perceived competency which S:251L is unwilling to bestow upon
bookkeepers unless they are members of specified professional associations
or are working under the direction of a registered tax agent.”
Enter the new legislation — Tax Agent Services Act 2009 which:
a)
that relates to:
-
ascertaining the liabilities, obligations or entitlements of an entity that
arise, or could arise, under a *BAS provision; or
-
advising an entity about the liabilities, obligations or entitlements of the
entity or another entity that arise, or could arise, under a BAS provision;
or
-
representing an entity in their dealings with the Commissioner in relation
to a BAS provision [e.g. lodging a BAS return]; and
b)
that is provided in circumstances where the entity can reasonably be
expected to rely on the service.
-
Defines a person registered to give
BAS advice and lodge BAS returns as a “BAS Agent”
-
Defines the
qualifications required by a BAS Agent
-
Defines the
relevant experience required by a BAS Agent
-
Prescribes that a
BAS Agent must hold professional indemnity insurance
-
Prescribes a Code
of Professional Conduct for BAS Agents
-
Prescribes a
civil penalty provision which will enable fines of up to $27,500 to be
inflicted on non-registered bookkeepers posing as BAS Agents by the issue of
a notice rather than the current criminal fine which requires a court
appearance
-
Details the
Transitional provisions from the “current” law to the “new’ law
The tax agent
services legislative package consists of the:
The “commencement date” of the new law will be 1 March 2010 and it is expected that the law will not only
be enforced by the Tax Practitioners Board
but also by registered BAS Agents “dobbing in” non-registered bookkeepers
offering BAS services.
Late entrants to the
bookkeeping industry: For bookkeepers entering the industry
after the beginning of 2010 there will be a significant “barrier to entry” in that they must:
-
hold one of the following academic
qualifications
-
and
-
or is a voting member of an RPA and
has undertaken at least 1,400 hours of relevant experience in the preceding
three years.
Work by an individual under the supervision and control of a registered
agent means that the bookkeeper must be either employed or directly
contracted to the registered BAS or Tax Agent.
BIA has the
answer:
By enrolling in
the Certificate IV Financial
Services (Bookkeeping) with the
Bookkeeping Institute of Australia
students are not only able to obtain an academic qualification that meets
the requirements of the new law but as membership of the Australian Bookkeepers Network
(ABN) is included in the enrolment fee they are also able to provide BAS
services legally under the old
law and thereby transition into the
new law.
ABN BAS Pty Ltd
with their BAS Wizard Partner Program, a quality assurance framework whereby
ABN BAS as a registered tax agent enables its member bookkeepers to
be working under their supervision and control whilst providing BAS agent
services for a fee or engaging in other conduct connected with providing
such services. ABN BAS will also hold the relevant BAS Agent
credentials that will allow a bookkeeper to gain relevant experience under
the new law. The program will also contain a Register for the aspiring
bookkeeper for use in recording their 1,400 hour obligation.
Transition
rules:
For bookkeepers entering the
industry before the “commencement date” of 1 March
2010 they will be able to rely on the provision in Part 2 Section 5
of the transition rules “Special rules relating to the provision
of BAS services by certain individuals” if:
(a) immediately
before the commencement date they are providing a BAS service within the
meaning of subsection 251L(7) of the old (“current”) law; and
(b) during the 6
month period beginning immediately after the commencement date, the
individual notifies the Board, in writing, that he or she satisfies
paragraph (a);
then the individual is taken to be a registered BAS agent within the meaning
of the new law for the 2 year period beginning immediately after
commencement.
This transition rule not only allows bookkeepers who are legal under the
current law to immediately become legal under the new law, but also gives
the bookkeeper an additional two years to obtain their Certificate IV and
more importantly the 1,400 hours working under the supervision and control
of a registered agent.
Proving
1,400 hours of relevant experience
by transition bookkeepers: The following actions should be
taken by a bookkeeper as soon as is
practical in order to establish
evidence of relevant experience:
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