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Tax Dispute

Recent TPB wins: A reminder that supervision of staff is key

The Tax Practitioners Board (TPB) has dramatically increased its investigation of tax agents who are not complying with their tax agent obligations. This is the result of intensive auditing of a tax agent and their business by the ATO who refer non-complying tax agents to the TPB for investigation.

The ultimate sanction by the TPB is for a tax agent’s (and their company tax agent) registration, is to be suspended for a period of up to five years.

Issues

The type of issues the ATO and TPB are most concerned about are:

  • Tax agents overclaiming work expenses on behalf of a client
  • Late lodgement of returns by tax agents
  • Outstanding personal tax debts
  • Lack of supervision of workers by tax agents.

Supervision of workers

Supervision is an issue we see repeatedly; particularly where offshore workers are used or employees are working remotely.

A tax agent is required to have personal physical oversight of work undertaken by staff.

The supervision must be substantial.  The TPB states that merely checking a document prepared by an unskilled employee to determine whether the contents of the document seem reasonable does not demonstrate a sufficient degree of supervision and control – there must be substantial supervision

A tax agent must conduct ‘spot’ checks of material prepared by staff and supervision of office work

Physical proximity to the person carrying out the work to the tax agent may suggest a lack of control.

Failure to supervise most frequently occurs where most commonly occurs where a tax agent engages an offshore worker as an employee or contractor and does not closely supervise them

How can we help with a TPB review or TPB investigation?

When a tax agent is investigated it is critical that all of the relevant facts are put to the TPB in order to allay their concerns.  Waterhouse Lawyers has successfully represented a number of tax agents so that tax agents were not suspended or deregistered.

Examples

Case 1

Basic Facts: 4 company tax agent registrations being investigated. One common director over all 4 companies (who is not an individual registered agent).

Key Concerns from TPB:

  • Substantiating amendments and deductions made to tax returns
  • Meeting taxation obligations for company
  • Issues with registered supervising individually registered tax agents
  • Privacy of taxpayer information concern as companies shared office space
  • Failing to meet employee obligations
  • Whether the director (non-tax agent) was a fit and proper person to act as a director of the company tax agents
  • Supervision of employees

 Outcome:

  • Successful surrender of two tax agent licences (as requested by director of companies)
  • No further action outcomes for other two tax agent companies

Case 2

Basic Facts: Individual registered tax agent under investigation. Third-party contractor involved in completing some work and referrals. Majority of employees were located overseas.

 Key Concerns from TPB:

  • How tax law calculations were conducted
  • Supervisory arrangements for overseas employees
  • Arrangement between company and third-party contractor
  • Concern about engagement letter provided to clients
  • Concern about whether approval was received from client prior to lodgement of tax returns

 Outcome:

  • No further action outcome for individual tax agent and educational direction.

 

How can Waterhouse Lawyers help?

If your company/partnership tax agent registration, or individual tax agent registration is being reviewed or investigated, Waterhouse Lawyers is best placed to respond on your behalf. Please call us on 02 9252 8746 or email us at tax@waterhouselawyers.com.au to discuss your matter.

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