Welcome!
Hi There,
Today’s newsletter covers some important updates from the TPB due to recent changes and new guidance.
Unfortunately because of our friends at PWC and rogue tax agents, the TPB has been issuing a lot of new guidance.
We're all trying to understand how this may affect us.
If you have any questions or are unsure about anything, I'm here to help. Just reach out!
Let's get into it!
Medicare Levy Exemption
If your client is not entitled to Medicare, the client must apply for a Medicare Entitlement Statement through Services Australia. This applies to anyone that has an exemption including visa holders and part-year exemptions.
The statement must be received by the time we lodge the return. I realise there may be some pushback from clients as other tax agents out there may not request this. However, with the new rules (discussed below), and ATO data matching, it is important that we get this right.
What will happen if they don't get it?
- They will be charged Medicare levy - 2% of their income
- They may be charged interest if incorrectly declared
- You may need to lodge an amended tax return - you likely will spend time to fix up at your cost.
It is crucial that we comply with these new rules to avoid any issues with both the ATO and our clients.
If they have already lodge their tax return, please ensure that you still ask them to get it as I'm sure the client would not like to pay 2% of their taxable income to Medicare if they don't need to.
You can read more on the ATO website here.
The client can apply here.
Letter of Engagement
This is a reminder that we must get a letter of engagement signed by all clients. If there are multiple people in a group, including multiple directors of a company, or trustees of a trust, they must all sign a letter of engagement.
With groups, in my opinion, it is fine to have one letter of engagement as long as all the people and entities are listed on it and all parties sign the letter of engagement.
With individuals, a form is absolutely fine. As you may have seen in my forms, I link them to the terms and conditions on my website, ask for permission to add them to the ATO portal and they sign the form. You can view my form here.
You can read more on the TPB website here.
Breach Reporting and Whistleblowing
The TPB have put out new guidance on breach reporting and whistleblowing.
Essentially, if you see something that is in breach of the Code of Professional Conduct, we need to report this. This includes:
- reporting other tax agents for serious misconduct (think of clients that come with dodgy deductions or lack of paperwork)
- self reporting if you have made a breach yourself.
What does it mean?
- Report any serious breaches by other tax agents.
- Report clients who refuse to amend incorrect returns.
- Ensure compliance with all tax laws and TASA.
- Maintain all proper supporting documentation, including letters of engagement, invoices, receipts, Medicare Entitlement statements, logbooks, etc
Key Points:
- Report significant breaches within 30 days.
- Includes self-reporting and reporting other practitioners.
- Failure to report can lead to penalties including suspension or termination of registration.
Action:
- Ensure you understand your reporting obligations and maintain proper documentation.
- Contact us if you need clarification or support regarding breach reporting requirements.
If you have any concerns, please let me know so we can work out a plan.
You can read more on the TPB website below:
Breach Reporting
Whistleblowing
Personal Tax Obligations
As you are aware, you need to keep your own tax obligations in check. This includes lodging and paying on time, and paying the right amount of tax.
This is especially important now. When you apply for your Tax or BAS Agent Licence, the TPB will look at not just your experience and education, but also at whether you are a fit and proper person.
If you need help with your own tax obligations, please let me know.
You can read more on the TPB website here.
Wrap Up
It may seem tough now, but with change comes opportunity. Things will eventually settle down. The changes will weed out a lot of the bad players, and those who do the right thing will thrive.
In my opinion, if we have all documentation in place, we should have no issues whatsoever. These changes will allow us to grow our practices beyond just doing tax returns, enabling us to be advisors to our clients and add value to what they do.
If there is anything you would like to see, or if you have any feedback on this newsletter, let me know.
As always, if you have any questions, please reach out.
Have a great week!
Cheers,
Daniel
