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My client has a subcontractor who has not registered for GST although he is turning over in excess of the $75,000 limit from my client alone. He also contracts for other people. He should be registered for GST and my client has hinted along those lines but he has chosen to ignore it.
Does my client have any responsibility in this area to the ATO as he is aware that this contractor should be registered for GST or is it solely up to the subcontractor to declare and change his GST status?
Response
Is your client doing anything wrong?
He pays a contractor, based on an invoice with a valid ABN and no GST. Your client pays the invoice and doesn't claim back any GST because the invoice didn't have any GST on it. Is the client that you are engaged by, that pays you, that relies on your advice requiring you to do anything wrong?
Doesn't sound like it!
So would the code of conduct apply a breach to you, when you are advising your client correctly and helping them claim back only the GST they are allowed to?
It doesn’t.
We don’t believe there is any obligation placed on you or your client to ensure compliance for a supplier to register for GST. An ABN yes, for GST no.
If you were the BAS Agent for the subcontractor then you are in a different spot. The code of conduct says:
(4) You must act lawfully in the best interests of your client. (9) You must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client. (10) You must take reasonable care to ensure that *taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client. Other responsibilities (11) You must not knowingly obstruct the proper administration of the *taxation laws. (12) You must advise your client of the client’s rights and obligations under the *taxation laws that are materially related to the *tax agent services you provide. Therefore if you were the advisor to a business that had begun to turnover more than $75k you would have to advise your client that they need to register. You could not be any part of lodging BASs for a client where you know they have a GST liability that they are not declaring. What happens if they don’t register? The ATO would require payment of 1/11 of their gross receipts and apply penalty.
You do not have an obligation as a BAS Agent to dob in other non- compliant taxpayers. It's then up to you as a taxpayer, do you feel obligated or whatever to dob in a non compliant taxpayer?
So who is my client?
The code of conduct applies to registered BAS Agents for the “services that you provide” to a client. So if you are advising a client “for a fee” then you must consider the obligations imposed on you by the code
BUT
Only to the extent of the work you are doing for that client. eg If the client has engaged you to do the payroll but not the BAS then you limit your concerns to the areas of Payroll.
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