TAX AGENT SERVICES LAW - September 2009

Its application to outsourced payroll providers

What is the idea behind the new Tax Agent Services law?

It has been recognised that a portion of the business community relies on an external bookkeeper to assist with various aspects of the Business Activity Statement.  The legislation d"s not affect an employee of the business reporting on the BAS..

It is recognised that to properly, correctly and effectively assist other businesses with preparation of their BAS that such "help should be provided by people who are accredited to help.

"Creation of the BAS Agent!

The creation of the Registered BAS Agent seeks to provide protection to the consumer in that the consumer can now know who is registered (accredited to a skill set and experience level) and can therefore be "RELIED ON to assist them with the preparation of the BAS.

Where d"s payroll fit it?

Advising on, ascertaining (calculate/verify/determine/establish) or being the ATO contact person in relation to a businesses PAYG Withholding amounts IS caught under the new system.

Providing a payroll service that is limited to the processing of "standard pays would not be caught  i.e. Processing the timesheets into a payroll program etc that provides the payslips, pay calculation, accruals, PAYG Withholding amount, Gross & Net Pays.

Setting up that program where interpretation of PAYG Withholding obligations, entitlements and liabilities is required in order for the program to do the processing correctly is definitely caught.  Establishing how PAYG Withholding law applies to a specific termination package would be caught, establishing how a Salary Package is to be processed and taxed would be caught.

Who is in and who is out?

It will create a differentiation between providers who can be "Relied on to assist with the preparation of the BAS (in this case the PAYG Withholding and reporting obligations), whom will be able to be called "BAS Agents, and those who may still provide services (data entry, reconciliation and reporting) but are not able "to be relied on to provide assistance to a business client in respect to the actual understanding, completion and certification of the BAS numbers. 

I don't do the BAS - I do payroll!

Provisions under the various parts of the new law allow for the Board to issue "restricted BAS Agent registrations.  We prefer the term "Specialist registrations.

Outsourced payroll providers (who advise or ascertain) should seek to become BAS Agents potentially with a Specialist "payroll Registration.

The Draft regulations and Transitional Bill would still require you to register and to meet one of the following actions

1)    Transition into the system:  I have been providing a payroll service and intend to keep doing so (this will be a 2 year transitional plan)

2)    Clean registration:  You already have a Certificate IV Financial Services (Bookkeeping) or (Accounting) including a course in GST/BAS Principles and 1400 hours "Relevant Experience over the last 3 years

3)    1st Registration:  You have been providing this BAS Service to a "Competent Standard for a "Reasonable Period which would provide you with your first registration for 3 years.

Recent submissions to Treasury include allowing the new (yet to be appointed) Board to prescribe different requirements to those above in the event of a required "Restricted registration.

What are the advantages of the new system?

BAS Agents become a more formalised and recognised part of the Tax Services industry enabling ATO to provide enhanced services and assistance to BAS Agents.

Clients/Consumers are being provided a level of "consumer protection in that they can now know they can engage a BAS Agent to assist them whom has met the legislative requirements.

Taxpayers who engage a BAS Agent have access to "safe Harbour provisions which remove penalties for misstatement or late lodgement if incurred due to a mistake of the agent.

What d"s it mean for bookkeepers?

Bookkeepers may decide to provide bookkeeping services but NOT provide a BAS Service.  Typically this style of business would be providing information for review by another Agent.

The bookkeeper may decide to be a BAS Agent providing BAS Services to clients legally and with authority.

In the long term a person seeking to develop themselves to be eligible for registration as a BAS Agent would first need to work with a BAS agent to gain the appropriate experience.

What must a bookkeeper do if they are a BAS Agent?

Once you become a Registered BAS Agent, you must meet the ongoing requirements of adhering to the Code of Conduct as prescribed in the legislation including continuing education, independence, competence and honesty.

A registered BAS Agent will be subject to the rulings of the Tax Practitioners Board.

They will be required to have Professional Indemnity Insurance.

The yet to be appointed tax board will need to further refine the guiding information around these matters.

The new environment

The development of the registered BAS Agent helps define the bookkeeper industry and will help designate the type of service being provided.  It will remove any confusion by the client as to whether a bookkeepers work is allowed to be the final say in preparation of the business BAS & the application of GST.

Bookkeepers will need to define their business specifically and with the appropriate credibility. 

Further information?

The ATO website provides information on the current compliance with Sn 251L which is the law in effect until the future start date of the new law.  The ATO may increase their resources around the impending system but this is more likely to be provided by the new Tax Practitioners Board when it comes into being (which should be mid September.)

The ICB aims to provide all bookkeepers and others with current information on how the system will be implemented, its effects and how to be involved - www.icb.org.au.  ICB is a professional association of bookkeepers that is committed to assisting bookkeepers in their work, their effectiveness and in their development.

ICB will seek to become recognised under the new legislation - the new system allows for recognition of BAS Agent Associations that may then assist the new board with their role in many facets.

MYTHS about the new system

All bookkeepers must become BAS Agents - WRONG - it is very possible to perform bookkeeping work that is not in the domain of only BAS Agents.

All bookkeepers must work for Accountants - WRONG - many bookkeepers work as independent businesses providing bookkeeping services to clients or their accountants and this continues under the new system.