Institute of Certified Bookkeepers

Different Backgrounds

The relatively new community of BAS agents are better (or at least typically more recently) educated in the expectations of the TPB and the ATO.

BAS agents came into existence with the commencement of the Tax Agents Service Act in 2010. Tax agents have been in a registered system for 100 years.

BAS agents have had to consider for the first time, their ability to be registered and therefore had to understand the obligations of TASA, the code of conduct in the TASA before contemplating pursuing the work. Tax agents have just re-registered not necessarily realising anything changed.

BAS agents must have been educated in at least the BAS Agent Skill Set within the last 5 years. Tax agents may have last undergone formal education anything up to 50 years ago.

BAS agents have taken their newly obtained responsibilities seriously and have been educated on the Code of Conduct obligations in recent times. Tax agents have mostly assumed that nothing has changed – they just noticed that they fill in their renewal online instead of on paper.

To be fair; more recent entrants to the Tax agent space have undergone the same contemporary education and hence are also aware of the new obligations.

Different Perspectives

Tax Agents tend to have been trained (post university) in the practical business, of actually attempting to make money, as an accountant in a practice. Newer grads, trained by those who have tried and tested their ability to make valued judgements about risk vs materiality vs reward, have been initiated into the process of only working on the items that someone has decided they should work on.

This practical, on-the-job training, providing a sense of where to look and how to perform a value based assessment of each jobs project plan.

BAS Agents, typically, are new to the process of needing to establish with the business owner what things they, the BAS Agent, are engaged to do. What items are worth worrying about? What items is the business owner prepared to pay for to gain assurance that the law has been complied with?

Different Approaches to Paranoia

What is also evident is that the BAS agents are more paranoid about the consequences of being caught with errors. BAS agents are typically working far closer to the business and are integrated with the business systems. They are typically held directly responsible more often for anything that goes wrong.

Tax agents typically are more removed from the business; emotionally, subjectively and operationally. Tax agents consider matters that business don’t understand and occasionally agents don’t explain to the clients what they have and haven’t considered.

It may be fair to say that tax agents are more comfortable with the concept of not auditing everything about the client, whereas BAS agents typically want to make sure everything is right.

What is Required?

BAS agents need to mature their approach to: discussions with the clients about risk vs cost; discussions about how to meet your obligation of advising the client of their obligations and then only doing the work that the client wants.

Both audiences must:

  • Advise the clients of their rights and obligations under the law
  • Agree with the client on what you are required to do – Engagement Letters recommended
  • Take reasonable care to understand the client’s state of affairs for those things you are doing
  • Take reasonable care to apply the tax laws correctly to those things

Help the clients understand that; advice and certainty costs money, they are to make the valued judgements on what certainty they require from the BAS agent.

A Summary

Why is it that it is only us BAS agents that are worrying about the law?

Because we care (too much sometimes?) We are close to the business owner and we want to help them despite themselves.

We need to become a little more commercial about the services we provide: become more comfortable with not looking or not taking on issues of the business when the business isn’t taking them on.

However, BAS agents need to do a few things:

  • Not move into the complacency of some tax agents
  • Provide business owners with the information about the concerns and obligations
  • Be prepared to do the work if the business owner requires it
  • Be prepared to not do the work if the business owner says don’t look
  • Know that you cannot lodge a form that you know is incorrect. That does not mean that you suspect might be incorrect, but if you suspect a problem with the form – don’t lodge it. Provide the output of your work to the business owner.

Just because the rest of the world is slack does not mean we need to be.

Matthew Addison
ICB Executive Director

Payroll Professionals can be Fined

Are you "knowingly" involved by action or by omission, even indirectly, in underpaying people or other breaches of FairWork? We refer to the following information from The Association of Payroll Specialists, used with permission.

Accessorial Liability - Payroll Professionals can be fined

Under the FairWork Act, individuals involved in contraventions can be penalised along with the company they work for where it is found they are “knowingly concerned” in the contravention.

Involvement in Contravention Treated in Same Way as Actual Contravention

  • A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
  • A person is involved in a contravention of a civil remedy provision if, and only if, the person:
    • has aided, abetted, counselled or procured the contravention; or
    • has induced the contravention, whether by threats or promises or otherwise; or
  • has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or has conspired with others to affect the contravention.

While unusual, accessorial liability can extend to a company’s payroll person as a recent case has shown:

Crystal Carwash was found to have underpaid a number of employees over several months in 2010. The underpayments totalled $177,000. While the underpayments were rectified sometime after the Fair Work investigation commenced, FairWork took Crystal Car Wash to the Federal Court due to the serious nature of the contraventions involved.

The Federal Court fined the company $70,000 and the company’s director/part-owner $10,000. The court also applied a $10,000 fine to an employee who was responsible for the company’s payroll and admin function saying they too had “direct and major responsibility” for the underpayments.

This case shows how important it is for Payroll Professionals to speak up when they become aware of contraventions to the FairWork Act, Awards and other legislation.

You can find information on the case here.

And the full decision here.

ICB Comment and Recommendations

We have consulted with Workforce Guardian (the ICB preferred Employment Law advisor) and also now written to the FairWork Ombudsman for clarification over their implementation of this section and how it would possibly be applied to you.

We are confirming with Insurance Made Easy as to the impact of the ICB preferred PII cover in relation to these areas.

As with all cases the liability of the "payroll employee" in this case is not just limited to; "they did what they were told" and there is far more to the case.

What are you Engaged To Do?

We believe that for most bookkeepers and BAS agents that while you are involved in the execution of the payroll, typically you are not the ones working out what award applies, you aren't typically negotiating the packages people are on, nor are you typically involved in what allowances or rates are applied to a person.

Our observation of the market place is that typically the bookkeeper receives the instruction from the business owner and executes that in the payroll system. However this does not mean you can "know" that people are being underpaid and ignore it.

If you become a party to activity in breach of the FairWork provisions then we think you need to be concerned. Our recommendation is that you should terminate your involvement with that business (refer below).

If you are involved in advising the business owner as to what award applies, what penalty rates apply, what wage rates apply, then you must build this into your engagement with the business and certainly your invoicing to them. Make sure you allow for the time to assess, review and implement the correct pay system. If you are being required to do this work then you must be paid for it at a reasonable rate. There are now a number of advisory services that assist you and the business with Award interpretation and application.

For contract bookkeepers / BAS agents we strongly recommend that you specifically address in your engagement letter or subsequent communication with the business, the extent of your duties with payroll. For employee bookkeepers we repeat you can not knowingly be a party to underpaying anybody else involved in the business.

If you have no role in setting any part of what is paid to who at what rate then...

"ABC Bookkeeping is engaged to establish the payroll systems based on the payroll information provided to us. We will implement and maintain the payroll based on this information. It is agreed that ABC bookkeeping is not engaged to interpret and apply the Fair Work provisions to this business”.

If you are engaged to interpret and apply all FairWork provisions to the business then...

"ABC Bookkeeping is engaged to assist the business with all aspects of managing and administering the payments to all employees. Accordingly we will ensure payments are in accordance with FairWork requirements and advise the business owners of any concerns or changes that impact the business. If the business is in breach of FairWork provisions we will first discuss this with the business but we note that we will not continue in our engagement with you if the business continues to be in breach”.

Where to From Here?

ICB will create a business information sheet for all members to provide to their businesses on this matter to then facilitate discussion with them as to the level of your services and their expectations.

Following that discussion you should confirm in writing your role and requirements in accordance with the above.

You can rely on the FairWork Ombudsman, according to their website:

5. Accountability

If the FWO provides incorrect advice about minimum wages or conditions of employment, and that advice is relied on and followed in good faith, the FWO:

  • will not pursue a penalty for not paying the correct entitlements before the person is advised of the mistake
  • will assist in any dispute to resolve concerns about outstanding entitlements
  • may require that outstanding entitlements be paid and that correct entitlements are paid once the incorrect advice is identified
  • will accept legal liability for incorrect advice in accordance with the law.

The reliability of our advice is dependent on the information you provide to us at the time of your enquiry.

The Fair Work Ombudsman, Fair Work Inspectors and other staff employed by the Fair Work Ombudsman are bound by the Public Service Act 1999.

This means that they are bound by the Australian Public Service Code of Conduct and have to uphold the highest ethical standards at all times.

  • Updated: 13th July, 2016