The Government has amended the legislation guiding registered tax practitioners to include compulsory reporting of material uncorrected errors to the Tax Commissioner.
The Government has legislated a series of changes to the Tax Agents Services Act 2009 that place additional requirements on registered tax practitioners and how they interact with clients.
The reforms are in response to the recommendations of a Senate enquiry into the actions of accounting group PwC and the consulting industry in Australia generally. The enquiry was sparked when a now former PwC Partner shared confidential information from Treasury consultations and through his engagement with the Board of Taxation. Despite having signed multiple confidentiality agreements, the Partner intentionally shared this confidential information with PwC partners and others in Australia and overseas, seeking to assist existing and potential new clients avoid some proposed anti-avoidance tax laws. The Senate enquiry estimates that the scandal put at risk $180 million in tax revenue per annum and generated new income of at least $2.5 million for the first tranche of PwC’s services assisting clients to “sidestep the new laws”.
Among other issues, the scandal revealed a series of flaws and deficiencies within the regulation of tax practitioner services, the investigative powers of the Tax Practitioners Board (TPB), and the ability of Government departments to share information.
While many of the resulting legislative reforms impact consulting services to Government, we are now obligated to advise clients of: how to check the currency of our registration as tax practitioners;
how to access the complaints process for registered practitioners; and, our obligation to report material uncorrected errors and omissions to the Tax Commissioner.
Tax practitioner registration
The TPB registers and regulates tax practitioners in Australia. Only licensed practitioners can provide tax or BAS services to you. You can check the public register here: https://www.tpb.gov.au/public-register
Firm name’s registration number is 000000000
Managing complaints
We are committed to providing quality services to you. If we fall short of your expectations and you would like to make a complaint, in the first instance, please contact
(insert details here. For example, a contact person or the director responsible for your work).
If your matter is not resolved to your satisfaction, you have the right to make a complaint to the TPB: https://www.tpb.gov.au/complaints.
Correcting errors and omissions
We are prohibited from making a statement to the Tax Commissioner or other government agency that we know, or ought to know, is false, incorrect or misleading, or incorrect or misleading by omission. If we become aware that a statement made to the Tax Commissioner is materially incorrect, we are obligated to either:
- Correct it, if we made the misstatement; or
- If the misstatement was made by you, advise you that it needs to be corrected.
If the misstatement is not corrected, we are obligated to report this to the Tax Commissioner.
Concerned?
If you have any concerns about the changes, please contact XXX.
The rise in business bankruptcy
ASIC’s annual insolvency data shows corporate business failure is up 39% compared to last financial year. The industries with the highest representation were construction, accommodation and food services at the top of the list.
Restructuring appointments grew by over 200% in 2023-24. Small business restructuring allows eligible companies – those whose liabilities do not exceed $1 million plus other criteria – to retain control of its business while it develops a plan to restructure its affairs. This is done with the assistance of a restructuring practitioner with a view to entering into a restructuring plan with creditors.
Of the 573 companies that entered restructuring after 1 January 2021 and had completed their restructuring plan by 30 June 2024, 89.4% remain registered, 5.4% have gone into liquidation, and 5.2% were deregistered as at 30 June 2024.
In the latest statement from the Reserve Bank of Australia, Michelle Bullock stated that, “…there’s also some signs that the business sector is under a bit of pressure, that the business outlook isn’t as rosy as it was.” Productivity is also lagging.
Strategically, managers need to be on top of their numbers to identify and manage problems before they get out of hand. If you do not know what the key drivers of your business are – the things that make the difference between doing well and going under – then it’s time to find out.
A business becomes insolvent when it can’t pay its debts when they fall due.
The top three reasons why companies fail are:
- Poor strategic management
- Inadequate cashflow or high cash use
- Trading losses
It’s easy to miss the warning signs and rely on optimism that things will get better if you can just get past a slump. The common problem areas are:
- Significant below budget performance.
- Substantial increases in fixed costs without an increase in revenues – Fixed costs are costs that you incur irrespective of your business activity level. When fixed costs go up, they have a direct impact on your profitability. If your fixed costs are increasing, such as leasing more space, hiring more people, buying more plant and equipment, but there is no measurable increase in your turnover and gross profit, it might tip you over.
- Falling gross profit margins – Your gross profit margin is the margin between your sales, minus cost of goods sold. Every dollar you lose in gross profit is a dollar off your bottom line.
- Funding your business primarily from debt rather than equity finance.
- Falling sales – If sales are falling, it is going to have a ripple through effect on your business, reducing profit contribution and inhibiting growth.
- Delaying payment to creditors – Your sales are good but you don’t seem to have enough cash in the business to pay your creditors on time.
- Spending in excess of cashflow – Trying to pay today’s expenses with tomorrow’s income.
- Poor financial reporting systems – Driving your business with a blindfold over your eyes!
- Growing too quickly – You’re making more sales than your business can sustain.
Substantial bad debts or ‘dead’ stock – Customers who won’t pay their accounts and stock that you can’t sell.
