0438 780 633
Engagement Terms
Dear Client,
Thank you for your instructions to attend to the preparation and lodgment of your income tax return.
This letter sets out our ‘Terms of engagement’ and supersedes any previous engagement letter provided by us.
Please read it and make sure that you understand the scope of our. If you have any queries or wish to discuss any aspect of the engagement, please do not hesitate to contact us.
Tax practitioners are regulated in accordance with the Tax Agent Services Act 2009 (TASA) and the accompanying regulations. The Tax Practitioners Board (TPB) is responsible for the registration and regulation of tax practitioners and for ensuring their compliance with the TASA.
As part of this role, the TPB maintains a register of registered, suspended and deregistered tax practitioners that enables the public to ensure they are engaging the services of a qualified professional. To check that we are registered with the TPB, search the TPB Register at www.tpb.gov.au/public-register using either of the following details:
Practitioner name - Guardian Accounting Pty Ltd
Registration number - 79783006
In addition, under the taxation laws, a ‘safe harbour’ from administrative penalties imposed by the Australian Taxation Office (ATO) applies in certain circumstances for taxpayers who engage registered tax agents.
To obtain the benefits of safe harbour protection, a taxpayer must give their registered tax agent “all relevant taxation information” to enable accurate statements to be provided to the ATO. This requirement may be important in identifying and understanding the purpose and scope of this engagement.
You will find a discussion on the safe harbour protection and information about your rights and obligations under the taxation laws in the ‘Appendix’ to this engagement letter. This document should be retained by you for your records.
We recommend you read this letter carefully and contact Ross Johnston of our office if you have any queries or wish to discuss any aspect of it. If the terms of our engagement are acceptable, please sign the “Acknowledgment of terms of engagement” and return to our office.
If you do not forward your signed copy of the “Acknowledgment of terms of engagement” nor contact us with changes to the engagement, yet continue to provide us with information and instructions regarding your financial and taxation affairs, the terms and information provided in this letter will bind us both.
Terms of engagement
Purpose and scope of our engagement
This letter relates to the taxation services described below and sets out the basis and terms of our engagement.
Our firm, Guardian Accounting Pty Ltd, has been engaged to prepare and lodge your Individual Income Tax Return, hereafter referred to as ‘You’. Unless otherwise agreed, we will prepare and lodge your annual income tax return on an ongoing basis.
We have set out below, when documentation should be provided to us to allow for the preparation and lodgment of your income tax return by the due date prescribed by the ATO. Before we lodge your tax return, we will forward the document to You for your approval.
If You are late in providing information to us, we will do our best to meet the time limits, but we will not be responsible for any late lodgment penalties or interest charges that You incur.
In providing this taxation service, we have a duty (under the TASA) to act lawfully in your best interests, and to act honestly and with integrity at all times.
Term of the engagement
Our engagement commences once You indicate acceptance of the terms by signing and returning this letter and will continue until it is terminated by either party.
You can terminate this engagement at any time by notifying us in writing. We also reserve the right to do so by providing You with 7 days' written notice.
Responsibilities and obligations
All information relevant to the preparation and lodgment of your income tax return must be collated and forwarded to our office no later than 2 months before it’s due date. Any rectifying work performed by us because of incorrect or late information is outside the scope of this letter and will be charged to You as an additional service.
In engaging us to provide the above taxation services, it is important to understand that:
· You are responsible for providing all relevant information to us in a timely manner, and for the accuracy and completeness of the information provided;
· You have obligations under the self-assessment regime to keep full and proper records in order to facilitate the preparation of accurate income tax returns on your behalf;
· any advice we provide is only an opinion based on our knowledge of your circumstances; and
· we cannot provide taxation services if we find that information on which those services are to be based includes false or misleading information, or material information is omitted, and You are not prepared to appropriately amend it to provide us with correct and complete information.
We are prohibited by law from making or preparing a statement (or from permitting or directing someone else to make or prepare a statement) to be made to the ATO, the TPB or another Australian government agency that we know or ought reasonably to know is false, incorrect, or misleading in a material particular, or omits any matter or thing without which the statement is misleading in a material respect.
If we subsequently become aware that such a statement was given to the ATO, the TPB or another Australian government agency, we are required to take reasonable steps to correct the statement as soon as possible.
Where we prepared the statement (or permitted or directed someone else to prepare the statement) on your behalf, we must advise you that the statement should be corrected.
Where we prepared the statement and you do not correct the statement or provide consent for us to correct the statement within a reasonable time, we must notify the TPB, the ATO or other Australian government body (whichever is applicable) that the statement is misleading in a material particular or that it omitted some matter or thing without which the statement is misleading in a material respect.
You must have all source documentation available to allow us to analyse the income tax implications of any transaction, should we request to see it.
As a matter of course, we will not be looking at, or auditing, these documents. However, You are required to have them available before any claim is made in your income tax return.
Also, in some circumstances, we may request to see source documents if clarification is required or a tax issue is particularly contentious.
You must have the necessary documents to comply with the substantiation requirements of the Income Tax Assessment Act 1997. We will advise You of the requirements relating to your tax return and of the necessity to obtain acceptable receipts as required by the law.
However, we will not be checking that the substantiation requirements have been met. This means we will not be reviewing, for example, your logbook or any calculations or information provided to us, such as a rental property schedule prepared by You or a property manager.
If You require assistance in completing a logbook or preparing any calculations, or You would like us to review such work, please discuss this with us. This will entail work which is outside the scope of this letter and will be charged as additional services.
Ownership of documents
The income tax returns that we are engaged to prepare, together with any original documents given to us by You, shall be your property. Any other documents brought into existence by us, including records of the tax agent services provided by or on behalf of our firm during this engagement (e.g., documentation of oral and written advice), general working papers and draft documents will remain our property.
By law, we are required to retain these records for at least five years after the relevant services were provided, even if our engagement is terminated.
If our services are terminated (by either party), You agree that we shall be entitled to retain all documents owned by You (including all your tax refund cheques which come into our possession) until payment in full of all our outstanding fees.
Where copies of any documents released to You are required for our records, You will be charged for the cost of photocopying at our normal rates.
Fees, disbursements and trust monies
Our services will be provided to You on a fee-for-service basis. In addition to our professional fees, You will be responsible for payment of expenses which we incur on your behalf.
However, the fee for this service does not cover any inquiries made to us, or investigations involving us, conducted by the ATO. Substantial penalties can apply for an incorrectly prepared income tax return.
Unless otherwise stated in writing, any estimates which we provide to You of our anticipated fees, disbursements and charges for any work are only indicative of the amounts You can expect to be charged. Estimates are not quotes or caps and are not binding on us.
Where an estimate is given and the scope of the work changes, or if it becomes apparent that the work involves matters that were not taken into account in the estimate, we will advise You and provide an amended estimate as soon as it is practicable to do so.
Unless otherwise agreed, our invoices will be issued upon completion of the income tax return and are payable upon invoice.
We may require You to deposit money (including any tax refunds due to You) into our trust account in anticipation of our fees and charges. If You fail to make a required trust deposit, we may suspend work or terminate this engagement. If we suspend work or terminate this engagement by reason of your failure to make a deposit as required, we will not be liable for any loss or damage that You may suffer as a result.
You agree that we can bank into our trust account, any tax refund amounts received on your behalf. You also authorise us to apply any trust monies held on your behalf towards payment of fees and disbursements, and to meet our bill of costs which have been rendered and which have not been paid or disputed within 14 days after issue of the bill of costs.
Additional services
Our fee applies only to the taxation services provided within the scope of our engagement, being the preparation and lodgment of your tax return each year. This fee includes checking and forwarding original assessments and payment notices received from the ATO.
Any additional services or advice that You request are outside the scope of this letter and are not included in this agreed fee. We will separately advise You of the fee for these services, including any direct out-of-pocket expenses.
Please note that any correspondence from the ATO that does not relate to initial assessments or original payment notices will be charged as additional services.
Complaints and dispute resolution
In the event that You may have any complaints or disputes in relation to this engagement, we ask that You please contact Ross Johnston in the first instance. We will endeavour to resolve any issues respectfully and as quickly as possible.
If we cannot resolve the issue or you are not satisfied with how your complaint is being handled by us or with the outcome, you may be able to escalate the matter to the TPB. For details about making complaints to the TPB, go to www.tpb.gov.au/complaints
Confidentiality
We have an ethical duty and a legal responsibility to keep information acquired as a result of this engagement confidential. This means that we will not disclose confidential information relating to You without your permission, unless there is a legal duty to do so.
We will also not use any such information for our own personal advantage or for the advantage of a third party.
From time to time, we may need to disclose information relating to your affairs to certain parties including, for example:
· a professional or regulatory body in response to an inquiry or investigation;
· a professional body of which we are a member, in relation to a quality review program undertaken by that body; or
· relevant parties in order to protect our professional interests in legal proceedings.
You hereby authorise us to do so when we consider it appropriate to further our performance of work for You, or when requested by the relevant party.
Use of third party service providers
We may use third parties (including Cloud computing providers) to perform services we are engaged to provide to You. The following is a list of third-party service providers currently used by our firm, to whom your information may be disclosed:
- Dropbox
- Acronis
- Microsoft
- Annature
We will notify You of any change to this list from time to time.
You hereby authorise us to disclose information relating to your affairs to such third parties, whom we engage to assist us.
Where we outsource services to third-party providers, we are responsible for their conduct and activities and for the delivery of the services that we are engaged to perform for You.
Non-compliance with Laws and Regulations (NOCLAR)
During the performance of our work under this engagement, we may detect conduct or a transaction that is considered to constitute NOCLAR, which has a material effect on any documents or information that might be required to be provided to a regulatory authority, such as the ATO.
If we detect any NOCLAR, we may have a professional requirement to make a disclosure to a regulatory authority. We will follow a formal process which will include advising You of our concerns and, if necessary, seeking legal advice.
If we do seek legal advice in relation to any NOCLAR, we reserve the right to ask You to pay or reimburse us for our reasonable costs.
If we are required to make such a disclosure, You agree to forever release us from any claim for costs or losses You incur in responding to or dealing with anything arising from our disclosure.
Losses from unauthorised cyber activity
We will take all reasonable precautions to ensure that any electronic data that contains your private information is securely stored and that any email transmissions are protected and are not able to be intercepted by third parties.
However, we cannot be held liable for any loss that You might incur as a consequence of any third-party intervention that accesses, procures or copies any data that contains your private information from any medium or device we use to store or transmit such information.
In the event that, despite our firm having taken reasonable precautions to securely store your private information, You suffer any losses arising from unauthorised cyber activity, You agree to forever release us from any claim for your losses.
Limitation of liability
Our firm’s liability is limited by a scheme approved under Professional Standards legislation and applicable regulations of the Professional Body.
Authority for ATO digital communication preferences
You agree to have the all types of ATO communication sent digitally to yourself.
You hereby authorise us to change or withdraw our preferred address for service of ATO communications. You also declare that the information supplied by You, for the setting or updating of these communication preferences, is true and correct.
Other matters that may be relevant to your decision
Registered tax practitioners must advise prospective and current clients of any matters that may significantly influence the decision to engage or continue to engage them to provide tax agent services.
Please be aware of the following matters that may be relevant to your decision or the decision of a client in your Group to engage, re-engage or continue engaging our firm to provide tax agent services:
Please be advised that we have no relevant matters to report.
Confirmation of engagement
Obviously, there are many issues to consider in this engagement and we ask that you consider all aspects of this letter to ensure that you are satisfied with the scope of our engagement.
Please contact us if you have any queries about this letter.
As mentioned above, if you do not forward your signed copy of the “Acknowledgement of terms of engagement”, nor contact us with changes to the engagement, yet continue to provide us with information and instructions regarding your financial affairs, the terms and information provided in this letter will bind us both.
Once you are satisfied with the terms of our engagement, would you please sign and date the “Acknowledgement of terms of engagement” and forward to us as evidence of your acceptance of the terms of our engagement. You should retain the Terms of Engagement letter as your evidence of our engagement.
We thank you for the opportunity to provide accounting and taxation services to you and your business and we look forward to developing a close business relationship with you for many years to come.
Yours sincerely
Ross Johnston FIPA
To:
Guardian Accounting
PO Box 406
Wangaratta Vic 3676
Acknowledgment of terms of engagement
I/We, ……………………………………………………………………………………………………………………………………………………………………… ,confirm that I/we understand and agree to your terms of engagement, and acknowledge our responsibilities as set out in the terms of engagement.
Dated the………………….day of ………………………………………….20……..
Individuals:
Name
Signed
Appendix - Rights and obligations of the parties under the taxation laws
Set out below is a brief explanation of the main areas of the taxation system you need to understand. If you have any concerns or issues with any of the matters discussed below, please feel free to contact us.
Operation of the self-assessment system
Australia’s tax system operates on a self-assessment basis. This means that when your income tax return, Fringe Benefits Tax (‘FBT’) return or Business Activity Statement (‘BAS’) is lodged, the Australian Taxation Office (‘ATO’) accepts the information provided in the return at face value and issues you with an assessment notice based on that information.
However, this does not mean the assessment is final as the ATO can conduct a review or audit of the information provided in the return at a later time, subject to the time limits discussed below.
Importantly, as a taxpayer, you have an obligation to comply with the taxation laws. If you do not meet your obligations under the taxation laws, the ATO may impose administrative penalties (fines), apply interest charges, seek criminal prosecutions (in some cases) or initiate debt recovery.
Commissioner’s ability to amend an assessment
While the ATO accepts the information lodged in your return at face value, it can amend the assessment if the ATO finds it to be incorrect. The following time limits generally apply for amending an assessment:
Individuals
· For most individuals, the ATO can amend an assessment within two years after the individual receives their notice of assessment. However, if an individual carries on a business and is neither a Small Business Entity (‘SBE’) (broadly, a business with an aggregated turnover of less than $10 million) nor a Medium Business Entity (‘MBE’) (broadly, a business with an aggregated turnover between $10 million and less than $50 million), then that period extends to four years.
· If an individual is a partner in a partnership or a beneficiary of a trust, the amendment period is generally two years. However, if a partnership or trust carries on a business and is neither an SBE nor an MBE, then the amendment period extends to four years.
Companies
· The ATO can amend a company assessment within two years after a notice of assessment is deemed to have been made where the company is either an SBE or an MBE.
· If the company is a partner in a partnership or a beneficiary of a trust, the amendment period is two years. However, if the partnership carries on a business and is neither an SBE nor an MBE, that period extends to four years. If the trust is neither an SBE nor an MBE, the amendment period also extends to four years.
· In most other cases, the amendment period is four years.
Trustees
· The ATO can amend an assessment within two years after the trustee receives the notice of assessment if the trust is either an SBE or an MBE.
· If the trustee is a partner in a partnership or a beneficiary of a trust, the amendment period is two years. However, if the partnership carries on a business and is neither an SBE nor an MBE, that period extends to four years. If the trust is neither an SBE nor an MBE, the amendment period also extends to four years.
· In most other cases, the amendment period is four years.
If the ATO amends an assessment, this will potentially involve increased taxes, penalties and an interest charge. If you discover an error in the information declared in the return, lower penalties generally apply for making a voluntary disclosure.
Note that there are no time limits on the ATO amending an assessment where it believes there has been fraud or evasion.
Obligation to keep records
The tax laws specifically require taxpayers to keep records that properly explain the transactions they have entered into.
Individuals
Individuals claiming deductions for work-related expenses are subject to the substantiation rules in the tax laws. These require taxpayers to keep receipts, invoices etc., of the expenses they incur. Where the expenses relate to a taxpayer travelling interstate or overseas, a travel diary may also need to be kept. Where the expense relates to a motor vehicle, a record of the journeys taken such as a logbook may need to be kept.
A failure to keep the appropriate records can lead to the ATO denying a particular deduction which may involve the imposition of penalties and interest. Substantiation records must be retained for five years.
Businesses
The tax laws specifically require a taxpayer that carries on a business to keep documents that record and explain all the transactions they have entered into. These include all the documents that explain how the income and expenditure of the taxpayer was determined.
Where the tax laws allow or require a taxpayer to make a choice, election, estimate or calculation, documents containing particulars of these matters must be kept.
All these records must be retained for a period of five years. There are penalties for taxpayers who fail to do so.
Obligation to provide complete and accurate records
For our practice to be able to lodge returns on your behalf, it is your responsibility to provide us with truthful, complete and accurate records. Furthermore, in order to lodge your return on time, we will require you to provide us with the relevant information as and when requested.
Where you are unable to provide us with complete and accurate records, we may be unable to prepare and lodge your return. Tax agents are subject to a Code of Professional Conduct contained in the Tax Agent Services Act 2009, which prevents us from acting for a client where insufficient records or information exist that allow us to determine the amount of a client’s income or deductions.
We also reserve the right to question any claims for deductions or credits that in our reasonable judgment might be considered as being excessive, and we may ask for more substantiation or records to prove that such a claim is allowable under the law.
If we believe that a claim is excessive and it cannot be substantiated, we reserve the right not to include such a claim in your income tax returns or BAS, but you will have the right to lodge an objection after receiving your notice of assessment. There may be further costs in doing so, and we will advise you accordingly.
Records for clients operating in the cash economy
Due to the ATO’s on-going concerns with dealings in the cash economy, the ATO has a program of ‘benchmarking’ standardised revenue returns for a wide range of small businesses.
In circumstances where the ATO is dissatisfied with a taxpayer’s records or recording systems, it may assess income tax and/or GST on what it considers to be an appropriate ‘benchmark’ amount (plus penalties and interest). Once this occurs, it is the responsibility of a taxpayer to demonstrate that the assessment is excessive and identify the correct tax position. One of the major problems with this outcome is that the onus of proving that the ATO’s assessment is excessive (i.e., the taxpayer did not earn that much income) is the responsibility of the taxpayer.
Taxpayers who operate in the cash economy are therefore urged to have a robust and reliable system for recording and reporting all cash transactions and ensuring that the recorded figures are accurate. If you need assistance in setting up or reviewing your recording and reporting systems, we will be happy to do so and will advise you of our rates for doing so on request.
Right to seek a Private Binding Ruling
When preparing your return, we may identify one or more issues that are not clear under the tax laws. Where we have pointed out such issues to you, you have a right to request a Private Binding Ruling from the ATO. The ATO will provide you with a ruling setting out its view on the proper tax treatment of the issue requested in the Private Binding Ruling.
Objecting against an assessment
If the ATO issues you with an assessment that you do not agree with, you have the right to lodge an objection against that assessment. The objection must be lodged with the ATO within either two or four years. The period which applies is determined as discussed above.
Where the ATO issues an amended assessment, the period for objecting is the greater of:
· 60 days from the time the amended assessment is received; or
· two or four years (whichever is applicable) from the time the original assessment was received.
If you remain dissatisfied with the outcome of the objection, you have the right to have the matter reviewed by the Administrative Review Tribunal or appeal the matter to the Federal Court.
Onus of proof falls on the taxpayer
It is important to be aware that in any disputed assessment before the court or the Administrative Review Tribunal (whether initiated by the taxpayer or by the ATO), the onus of proof is placed on the taxpayer. In other words, if the Commissioner asserts that your income should include a certain amount or that a deduction claimed in a return is not allowed, it will be up to you to establish that the Commissioner’s view is incorrect and the correct treatment.
Safe harbour protection
As the client of a registered tax agent, under the taxation laws, you have a statutory ‘safe harbour’ exemption from penalties imposed by the ATO in certain circumstances.
To ensure you are eligible to benefit from the safe harbour, it is a requirement that you provide us with all relevant tax information. This includes any records, or documents we request from you plus any other information relevant to the preparation of your tax return. The information provided must be truthful, complete and accurate.
It is equally important that you provide us with this information by the time it is requested to allow the return to be lodged by its due date. The safe harbour from late lodgment penalties can also apply where a Business Activity Statement, Instalment Activity Statement, or FBT return is lodged late.
A taxpayer who is eligible for the safe harbour protection will not be subject to any penalties for errors identified in their tax return, although the underlying tax and interest charges will still apply.
Your tax practitioner’s obligations
The Tax Agent Services Act 2009 (‘TASA’), including the Code of Professional Conduct contained within the TASA, provide statutory protections for taxpayers who engage registered tax practitioners.
The Code of Professional Conduct is a set of statutory ethical and professional standards that registered tax practitioners must comply with.
The TASA, including the Code of Professional Conduct, and associated regulations and determinations are administered by the Tax Practitioners Board (‘TPB’).
We are required under the Code of Professional Conduct to provide you with general information about the obligations that tax practitioners have to their clients under the taxation laws, including the TASA and the Code of Professional Conduct.
The following information has been adapted from the TPB’s factsheet, Information for Clients for these purposes.
Your tax practitioner’s obligations require them to:
· act lawfully in your best interests and with honesty and integrity in the performance of our duties;
· uphold and promote the ethical standards of the profession;
· manage any conflicts of interest;
· take reasonable care to ascertain your state of affairs and apply tax laws correctly;
· keep your information confidential unless there is a legal duty to disclose;
· provide services competently;
· not knowingly obstruct the administration of the tax laws;
· advise you of your rights and obligations under the taxation laws (refer above);
· account to you for money or other property on trust;
· not make false or misleading statements to the TPB or the ATO, and in some cases, withdraw our engagement with you and notify the TPB or ATO of certain matters;
· address any false or misleading statements we are responsible for;
· engage with clients to address other false or misleading statements, exploring options to correct;
· keep proper records (including records of tax agent services provided);
· keep you informed of certain matters so you can make informed decisions.
If your registered tax practitioner fails to meet their obligations:
· their registration can be suspended or terminated, meaning they cannot practice;
· they could receive a caution or orders from the TPB – for example, undertaking education or working under the supervision of another registered tax practitioner;
· have fines imposed on them by the Federal Court;
· your tax and superannuation matters may not be accurate;
· you may be subject to enquiries or audits;
· any tax shortfalls may attract penalties and interest;
· you may have litigation options to review decisions and recover debts;
· in the case of fraud or criminality, penalties may lead to prosecutions.