Go to top of page

Information for clients - factsheet

Information for clients - factsheet

This information is also available as a PDF factsheet, download:

As a taxpayer, it is important you:

  • are aware of your obligations to the Australian Taxation Office (ATO)
  • understand your tax practitioner has obligations to the ATO and the Tax Practitioners Board (TPB).


Your obligations

  • Be truthful with the information you provide your tax practitioner.
  • Keep the required records and provide them to your tax practitioner, if required on a timely basis.
  • Be co-operative with your tax practitioner’s requests, and meet their due dates.


If you do not meet your obligations

  • The ATO may impose administrative penalties (fines).
  • Interest charges may be applied.
  • In some cases, criminal prosecutions may be sought.
  • The ATO may initiate debt recovery.


What you should expect from your tax practitioner

Your tax practitioner:

  • will ask you questions to better understand your situation
  • may ask you to substantiate and provide evidence of any claims you make
  • won't act illegally, even if it is in your best interests
  • will advise you of your obligations under the tax laws.


Your tax practitioner’s obligations

  • Always act honestly and with integrity.
  • Act lawfully in your best interests and advise you of any conflicts of interest.
  • Take reasonable care to ascertain your state of affairs.
  • Take reasonable care to apply the tax laws correctly.
  • Provide their tax agent, BAS or tax (financial) advice services competently.
  • Not knowingly obstruct the administration of the taxation laws.
  • Advise you of your rights and obligations under the taxation laws on a timely basis and return funds due to you.
  • To not make false or misleading statements to the ATO.


If your tax practitioner does not meet their obligations

  • Their registration can be suspended or terminated, meaning they can’t practice.
  • They could receive written cautions or orders from the TPB – for example, undertaking education or working under the supervision of another registered tax practitioner.
  • Fines may be imposed by the Federal Court.


Case studies

Scenario 1

Situation

A client, a bookshop employee, asked their tax agent to claim significant travel and work-related expense deductions. The tax agent included these expenses in the client’s tax return, despite no supporting evidence being provided.

Consequences for the client

An ATO audit found the expenses were not deductible because they were private expenses and there was no evidence to support them. The ATO fined the client for making false statements in their tax return.

Consequences for the tax practitioner

The TPB found that the tax agent failed to:

  • take adequate steps to ensure the income tax return was accurate
  • take reasonable care to check the client’s circumstances and apply tax laws correctly
  • sight the necessary evidence.

Because of these failures, the TPB:

  • suspended the tax agent’s registration for 12 months, which meant they could not continue to operate their business
  • ordered the tax agent to complete and pass courses of education in income tax preparation and lodgement.


Scenario 2

Situation

A client, who operated a fruit shop, had the income tax returns their tax agent prepared audited by the ATO. The tax returns showed no assessable income reported, and significant claims for motor vehicle expenses and unreported interest income.

Consequences for the client

The ATO audits resulted in: 

  • the client’s assessable income increasing in over $2 million
  • penalties and interest charges totalling almost $800,000 being applied.

Consequences for the tax practitioner

The TPB found the tax agent failed to:

  • take adequate steps to ensure the income tax returns were accurate
  • take reasonable care to check the client’s circumstances and apply tax laws correctly
  • ask relevant and sufficient questions about the client’s cash and interest income, and motor vehicle expense claims
  • sight the necessary evidence.

Because of these failures, the TPB terminated the tax agent’s registration.


Scenario 3

Situation

A client, a boutique wine bar operator, asked their BAS agent to claim the cost of some bar stools they purchased for their new home as a business expense in her accounts. The BAS agent claims the GST credit for the bar stools, despite not being provided with evidence of the expense being for business purposes.

In this situation the BAS agent has a responsibility to determine if an expense is a private or business expense at the time of lodging the BAS.

Consequences for the client

An ATO audit found the expenses were not deductible because they were private expenses and there was no evidence to support them. The ATO imposed penalties on the client for making false statements in their BAS return.

Consequences for the BAS agent

The TPB found that the BAS agent failed to:

  • take adequate steps to ensure the BAS was accurate
  • take reasonable care to apply tax laws correctly to ensure only genuine business expenses are claimed
  • sight the necessary evidence.

Because of these failures, the TPB:

  • suspended the BAS agent’s registration for 12 months, which meant they could not continue to operate their business
  • ordered the BAS agent to complete and pass a course of education in preparation and lodgement of business activity statements.


Scenario 4

Situation

A BAS agent is engaged by a new client to prepare and lodge their quarterly BAS. The client advises they have appropriate record keeping systems in place and that all their suppliers are registered for, and are charging, GST. The BAS agent takes this on face value and goes ahead and prepares the client’s BAS.

In this situation, because the client is new, the BAS agent should also undertake appropriate follow-up action to assure themselves that:

  • the client has appropriate record keeping systems in place; and
  • they can rely on the information provided by the client to prepare and lodge their quarterly business activity statement.

Consequences for the client

An ATO audit resulted in:

  • the client’s GST credits being reduced
  • penalties and interest charges being applied.

Consequences for the BAS agent

The TPB found that the BAS agent failed to:

  • take reasonable care to apply tax laws correctly and ascertain the client’s state of affairs
  • exercise professional knowledge, skills and judgment and make further enquiries
  • sight the necessary evidence.

Because of these failures, the TPB:

  • issued a written caution
  • ordered the BAS agent to complete and pass a course of education in preparation and lodgement of BAS returns.


Last modified: 7 September 2020