• Practice administration

    Here you'll find information about the basics of running your practice, dealing with us and what records you need to keep.

    See also:

    Online security

    Proof of identity for registered agents

    You'll need to provide proof of identity (POI) information when contacting us or when we contact you.

    POI details may include information from a notice of assessment or lodged return, provided it is no more than five years old.

    When you contact us

    Step 1 – Quote your RAN

    If you phone us on the Registered agent phone line (13 72 86), you must provide your registered agent number (RAN).

    Step 2 – Identify the account you want to access

    You can identify the account you want to access by providing one of the following – the taxpayer's:

    • Australian business number (ABN)
    • tax file number (TFN)
    • name.

    Step 3 – Provide POI for the account

    The POI we need depends on whether your RAN is already on the account and for which taxpayer role, as shown below.

    Access type 1
    Registered agent listed on the taxpayer's account for the role

    Access type 2
    Registered agent listed on the taxpayer's account but not for the role

    Access type 3
    Registered agent not listed on the taxpayer's account

    You must provide details from an ATO generated notice or lodged return that is no more than five years old and relates to the taxpayer, including:

    • a notice of assessment sequence number
    • a document identification number (DIN)
    • a correspondence reference number
    • the date and name or title of a letter or notice we have sent you that may or may not have a unique identification number but can be confirmed by our systems
    • income
    • deductions claimed.

     

    You must refer to an ATO generated notice or lodged return that is no more than five years old and is relevant to the role. You must also provide one of the following relating to the taxpayer:

    • their TFN (if not already provided as an identifier)
    • their date of birth, if applicable
    • their address – business, postal or email.

    Where another registered agent is listed on the account for a role, the notice you refer to must be more recent than any authority a taxpayer has provided for that role.

    Note: Our systems only support one registered agent against a role. Where you are the registered agent for the taxpayer and another registered agent is listed on the role, you must provide details from the latest lodged activity statement or tax return.

    You must refer to an ATO generated notice or lodged return that is no more than five years old and is relevant to the role. You must also provide one of the following relating to the taxpayer:

    • their TFN (if not already provided as an identifier)
    • their date of birth, if applicable
    • their address – business, postal or email

    Where another registered agent is listed on the account for a role, the notice you refer to must be more recent than any authority a taxpayer has given for that role.

    You must also provide verbal assurance that you have a signed authority.

    Note: Our systems only support one registered agent against a role. Where you are the registered agent for the taxpayer and another registered agent is now listed on the role, you must provide details from the latest lodged activity statement or tax return.

    When we contact you

    Step 1

    If we contact you and can identify the name of your practice at the beginning of the conversation without any prompting, we will not ask for any further POI. However, if we can't, we will ask for your RAN and the name of your practice.

    Step 2

    Our officers will identify themselves clearly by providing their full name and the section in which they work. If at any stage you have doubts about the person contacting you being an ATO employee or you want a more formal confirmation, ask for the officer's contact details, including:

    • their full name
    • their extension number, if available
    • the name of their team leader and their extension number.

    You can also ask the officer if you can phone them back on 13 28 69 between 8.00am and 5.00pm, Monday to Friday.

    You can also ask the person phoning to confirm their identity by either faxing you a letter on ATO letterhead or emailing you.

    When you write to us

    When writing to us, always include your RAN. This helps prevent unnecessary delays in processing your correspondence.

    See also:

    Proof-of-identity checks

    In order to avoid errors and help stamp-out tax fraud through identity crime, it is important you take steps to check the true identity of individuals asking you to act on their behalf. We have seen increasingly sophisticated attempts by criminals and their accomplices to commit refund fraud by stealing the identities of taxpayers and posing as those taxpayers. These people may also be part of a larger fraud network. Carefully checking proof-of-identity documents and questioning discrepancies in information provided by people is an important first step to stop these attempts.

    Verifying individual identities

    Identity crime can happen to anyone at any time. We strongly recommend you perform identity checks for:

    • all new clients before accepting them as clients
    • existing clients, in particular when personal information has been altered or information relating to tax affairs is inconsistent with information you already hold (and have previously verified) about their tax affairs
    • all representatives of clients (whether they claim to represent new or existing clients).

    It is always best to check original documents to verify an identity. You may be able to use the Document Verification Service (DVS) which is a national online system that helps businesses build greater confidence in the identities of their clients. The DVS allows you to compare a client’s identifying information with a government record. Businesses must meet certain eligibility criteria and pay a fee to use this online system. For further information visit the DVS websiteExternal Link.

    If you or your staff cannot confirm the identity of an individual, or you suspect fraudulent documents are being used, you can notify us of the incident so that we can stop any other attempts to use that identity.

    See also:

    • To report suspected fraudulent activity    
      • make an online report
      • phone us on 1800 060 062 or 13 72 86 fast key code 3 4 (between 8.00am and 6.00pm, Monday to Friday).
       

    Clients attending agent premises

    New clients

    For new clients that attend your premises (face-to-face), the following documents can be used:

    • at least one piece of current photo identification, including    
      • passport
      • drivers licence
      • government or student identity card, if applicable
      • last year's notice of assessment
      • birth certificate
      • Medicare card
      • recent bank statement (not credit card).
       

    For temporary residents:

    • a current valid passport.

    Some temporary visa holders have work rights, although some classes of visas only allow limited work rights (for example, working holiday and student visas).

    Australian visa details should be checked to verify both:

    • the working rights attached to the visa type
    • that the individual is a resident for tax purposes.

    Discrepancies or claims that seem inconsistent with the individual's work rights or personal circumstances warrant further attention.

    Existing clients

    For concerns regarding existing clients, you can use the following details to ensure your client's identity has not been stolen:

    • tax file number (TFN)
    • full name
    • date of birth
    • current residential address
    • current contact telephone number
    • current bank details
    • employment details (including the employer's address and phone number) where applicable.

    For temporary residents:

    • a current valid passport.

    It is unlikely the holder of a stolen identity would be able to verify the details without discrepancies with the information you already hold.

    Where there are any discrepancies with information you already hold, the discrepancy should be checked directly with the client to see if it matches information you already hold.

    Online interactions with new clients

    An increasing number of agents are accepting new clients from online channels rather than those clients coming to their premises. There is a heightened risk for you dealing with information in an online environment, particularly with clients you have not physically met.

    For any online or electronic transaction, you still need to take appropriate steps to be satisfied that:

    • the client is a genuine taxpayer
    • the client is who they say they are and the identity has not been stolen
    • the information they are providing to you is correct and can be substantiated.

    We strongly recommend that you use an appropriate level of scrutiny to check information provided through electronic and online channels.

    If you receive information from an existing client to prepare and lodge a tax return or activity statement via an online channel, you should use the identity checks recommended for existing clients to validate the information.

    If the information you receive is inconsistent with the information and usual reporting patterns you hold for that client, additional checks should be used.

    For new online clients, a wide range of personal details can also be compared against existing ATO information on the portal:

    • TFN
    • full name
    • date of birth
    • current residential address
    • current contact telephone number
    • Medicare number
    • current bank details
    • employment details (including the employer's address and phone number) where applicable.

    If you are not satisfied the identity of the client is correct, then you should consider not accepting the person as a client.

    Preparing tax returns for clients

    Questions to ask your client

    You need to ask reasonable and direct questions to work out your client's income position, and the deductions and tax offsets they can claim.

    When working out your client's deductions, ask them whether they have already incurred the expenditure in the relevant year. Also ask questions to understand whether the expenditure is allowable as a tax deduction.

    If the substantiation rules apply, ask your client what evidence they have available that is necessary (for example, receipts) to support the deduction.

    You do not have to sight receipts and records

    You do not have to sight the receipts and records. However, if they are available, examine them as part of the tax return preparation process. It is good professional practice to:

    • ask your client to provide all the relevant documentation relating to their claims
    • make note of the evidence you have seen and the evidence your client advises you they have, even if they haven't produced it for you.

    You do not have to audit tax returns you prepare

    You do not need to conduct tax audits on tax returns you prepare to ensure they are correct. However, you are expected to adopt reasonable professional care.

    Ask questions to obtain the relevant information you need to prepare the tax return. However, we understand you have to rely on the accuracy of the information your clients provide.

    If your client will not produce their records

    If you have good reason to believe your client is making a false claim or omitting income, carefully consider whether or not to continue preparing their tax return. However, if you have reasonably ascertained what records the client has to support their claims and you have no good reason to doubt the accuracy of that information, you can rely on it when preparing the tax return.

    Carefully advise your clients about the:

    • relevant substantiation rules or other requirements to support their claims
    • significance of the declaration they have to sign on their tax return.

    Do not include a claim that is clearly not allowable

    You must not knowingly include a claim in a tax return that is clearly not allowable.

    The Tax Practitioners Board can apply a wide range of sanctions where breaches of the Code of Professional Conduct have occurred. The Board will tailor its response to the severity of any misconduct, which includes making false or misleading statements.

    This means that as a registered tax agent, you must not include a claim on a tax return if you know:

    • your client has not incurred the relevant expenditure
    • the claim is not allowable.

    For example, you must not include a claim for total work-related expenses (other than car, meal allowance, award transport payments allowance and travel allowance expenses) that exceeds $300 if you have not reasonably ascertained that your client has kept evidence to prove the total amount.

    If your client instructs you to include a false claim

    If your client instructs you to include a false claim, advise them of their responsibility to lodge a correct tax return and the possible consequences of not doing so. Also explain your responsibility as a professional registered tax agent.

    Try to persuade your client to exclude any false claims. If they insist on lodging a false tax return, neither you nor your staff should have anything further to do with the preparation of that tax return.

    Record keeping

    By law, you and your clients must keep business records, either paper or electronic:

    • generally for five years after they are prepared, obtained or the transaction is completed, whichever occurs latest
    • in English or in a format that we can access and understand.

    Some records may need to be kept for longer periods, such as records relating to capital gains tax events. However, shorter record keeping periods apply for some records for individual clients with simple tax affairs.

    While you and your clients are not required by law to keep records of tax returns, schedules, activity statements, tax objections or notices of assessment, we recommend you keep a copy for five years.

    See also:

    Taxpayer declarations

    If you give a document to us in the approved form on behalf of a client, your client must make a signed declaration in writing stating both of the following:

    • they have authorised you to give the document to us
    • the information they have provided to you to prepare the document is true and correct.

    Examples of documents that must be in the approved form include tax returns and activity statements.

    The declaration can be given:

    • in paper form
    • by fax
    • electronically.

    Your client must give you a signed declaration before you lodge any document on their behalf. Once your client makes the declaration and gives it to you, you can return it, or a copy of it, to them.

    Most of your clients must keep their declaration, or a copy of it, for five years after they make it, depending on their circumstances.

    Reporting cash transactions

    Cash is often used legitimately to pay for goods and services. However, it is illegal for people to use cash economy activities to hide income and avoid tax and superannuation obligations.

    Cash economy activities include businesses 'skimming' cash takings, paying 'cash-in-hand' wages, operating off-the-books and not recording or reporting all sales and purchases.

    Below are ways you can assist your clients to correctly record and report cash sales, cash expenses and cash drawings.

    Determining the best practices you use in your business will depend upon the type of tax practitioner services you provide (BAS or tax agent).

    It is possible that even if you adopt these or other practices that a business you service may still under-report income and may still come under our scrutiny.

    The relevance of these practices may vary depending on:

    • the size and nature of your clients' businesses – for example, an established larger business would be expected to have strong record-keeping systems and controls; a review of their record-keeping processes, rather than of source records, may be more appropriate
    • the relationship you have with your clients – for example, in an initial engagement interview with a new client you may undertake a more comprehensive review of their record-keeping systems.

    Best practice examples

    Ask clients what records or evidence they have to support income and expense amounts, for example:

    • Sight a sample of source records, such as invoices, or last month's till tapes
    • Sight source records during initial client engagement
    • Sight source records when anomalies appear
    • Make a note of the records sighted and the evidence your client advises you they have, even if they haven't produced it for you.

    Advise clients of the consequences if records are not correct, complete or maintained appropriately, for example:

    • Advise that our risk models, or our Small business benchmarks, may identify them as a compliance risk if amounts reported in returns are unreasonable or are outside the benchmark for their industry
    • Explain the consequences if they are unable to substantiate income and expense amounts reported in their returns
    • Advise of possible compliance actions, including audits, financial penalties and prosecution
    • Advise of the consequences of providing incomplete, incorrect or misleading information for preparation of their returns or activity statements.

    Sight or perform reconciliations, for example:

    • Check the differences between total sales and banking
    • Check that reported sales reconcile with till tapes
    • Check the differences between reported amounts in business activity statements (BAS) and income tax returns.

    Check figures are reasonable, for example:

    • Check the consistency of current amounts with previously reported figures
    • Compare with our Small business benchmarks or other industry benchmarks
    • Check income reported is consistent with your clients' lifestyle, including property and motor vehicle purchases
    • Use the Personal living expenses comprehensive worksheet
    • Check if profit and loss and cash flow are reasonable
    • Separate income received by cash from other payment methods and use ratios to compare cash income to non-cash income
    • Discuss figures with your clients if the figures appear unreasonable.

    Ask sufficient questions to satisfy yourself the information your client provided is correct and complete, for example:

    • Ask direct questions to get the information you need to work out your client's income position
    • Enquire further about the completeness and correctness of information if there are grounds to doubt the information your client provides.

    Ask clients to explain the processes they use to record and report cash transactions, for example ask them to explain:

    • Their processes for recording sales from all income streams as they occur
    • How they pay the business owner, staff and suppliers
    • Processes for recording expenses and drawings paid out of cash takings
    • How they reconcile sales records.

    Provide record-keeping advice or services, in an engagement interview or on an ongoing basis, for example:

    • Assess the record-keeping requirements of the business and the record-keeping capability of your clients to provide tailored advice or services
    • Recommend or set up a suitable record-keeping system for your client, such as a computerised or manual accounting system; or recommend they engage a bookkeeper
    • Review your client's records to ensure they have the processes and systems in place to manage tax records, including cash sales and expenses
    • Advise your clients of their obligation to maintain source records of all sales, such as cash register rolls, including their obligation to provide those records if we request them
    • Advise your clients in relevant industries that a separate sequentially numbered invoice book is recommended, and that invoices should be issued and copies maintained for all sales
    • Provide education to your clients who choose to calculate and lodge their own activity statements.

    Maintain contact with clients throughout the year, for example:

    • Prepare or obtain a copy of your client's activity statements to maintain contact on a quarterly basis
    • Visit your client's business during the financial year.
    End of example

    See also:

    Changing your details

    As a registered tax agent or BAS agent, you must notify the Tax Practitioners Board (TPB) of any changes to your contact details, which automatically updates some of our records.

    Records we automatically update

    We use the data the TPB sends us to automatically update your practice details as well as the:

    • postal address on your client’s income tax and fringe benefits tax role, providing    
      • you have added them to your client list for these roles
      • the postal address for the client is the same as your prior address.
       
    • email address for urgent broadcasts
    • mobile phone number for SMS alerts about portal availability.

    You may need to update your contact details with us for other communications or notifications.

    You can check the Your details screen in the Tax Agent Portal or BAS Agent Portal to verify if we have your latest practice contact details.

    Details you need to update with us

    You will need to update your contact details with us for the following:

    Communications or notifications

    Action required

    Find out more

    Activity statements and related notifications

    You can update the contact details on your client’s activity statement role using the Tax Agent Portal or BAS Agent Portal.

    Adding and removing a client – Tax Agent Portal

     

    Adding and removing clients – BAS Agent Portal

    Portal Mail - email notification

    You must change your email address for these notifications using the Tax Agent Portal or BAS agent Portal.

    Email notification – Portal mail

    Tax professionals newsletter or Tax professionals newsletter – BAS agent edition

    You must subscribe to receive these free weekly newsletters.

    To change your email address, select unsubscribe at the bottom of a newsletter you have received, then subscribe to enter your new email address.

    Subscribe to the Tax professionals newsletter

    Tax professionals alerts

    You must subscribe to receive these free alerts.

    To change your email address, select unsubscribe at the bottom of an alert you have received, then subscribe to enter your new email address.

    Subscribe to the Tax professionals alerts

    ATO website – email updates

    You must subscribe to receive these updates.

    To change your email address, select the link in an email update message you have received.

    ATO website subscriptions

    Next step:

    Retiring, selling or restructuring your practice

    If you are a registered agent and thinking of retiring, or selling or restructuring your practice, there are a number of actions you need to take.

    You need to let us know straight away of your changing situation. You should also inform the Tax Practitioners BoardExternal Link if your requirement for a registration changes.

    If you are restructuring your practice and you:

    See also:

    Informing clients

    You should inform your clients about your practice changes in writing. Your letter should explain the reasons for the changes – usually selling, retiring or restructuring.

    As a:

    • retiring agent, you may take the opportunity to introduce the new or receiving registered agent
    • transferring agent, you should also inform your clients about their right to either continue with the new registered agent or assume responsibility for their own tax affairs.

    Transferring clients

    We can process a whole-of-practice transfer to a new registered agent or entity if certain requirements are met. Some examples where this may happen are when:

    • a practice is sold
    • a sole practitioner becomes a company
    • a sole practitioner becomes a partnership
    • an existing partnership adds or removes a partner
    • two or more partnerships or companies merge.
    • We cannot perform a whole-of-practice transfer for a portion of a client base.

    Your clients' new registered agents (tax agents or BAS agents) are responsible for updating their client details with us.

    Deleting clients from your list

    You should delete those clients you no longer represent from your client list, as well as those clients you have had no contact for some time.

    If you are the selling or retiring agent, it is in your interest to remove all clients from your client list, either through a whole-of-practice transfer or by deleting clients. This will ensure their mail is not sent to you in the future.

    Tax agents can individually delete clients using the Tax Agent Portal or Electronic Lodgment Service (ELS). If you have clients with a FRNN indicator, you will not be able to view or delete them using the ELS.

    BAS agents can individually delete clients using the BAS Agent Portal.

    Requesting a whole-of-practice transfer

    If you are the new (receiving) registered agent or have restructured your practice and have a new RAN, before requesting a whole-of-practice transfer, ensure your details are recorded correctly by contacting the Tax Practitioners BoardExternal Link.

    To request a whole-of-practice transfer, you need to send us a request in writing with the following information:

    • the registered agent name and RAN of both agents
    • the new postal address and roles you want the transfer to apply to – for example, income tax, activity statements, fringe benefits tax
    • a signed authority from both registered agents for the transfer to take place
    • a signed statement indicating that all your clients consent to transfer their information. This is to satisfy the guidelines issued by the Privacy Commissioner
    • for tax agents – whether you want all the FRNN clients transferred. If not, they will need to be deleted or to have given their consent for the transfer.

    Example

    I (name and RAN) - registered agent, hereby notify the Australian Taxation Office that I have transferred my practice to (name and RAN) - registered agent.

    Or

    I (existing entity, for example sole practitioner) - registered agent (name and RAN), hereby notify the Australian Taxation Office that I have restructured my practice and am now practising as (new entity, for example partnership) - registered agent (name and RAN).

    I further notify the Australian Taxation Office that all my clients have agreed that (name of new registered agent) - registered agent, can prepare income tax returns and transact business in tax matters on their behalf.

    Dated this ___________________ day of _____________________ 2010

    Signature of existing registered agent/entity _____________________________

    Signature of new registered agent/entity ________________________________

    Print name ___________________________________________________

     

    End of example

    Send your request to us by:

    • Faxing 1300 550 356
    • Posting it to:

    Australian Taxation Office
    PO Box 327
    ALBURY  NSW  2640

    If you have any queries about whole-of-client transfers, phone us on 13 72 86 and use Fast Key Code 3 2.

    A whole-of-practice transfer takes 28 days to process.

    See also:

    Last modified: 08 Jun 2016QC 43933