BUSINESS TAX FACTSHEET
Australian businesses have traditionally used bookkeepers as an outsourced service to perform basic data entry of transactional information and business financial reporting functions.
The Australian Government has recently introduced the concept of a Registered BAS Agent, which has a number of implications both for bookkeepers and businesses that use a bookkeeper to prepare their financial reports for Business Activity Statements (BAS) on their behalf. Bookkeepers who want to provide this service will now need to apply to and be accredited with the Australian Tax Office.
Bookkeepers perform an essential function that many business owners rely upon for their accounting and financial functions.
A good bookkeeper is able to record the transactional information of the business and summarise it in an accurate trial balance setting out account details and balances that explain the financial results or financial position of the business.
The skill and abilities of bookkeepers varies considerably depending on their experience, education and qualifications. SMEs engage bookkeepers in a range of roles within their business – and the service quality is usually reflected in the price they pay.
Some simply record transactional information, others provide a more comprehensive service such as management reporting that feeds into your business's activities.
The role of the bookkeeper has not traditionally been regulated however the recent measures introduced by the Australian Government place greater emphasis on minimum standards of experience and qualifications to undertake BAS lodgement.
While businesses will continue to be able to use bookkeepers to perform their transactional and data entry role, the designation of Registered BAS Agent allows them to lodge business activity statements with the ATO.
There will now be prerequisite educational and experience levels required to lodge BAS and ensure that due care and quality control is in place for reporting correctly to the ATO.
Under the new measures, bookkeepers that are not registered as a tax agent will no longer be able to charge for the preparation of a business activity statement nor can they lodge it on behalf of their clients.
The bookkeeper is still permitted to process transactions as would normally occur however the reconciliation and the preparation of supporting documentation would not normally be required.
The issue for the client, however, is the preparation and lodgement of a business activity statement.
It is important to note that the use of a Registered BAS Agent will mean that they have certain regulatory obligations and will perform the necessary steps required to ensure that transactions within the client's business have been identified and recorded accurately and that that transactions are relevant to the affairs of the client and within the period that has to be reported.
There must now be adequate work papers that demonstrate the work has been carried out and that any decisions made in relation to the treatment of unusual or complex transactions is evident.
This type of service increases the quality and skills standards but will generally cause an increase in the cost of bookkeeping performed by qualified Registered BAS Agent bookkeepers.
If the client is unable to afford the additional costs of the BAS agent preparing this information they may elect to engage their usual bookkeeper as just a bookkeeper, however the scope of the arrangement changes accordingly and this would involve specific parameters to be in place such that the bookkeeper does not undertake the work required of a Registered BAS agent.
Clients now have the choice of lodging their BAS via their Registered BAS or Tax Agent or directly via the ATO's business portal, which allows them to prepare and lodge their own BAS.
They will not be able to rely on an unregistered bookkeeper to do this on their behalf, as the new minimum standards ensure the responsibility defaults to the client if their bookkeeper isn't a
Registered BAS or Tax Agent.
While it may be argued that the bookkeeper is still performing the transactional recording process and thus their role doesn't change, there is in fact is change manifesting in where the responsibility for accurate reporting lies for the bookkeeper or the client.
If the client chooses not to use a Registered BAS Agent, their choice effectively means that the review function of this activity statement is the direct responsibility of the client. The decision the client must make comes down to a cost versus risk versus time resource analysis and is entirely subjective based on fact.
It is an important issue for businesses that use a bookkeeping function to understand the impact and potential issues that this change in reporting and lodging BAS will have on their business and interactions with the ATO.
For more information about how this impacts you, contact us at Bates Cosgrave on 02 9957 4033 or via email to firstname.lastname@example.org.
Download PDF version: Understanding the bookkeeping and BAS relationship
Last updated October 2011. This factsheet is provided for information purposes only and is correct at the time of publishing. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.