TPB sheds further light on Section 30 requirements
The Tax Practitioners Board has rejected claims that practitioners will be required to become Tax Office auditors under the new code obligations.
In a recent webinar, the Tax Practitioners Board has provided further practical insights into the client record keeping requirements under Section 30 of the Tax Agent Services (Code of Professional Conduct) Determination 2024.
TPB chair Peter de Cure said the requirements set out under Section 30 are very consistent with the existing requirements for clients to maintain records that adequately demonstrate the appropriateness of their tax returns and tax positions.
"These requirements for a practice are really consistent with those," he said.
"I also want to emphasise that these new requirements do not require practitioners to become Tax Office auditors which is something that's been spread around by a few people."
De Cure said the TPB wants to see tax practitioners keeping proper client records that correctly record the tax agent services they are providing or being provided on their behalf to each of their clients, including former clients.
"To satisfy this, records must be in the English language or easily converted into the English language. They must be retained for at least five years after the service has been provided," he said.
"These records must also include all relevant information considered in the provision of taxation services and should include things like information you've exchanged with the client and advice provided to the client."
For more complex matters, de Cure said the practitioner may also include summary information of the relevant facts, the assumptions and the reasoning underpinning any advice given to your client.
"Typical examples of that would be the file notes of what research you might have done on a particular issues or perhaps cases that you've read or tax rulings that you've relied on," he said.
Practitioners should be retaining these sorts of records so that if there is a contest about a position that's been taken, they'll be able to substantiate what the practitioner and their team has done to ensure that the services provided have been appropriately researched and based on good facts, the TPB said.
"Clearly, we're not asking you to keep downloads of a full client's ledger. We understand that a lot of the work that's done these days by tax agents and BAS agents is working on the live ledgers and live records of their clients," said de Cure.
"So what we're actually talking about is having enough substantiation to demonstrate the work that you've done has given proper consideration to the facts and circumstances of the case.
"By complying with this obligation you'll be able to refer to your records as clear evidence of your actions and clarify the things that have been considered in making or recording the tax positions that have been taken."
De Cure said practitioners should also have file notes relating specifically to what they've done in terms of proof of identity checks, but stressed that the TPB does not recommend that practitioners keep copies of identity documents.
"We recommend that you have a proper process to record that you've cited them and that you're comfortable that you've identified the client," he said.
Practitioners should also have copies of client permissions including any relevant consent to disclosure their private information, he added.
"You should also maintain the key client communication and records of discussions with a client, including any requests for further information and responses," he said.
"That might mean copies of letters, copies of emails, copies of file notes that are made in the course of the provision of services and key communications with third parties, for instance, the ATO and other government agencies that are relevant to the tax services.
"[Practitioners should also retain] tax invoices issued to clients evidencing the nature and scope of the work that's been provided for them and records evidencing the receipt and handling of money or property that may be held in trust and disbursement instructions and authorities in connection with the provision of those sort of services."
De Cure stressed that practitioners will not be required to retain duplicate accounting records or source documents belonging to clients.
"That's your client's responsibility. The records you're required to obtain and and keep will need to reference information you reasonably considered in providing tax agent services but this doesn't amount to an obligation to obtain duplicate copies or reproductions of client information," he said.
