Welcome to: FNSBKG404 Carry Out Business Activity and Instalment Activity Statement Tasks

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1 Welcome to: FNSBKG404 Carry Out Business Activity and Instalment Activity Statement Tasks Lisa Genna Monday - 6:00 pm to 9:00 pm

2 Class introductions J Class admin. Student Detail Slips (please fill out and return to teacher) TAFE Resit Policy and resit dates for Semester 2, 2017 Unit Delivery and Assessment Guide à for all course material Our classroom rules (including your rights & responsibilities at TAFE) Location of some facilities (toilets; library; counselling; careers advisor) What should you do in an emergency? General WHS (Work Health and Safety)

3 Unit Overview Ref. DELIVERY AND ASSESSMENT GUIDE Performance criteria Resources including recommended text Delivery schedule Assessments Unit grading Solutions to even-numbered end-of-chapter questions in the textbook where to find them? Acronym challenge

4 AMEG House Rules Be punctual (teacher included!) Come to every class (if possible) Come to class prepared (students & teacher) Bring textbook (might help a bit) Create and maintain a safe and supportive learning environment (there is no such thing as a silly question!) Eating and drinking in class totally permitted J

5 Lesson 1 TPB Requirements FNSBKG404 Carry Out Business Activity and Instalment Activity Statement Tasks

6 Overview 1. Introduction to activity statements 2. Lodgement of activity statements 3. Interacting with the ATO 4. Providing BAS services

7 Ok let s begin how much do you already know?

8 Which statement do you identify with the most? A: I don t really know anything about BAS. It stands for Bananas, Apples and Strawberries, right? B: I know a little about BAS. I know that the ATO requires this type of statement to be prepared by certain taxpayers. C: I know lots about BAS. I have experience preparing an activity statement in the workplace.

9 Video Clip: Tax basics for small business Activity Statements

10 1. Introduc,on to ac,vity statements

11 Businesses are required to comply with tax legislation. The New Tax System came into effect in 1999 and introduced the Goods and Services Tax (GST). GST replaced indirect taxation with a 10% charge on most sales made by businesses. This effectively shifted the job of tax collection onto businesses. Businesses are required to pay amounts collected to the Australian Taxation Office (ATO) through the use of Activity Statements. Businesses are required to lodge Activity Statements on either a monthly, quarterly or annual basis to the ATO.

12 Types of Ac2vity Statements There are two (2) types of activity statements: The Business Activity Statement (BAS), which must be completed by those taxpayers who are required to report GST in that activity statement period. The Instalment Activity Statement (IAS), which applies to those not registered for GST, taxpayers with investment income and GST-registered businesses who are required to report GST on a quarterly basis but have other monthly reporting obligations.

13 Business Ac2vity Statements All taxpayers who are registered for GST must report their tax obligations on a BAS. A BAS can be used for: GST (lessons 5 and 6) PAYG withholding (lesson 3) PAYG instalments (lesson 4) Luxury Car Tax (LCT) (lesson 7) Wine Equalisation Tax (WET) (lesson 7) Fringe Benefit Tax (FBT) instalments (lesson 7)

14 Business Ac2vity Statements A business that is registered for GST purposes must also apply for an Australian Business Number (ABN). It will then be required to: Complete a BAS. Lodge the BAS. Report and pay tax as required.

15 Instalment Ac2vity Statements The IAS mainly applies to individual taxpayers with investment income (e.g. rental, interest or dividend income) or who have businesses with an annual turnover below the minimum GST registration threshold of $75,000. In addition, some GST-registered businesses must complete a quarterly BAS and a monthly IAS for the months in between.

16 Instalment Ac2vity Statements An IAS can be used for the following reporting obligations: PAYG withholding (lesson 3) PAYG instalments (lesson 4) FBT instalments (lesson 7)

17 2. Lodgement of ac,vity statements

22 Due dates of instalments Quarterly payments are due 28 days after the end of each quarter, with a one month extension for the December quarter. If a taxpayer s income year starts on 1 July, their instalments will be due: 28 October 28 February 28 April 28 July

23 Due dates of instalments Annual payments are due on 21 October after year-end if the taxpayer s income year starts on 1 July. The ATO will advise taxpayers if they are eligible to make an annual payment. If the taxpayer wishes to pay on this basis, they must complete the form the ATO sends at the time the first instalment is due. The taxpayer is still required to lodge an annual income tax return at the end of the income year. Any amounts of PAYG instalments that have been paid during that year will be credited to the taxpayer s assessment and they can either claim a tax refund or pay the balance of outstanding tax.

24 Due dates of instalments Declaration and Lodgement To finalise the BAS form the declaration box must be signed by an authorised person before lodgement to the ATO.

25 Who can sign an Ac2vity Statement? Once the activity statement is completed and the taxpayer is satisfied that all of the information provided is true and correct, it must be signed and dated. If the activity statement is being lodged electronically by an agent, the agent will need to sign the declaration on the activity statement using their electronic signature. Where an agent lodges a taxpayer s activity statement, the taxpayer must sign a declaration stating that: The taxpayer authorises the agent to give the activity statement to the Commissioner. The information provided to the agent to prepare the activity statement is true and correct.

26 Lodgement of Ac2vity Statements Taxpayers can lodge activity statements online using the ATO s Business Portal or electronic commerce interface (ECI). Registered tax agents and registered BAS agents can help prepare and lodge a taxpayer s activity statement and can lodge them electronically via the electronic lodgement service (ELS). If the taxpayer has no amount to report at any label due to no business activity during the period, lodgement of the BAS/IAS can be made over the telephone. Otherwise, the completed BAS/IAS can be mailed directly to the ATO using the pre-addressed envelope provided.

27 Lodgement of Ac2vity Statements Late Lodgement Penal,es The penalty for lodging an activity statement late is one penalty unit (currently $180) for each 28 day period, or part of a period, that the activity statement is outstanding, up to a maximum of 5 penalty units ($900). For a business with an annual turnover between $1 million but less than $20 million, the penalty is multiplied by two. For a large business with an annual turnover of $20 million or more, the penalty is multiplied by five, resulting in a maximum penalty of $4,500.

28 3. Interac,ng with the ATO

29 Only primary contacts (including public officers), authorised contacts, registered tax agents, registered BAS agents and temporarily appointed tax professionals can contact the ATO on behalf of an entity. What is a primary contact? A primary contact has authority to access all roles on their client s account, and add, remove or update the list of authorised contacts. What is an authorised contact? Primary contacts can authorise contacts to act on their behalf in relation to some or all of the entities tax affairs. They are not able to add, remove or update authorised contacts unless the authorised contact declares they have been given authority to act on behalf of the entity in this capacity.

30 En2ty Types/Primary Contacts

31 4. Providing BAS services

32 After completing this part, you should be able to answer the following questions: 1. Why was the Tax Agent Services Act 2009 introduced? 2. What is the role of the TPB? 3. What does a BAS provision include? 4. What is a BAS service as defined under the Act? 5. Who is allowed to provide a BAS service? 6. Can a BAS agent provide a BAS service for a fee if they are not registered? Are there any consequences for doing so? 7. Can a voting member of a Recognised Professional Associations register as a BAS agent? 8. What do you have to do / what registration criteria do you have to meet before you can become a BAS agent? 9. Do BAS agents have to comply with obligations set out in the Code of Professional Conduct? Are there any consequences for not doing so? 10. Do registered BAS agents need Public Indemnity Insurance? Why?

33 Registered BAS agents can charge a fee for providing BAS services to a taxpayer. A BAS service is defined as: Preparing or lodging an approved form about a taxpayer s liabilities, obligations or entitlements under a BAS provision. Giving advice about the taxpayer s obligations under a BAS provision. Transacting any business with the Commissioner on behalf of a taxpayer in relation to their obligations under a BAS provision.

34 A BAS provision includes/relates to: Goods and Services Tax (GST) law Wine Equalisation Tax (WET) law Luxury Car Tax (LCT) law Fuel Tax law Fringe Benefits Tax (FBT) law relating to collection and recovery only Pay-As-You-Go (PAYG) withholding PAYG instalments

35 Specifically

36 Legisla2on rela2ng to BAS services To ensure appropriate standards of professional and ethical conduct by tax agents and those providing BAS services, the Tax Agent Services Act 2009 was passed in Parliament. The Act became operational in February 2010 after allowing time for the appointment of a national Tax Practitioners Board and the establishment of administrative resources to administer the Act.

37 Tax Agent Services Act 2009 The key features of the Act: The establishment of a national Tax Practitioners Board (TPB), replacing the existing State-based boards. A legislated code of professional conduct that governs the provision of tax agent services. A wider range of disciplinary sanctions available to the new board, including a civil penalty for certain types of serious misconduct by tax practitioners. Registration and regulation of BAS service providers as BAS agents. Protection for taxpayers from tax shortfall penalties for making false or misleading statements, where a taxpayer demonstrates that they have taken reasonable care.

38 BAS Agents BAS agents must be registered with the TPB. A BAS agent may be an individual, partnership or company. If the BAS agent is a partnership or company, a sufficient number of individuals (being registered BAS agents) are required to provide BAS services to a competent standard, and to supervise other employees. A BAS Service Provider (BSP) is either: A registered tax agent. A registered BAS agent. An employee who conducts BAS services for a company or partnership that is a registered BAS agent.

39 Who can provide a BAS service for a fee?

41 BAS Agents The requirements and recommendations apply to bookkeepers providing BAS services for a fee and the registered tax agents under whose direction they are working. BAS agents who charge for BAS services are required to be registered with the TPB. To be registered they must hold certain academic qualifications and meet experience requirements.

Penal2es Under the Tax Agent Services Act, if a fee for BAS services is charged by a person who is not a registered BAS agent, or a person eligible to do so, they may be prosecuted and fined up to

42 Penal2es Under the Tax Agent Services Act, if a fee for BAS services is charged by a person who is not a registered BAS agent, or a person eligible to do so, they may be prosecuted and fined up to $45,000 for a breach of this law. Conduct prohibited without registration: Providing BAS agent services. Advertising BAS agent services. Representing that you are a BAS agent or BAS service provider. Career as BAS agent à à à

43 Recognised Professional Associa2ons (RPAs) Voting members of the following recognised professional associations are eligible to register as BAS agents: Association of Accounting Technicians. Association of Chartered Certified Accountants. CPA Australia ( CPAs ). Institute of Certified Bookkeepers. Institute of Chartered Accountants in Australia ( CAs ). Institute of Public Accountants.

44 How to Register as a BAS Agent A standard application: The applicant must meet the standard registration requirements. They must be a fit and proper person and meet qualification and experience requirements. The applicant will be registered for three (3) years from the day the TPB decides on the application. The applicant cannot legally provide a BAS service prior to approval of registration. The application fees for BAS agent standard application are: $100 - for registration as a BAS agent who carries on a business. $50 - for registration as a BAS agent who does not carry on a business.

45 Fit and Proper Person Requirement To be eligible for registration, the applicant must satisfy the TPB that they are a fit and proper person. TPB/Subsidiary_content/ 0315_Fit_and_proper_person.aspx

47 Qualifica2ons An individual who wishes to register as a BAS agent must satisfy the TPB they have sufficient qualifications. The individual must hold at least a Certificate IV in Financial Services (Accounting) or Certificate IV Financial Services (Bookkeeping) from an Australian Registered Training Organisation (RTO) such as TAFE. The qualification must include a course in GST/BAS taxation principles. The type of GST/BAS course you need will depend on when the application for registration or renewal is made.

48 Relevant Experience To register as a BAS agent there are two (2) options relating to relevant experience requirements for individuals. Option 1: Experience Based on Accounting Qualifications The individual must have had at least 1,400 hours of relevant experience in the past three years. Option 2: Experience Based on Membership of a Professional Organisation If the individual is a voting member of a recognised professional association the relevant experience requirement for the past three years is 1,000 hours.

49 Other Responsibili2es Not knowingly obstruct the proper administration of the taxation laws. Advise the client of the client s rights and obligations under the taxation laws that are materially related to the BAS agent services provided by the agent. Maintain the professional indemnity insurance that the TPB requires the agent to maintain. Respond to requests and directions from the TPB in a timely, responsible and reasonable manner.

50 Failure to Comply with the Code BAS agents are required to comply with all the obligations set out in the Code of Professional Conduct. If, following an investigation, the TPB is satisfied that a BAS agent failed to comply with the Code; it may impose one or more of the following administrative sanctions: A written caution. An order requiring the agent to take one or more actions including: Ø completing a course of education or training specified by the TPB, Ø providing services (for which the BAS agent is registered) only under the supervision of another BAS agent that has been specified in the order, or Ø providing only those services that are specified in the order. Suspending the agent s registration. Terminating the agent s registration.

51 Professional Indemnity Insurance (PII) Requirements It is possible that clients may suffer financial loss due to the conduct of a BAS agent in the provision of BAS services. Since 1 July 2011, registered BAS agents are typically required to have adequate Professional Indemnity Insurance (PII) cover that meets the TPB s minimum requirements. Adequate Professional Indemnity Insurance will satisfactorily indemnify an agent against civil liability that may arise in the agent s provision of BAS services.

52 This week s homework Get a copy of the recommended text. Download and read a copy of the DELIVERY AND ASSESSMENT GUIDE for this unit (available on ). Complete assigned research activity (started in-class).

53 You are now ready to start the next lesson on: The Business Tax System Income Tax; ABN and TFN Requirements

Welcome to: FNSBKG404 Carry Out Business Activity and Instalment Activity Statement Tasks

Welcome to: FNSBKG404 Carry Out Business Activity and Instalment Activity Statement Tasks Lisa Genna lisa.genna2@tafensw.edu.au Monday Room H G.09-6:00 pm to 9:00 pm 1 Lesson 3 FNSBKG404 Carry Out Business