Announcements
Worried you’re missing part of your refund? Remember, the low and middle income tax offset isn’t a refund on its own – it’s used to offset (or reduce) the amount of tax you pay. The offset amount you may be entitled to is automatically applied and could range between $255-$1080, depending on things like your taxable income and how much tax you’ve paid.
Still not sure? Ask the Community

ATO Community

Re: Who is "responsible" for the accuracy of a tax return?

Newbie

Views 686

Replies 1

Hi,

I manage a discretionary trust, and provide detailed (and accurate of course) information to our accountant - one of the big ones. I sign the first part of the ELD declaring:

     • All of the information I have provided to the agent for the preparation of this document is true and correct
     • I authorise the agent to give this document to the Commissioner of Taxation.

and they sign the declaration:

     • I have prepared this Trust return and its related schedule(s) in accordance with the information supplied by the entity;
     • I have received a declaration made by the entity that the information provided to me for the preparation of this return is true and correct,
     • I am authorised by the entity to give the information in this return to the Commissioner.

I believe this means that I am not responsible for any errors made by the accountant processing and transforming my (correct) source information into the tax return.  However the accountant has put in writing to me:

     Responsibility for the contents, correctness and completeness of the return (and related schedules) rests with you.

     By signing the return, you will be declaring that the information in the return is ‘true and correct’.

Is this justifiable? 

If an accountant/tax agent makes a huge error in the interpretation or calculation of some complicated area that is beyond the client's understanding, which they have to take on faith, who would the ATO hold "responsible"? In the theoretical case that the error was so serious that the ATO took action, who would be held liable? Would the agent be accountable for their error, or could they wash their hands of it and throw the client under a bus becaus they signed it off? It seems to me the ELD makes it quite clear it's the agent.

   Even the ATO website is a bit hazy on this.  On this page (https://www.ato.gov.au/tax-professionals/prepare-and-lodge/managing-your-lodgment-program/client-dec...) it says:

     The client declaration must state both that:

     - they have authorised you to lodge the document
     - the information is true and correct.

But there's a big difference between "the information (lodged) is true and correct" versus "the information (submitted is based on information that is) true and correct"... at least when there is a significant transformation of the information performed by the tax agent.

    In fact at the end of the page are references to "Sections 388-65 and 388-70 of schedule 1 to the Taxation Administration Act 1953", and they just say what the ELD says.  And whilst the client must authorise the agent to lodge the document, and that suggests the client believes or trusts that the agent has prepared it accurately, there is no implication in the Act or ELD that the client is in any way competent to verify or warrant the agent's work.

  So is it fair to say my accountant's statement is wrong?  I would like to gently suggest to them that the written assertion needs a re-think.

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee

Replies 0

Ultimately it is up to the taxpayer to ensure their tax return is accurate. Just because you use an agent doesn’t mean you are not responsible. For example, you would still need to pay any shortfalls if Income was understated. In my experience, if yourself and the agent at acting responsibly and it is an honest mistake you would avoid penalties. I believe this is within the tax payer’s charter.
1 REPLY 1

Most helpful response

Devotee

Replies 0

Ultimately it is up to the taxpayer to ensure their tax return is accurate. Just because you use an agent doesn’t mean you are not responsible. For example, you would still need to pay any shortfalls if Income was understated. In my experience, if yourself and the agent at acting responsibly and it is an honest mistake you would avoid penalties. I believe this is within the tax payer’s charter.