written evidence

[#1]

Hi,

I have a client, refuses to provide receipts for items over $300, but says he can provide them if the ATO request them in an event of an audit.

I understand that its my responsibility to check details on receipts, but in this situation can I include those expenses and  process his tax return without sighting the receipts.

Thanks

[#2 · Accepted solution]

I have a client, refuses to provide receipts for items over $300, but says he can provide them if the ATO request them in an event of an audit.

To be blunt, they are lying to you.  If you support their lie, they will send all their lying friends to you as well.

If they get an audit, they will tell ATO that if they really needed receipts then the tax agent should not have included the claims.

I understand that its my responsibility to check details on receipts

Watch the TPB webinars about duties under the code  -  it does not mean that you must see every receipt for every client, but it does mean that you need to make reasonable inquiry to establish your level of confidence in the truth of what you are being told.

This means: As soon as someone says that they will not show you the receipts, then you know that you need to see them.

From the movie "Ronin"    -  "If there is a doubt, then there is no doubt" (about what you need to do)

From out Taxation Services Guide:

1. Provide any information that we request.  Our aim is to prepare a tax return that can pass a review by the ATO.  A review could happen up to 5 years after your tax assessment issues. If there is fraud or evasion, then there is no time limit on the ATO amending the assessment. We cannot complete returns unless information we request is supplied. If you cannot find the document now, you will not be able to produce it for an ATO review 2 years from now. 
2. Check your tax return to ensure that the information in the return is accurate and complete because, ultimately, you are responsible for what went into it.
3. Understand that for work-related expenses claimed by employees, the substantiation rules mean:     No receipt = no deduction      No exceptions other than provided by law. 

but in this situation can I include those expenses and  process his tax return without sighting the receipts.

If you do, then you will be following in the footsteps of this tax agent:

http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/AATA/2020/4022.html

and look what happened to her.  Don't let it happen to you.

[#3]

Hi (Bruce4tax),

Thank you so much for taking time to send the lengthy answer with details.  I really appreciate it.

I agree with you 100%.  I think I have so many reasons to refuse his job. Just one incident as follows:

He provided an invoice for his rental property, for doing some renovations- tiling.

The invoice has two spaces for addresses- one is for client address, the other one is for delivery address. The delivery address is same as his home address, he insists that it’s a mistake made by the tile company, but the tile delivered to the rental property.

I believe he’s not honest.

Thanks again for your reply.