Rights and Obligations of the Parties
Under the Taxation Laws
As a client or prospective client, we are required to advise you of your rights and obligations under the taxation laws in relation to the tax or BAS agent services we provide. This document is provided to comply with our obligations under the Tax Agent Services Act 2009 (TASA) and applicable professional standards.
This includes both your obligations as a taxpayer and our obligations as a registered tax or BAS agent under TASA and the Code of Professional Conduct.
Your rights and obligations under the taxation laws
The following is a summary of key aspects of the taxation system that are important for you to understand.
If you have any questions or concerns about the matters outlined below, please contact us.
Operation of the self-assessment system
Australia’s tax system operates on a self‑assessment basis. This means the Australian Taxation Office (ATO) generally accepts information in your Income Tax Returns, Fringe Benefits Tax (FBT) Returns and Business Activity Statements (BAS) as lodged and issues an assessment based on that information.
However, assessments are not final and the ATO may review or audit the information at a later date, subject to applicable time limits.
As a taxpayer, you are required to comply with the taxation laws. Failure to do so may result in penalties, interest charges, audits, debt recovery action, or in some cases, prosecution.
Commissioner’s Ability to Amend an Assessment
Although the ATO generally accepts the information lodged in your return, it may amend an assessment if it is found to be incorrect.
In most cases, the ATO can amend an assessment within 2 years for individuals and smaller entities, and up to 4 years in other circumstances, including where a business is carried on or where the taxpayer is involved in a partnership or trust.
These amendment periods apply broadly across taxpayers, including individuals, companies and trustees, depending on their circumstances.
If an assessment is amended, this may result in additional tax payable, together with penalties and interest. If you identify an error, making a voluntary disclosure may reduce applicable penalties.
There is no time limit for the ATO to amend an assessment where it believes there has been fraud or evasion.
Obligation to Keep Records
The taxation laws require taxpayers to keep records that properly explain all transactions and support the income, deductions and other amounts reported in their tax returns.
These records must be accurate, complete and retained for the required period (generally at least five years). Failure to maintain adequate records may result in adjustments by the ATO, penalties and interest.
Individuals
Individuals claiming deductions must comply with substantiation rules, which generally require receipts, invoices and other supporting documentation. Additional records may be required in some circumstances, such as:
travel diaries for work‑related travel
logbooks for motor vehicle expenses
Failure to retain appropriate records may result in deductions being denied and penalties being applied.
Businesses
Businesses must keep records that accurately record and explain all transactions, including documents supporting how income, expenses, estimates and calculations have been determined.
All records must generally be retained for at least five years and penalties may apply where adequate records are not maintained.
Obligation to Provide Complete and Accurate Information
To enable us to prepare and lodge returns on your behalf, you must provide complete, accurate and timely information as requested.
If sufficient information is not provided, we may be unable to prepare or lodge your return. Under the Tax Agent Services Act 2009, we are required to comply with the Code of Professional Conduct, which prevents us from acting where adequate records or information are not available.
We may question or seek further evidence to support any claims that appear unreasonable or insufficiently substantiated. Where a claim cannot be adequately supported, we may exclude it from your return. You may choose to lodge an objection after assessment, and we will advise you of any additional costs involved.
Records for Clients Operating in the Cash Economy
The ATO has increased its focus on businesses operating in the cash economy, including the use of benchmarking to compare reported income and expenses against industry standards.
Where the ATO is not satisfied with a taxpayer’s records, it may assess income and/or GST based on these benchmarks, which may result in additional tax, penalties and interest. In such cases, the onus is on the taxpayer to prove that the assessment is excessive and determine the correct tax position.
Taxpayers operating in the cash economy should ensure they maintain robust and accurate systems for recording all transactions, including cash receipts and payments.
If you require assistance in establishing or reviewing your record‑keeping systems, we can provide this as an additional service.
Right to Seek a Private Binding Ruling
Where the tax treatment of a transaction is uncertain, you have the right to request a Private Binding Ruling (PBR) from the Australian Taxation Office (ATO).
A PBR sets out the ATO’s interpretation of how the tax laws apply to your specific circumstances, providing greater certainty on the position taken.
Objecting Against an Assessment
If you do not agree with an assessment issued by the ATO, you have the right to lodge an objection. The objection must generally be lodged within 2 or 4 years, depending on the applicable amendment period.
Where an amended assessment is issued, the timeframe for lodging an objection is the later of:
60 days from the date the amended assessment is received, or
the relevant 2 or 4 year period from the original assessment
If you remain dissatisfied after the objection process, you may seek a review by the Administrative Review Tribunal or appeal to the Federal Court.
Onus of Proof Falls on the Taxpayer
In any dispute with the ATO, including matters before the Administrative Review Tribunal or the courts, the onus of proof rests with the taxpayer.
This means that if the Commissioner determines that income has been understated or a deduction is not allowable, it is your responsibility to demonstrate that the assessment is incorrect and to establish the correct tax position.
Safe Harbour Protection
As a client of a registered tax agent, you may be entitled to a safe harbour from certain ATO penalties, provided you meet the required conditions.
To benefit from this protection, you must provide all relevant tax information, including any documents or records requested, and ensure that the information is complete, accurate and provided on a timely basis.
Where these requirements are met, safe harbour protection may apply to errors in your tax return or late lodgement of obligations (such as BAS, IAS or FBT returns). However, any underlying tax and interest charges will still apply.
Your Tax Practitioner’s Obligations
The Tax Agent Services Act 2009 (TASA) and the Code of Professional Conduct establish the professional and ethical standards that registered tax practitioners must comply with. These are administered by the Tax Practitioners Board (TPB).
Under these requirements, tax practitioners are obligated to:
Act lawfully, honestly and in your best interests
Uphold the professional and ethical standards of the profession
Manage conflicts of interest
Take reasonable care in ascertaining your circumstances and applying the tax laws
Maintain the confidentiality of your information, unless disclosure is required by law
Provide services competently and with due care
Not make false or misleading statements to the ATO or TPB and take steps to correct any such statements
Keep proper records, including records of tax agent services provided
Account to you for money or property held on your behalf
Keep you informed of relevant matters so you can make informed decisions
This information is based on the TPB’s “Information for Clients” guidance.
If your Registered Tax Practitioner Fails to Meet Their Obligations:
If a registered tax practitioner does not comply with these obligations, the TPB may take action, which can include:
Issuing cautions or requiring further training or supervision
Suspension or termination of registration
Imposing sanctions or referring matters for court‑imposed penalties
In such circumstances, there may also be consequences for your tax affairs, including increased scrutiny, adjustments, penalties or interest.
You also have the right to make a complaint to the TPB if you believe a tax practitioner has not met these obligations.