Extinction Event

Many Scientists believe that dinosaurs were wiped out by a mass extinction event, an event so devastating that not even the mighty T-Rex could survive.

A giant asteroid crashed the party around 66 million years ago and the rest, as they say, is history.

So, what relevance does an extinction event have to do with the strata industry and what’s the point of this Chicken Little ‘the sky is falling’ routine?

The asteroid is the TPB (Tax Practitioner’s Board); but unlike the poor old dinosaurs, strata managers can make a conscious business decision to avoid extinction.

So, should you be preparing and lodging tax returns or Business Activity Statements (BAS) on behalf of your bodies corporate clients, even under the guise of being the en-masse public officer?

Here’s a hint – if you are carrying on this practice but don’t know who or what the TPB is and you are not a registered tax agent, I would strongly recommend speaking to your lawyer.

Concerns have been raised in the past about contravention of the civil penalty provisions by managers under Part 5 of the Tax Agents Services Act 2009 (TASA), by providing tax and BAS agent services for a fee or other reward, whilst unregistered as a tax agent or BAS agent.

The fee may not be charging specifically for a tax or BAS preparation; instead, the fee is incorporated into a general management fee or public charge.

The TPB has advised that under TASA, a service is taken to be provided for a fee “even if the fee for the service is bundled with other fees for other services”: a practice known as bundling.

The extinction event here is the funded and resourced TPB, and their discretion to apply to the Federal Court of Australia for an order for pecuniary penalties for up to $42,500 against an individual, and up to $212,500 for a body corporate for each contravention.

To put this in perspective, a strata manager who manages 100 plans and who lodges and prepares tax returns on behalf of all their body corporates but who is not a registered tax agent would be potentially liable for the following pecuniary fine:

100 buildings x $212,500 x 4 years (assuming the TPB decide to go back only 4 years) = $85 million = Bye-Bye.

The evolution of the strata manager to trusted professional advisor will in part be determined by the ability to identify existential threats and act accordingly – this is one of those.

Where you are unsure about your current tax and BAS arrangements and want to mitigate the risk of breaching the civil penalty provisions under Part 5 of the TASA, I would strongly recommend shoring up your position with legal advice and contacting the Tax Practitioners’ Board, on 1300 632 829.

Joel Russell

Client Director

Email: Joel.Russell@kellypartners.com.au

Website: www.kellypartners.com.au

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