Tax body says SMEs using unregistered bookkeepers should miss out on deductions

An accounting body is calling on the government to crack down on the number of businesses using unregistered bookkeepers.

The lobby comes after a similar red flag was raised by tax experts when a BAS (Business Activity Statement) agent was fined $40,000 for lodging returns without a licence.

Tony Greco, tax counsel at the Institute of Public Accountants, told SmartCompany this morning there are potentially thousands of businesses using bookkeepers who are not registered. Laws introduced in 2010 mandate all agents preparing Business Activity Statements operate under a license.

“At the moment there are only 14,000 registered bookkeepers, but how many small businesses are there? Over one million? So by deduction you would say there are quite a few operating outside the system,” Greco says.

“But how many?”

He says businesses face a number of risks by using a non-registered bookkeeper to complete BAS-related activity, (including advice on GST and other tax matters), such as the possibility the agent could be missing some essential information. Greco also referenced the fact a bookkeeper could be fined up to $27,500 if they conduct BAS work while unregistered.

“I use the analogy of a plumber. You never say you’ll use an unlicensed plumber, because he or she may not know what they’re doing.”

“But with bookkeeping, the same analogy doesn’t work because the system hasn’t been put in place long enough, and they aren’t aware of the consequences of not using someone who isn’t registered.”

Greco’s proposal is to make certain deductions only available to registered bookkeepers, who would have to prove their registration during a filing.

“The system works so you can’t claim tax agent service deductions unless it’s being prepared by a tax agent. It would be doing almost the same thing here.”

Greco says the IPA will be putting forward its proposal to the Tax Practitioners’ Board today – and says there’s no reason why the government shouldn’t adopt the plan for the 2013 budget.

“There’s no downside here. It generates revenue and improves the integrity of the system.”