Section 50-30 TASA – A paradox

I've often wondered about why s50-30 was ever inserted into TASA.?In brief, s50-30 says that a tax agent or BAS agent is liable for a serious civil penalty if they sign a declaration or other statement in relation to a taxpayer that is required or permitted by a taxation law (or by a BAS provision for BAS agents), where the document that the declaration or statement relates to was prepared by an unregistered entity without supervision and control (which includes, but is not limited to, an employment relationship) by a registered entity. ?There is a safe-harbour in s51-30(5) which says that the civil penalties do not apply if the agent took reasonable steps to ensure the accuracy of the document

The necessary elements of the offence are that:

1.?????A registered tax agent;

2.?????In the course of providing a tax agent service;

3.?????Affixes her or his signature to a document;

4.?????The document contains information that is required or permitted under a taxation law which has not been checked for accuracy; and

5.?????The document was not prepared by the agent or another registered tax agent, or an supervised employee.

If the necessary elements are satisfied, the agent is in breach of TASA and liable to a civil penalty of 250 penalty units or approximately $45,000. The TPB can approach the Federal Court within 4 years to enforce the penalty.

The Explanatory Memorandum that accompanied the introduction of TASA gives the benign example of a registered agent who signs and lodges income tax returns prepared by an unregistered person, in exchange for a share of profits.

But is it that simple?

You see, an element that is not necessary is that the document containing the statement or declaration be provided to the Commissioner.?Also, the signature element doesn’t require a wet signature.?All jurisdictions have introduced emergency pandemic legislation allowing for the efficacy and effectiveness of digital and electronic signatures as the equivalent of wet signatures.

So why do I get concerned??I periodically see accountants who digitally approve bank-loan related documents that affirm a taxpayer's asset and taxable income position.?These are documents that have not been prepared by a tax agent, where a commercial lender requires the agent to provide an affirmation by way of digital signature before a loan is advanced to a borrower.?

Since the content of the documents goes to a taxpayer's taxable income, it would arguably be a statement that is permitted by a taxation law.?Furthermore, the tax agent can't say that the statement has been checked for accuracy.?All the agent can say is that the taxable income has been calculated based on instructions from a taxpayer; it is highly unlikely that the accuracy of the information has been determined by the agent.

All the necessary elements for the breach are therefore satisfied.?And yet, this happens all the time.?There are also many other circumstances that an agent signs off on taxation information that hasn’t previously been checked for its accuracy.?Consider recent statements made to the ATO about Jobkeeper and Cash Flow Boost eligibility.?Many such statements haven’t been checked for accuracy.

The point is, if you're an agent and asked to sign-off any statement that contains any tax information, unless you're absolutely certain about who prepared it and its accuracy, then don't sign or affirm the statement.?It's that simple.