If you are providing even basic payroll services to clients for a fee, and are not a registered tax or BAS agent, are you aware that you are likely in serious breach of the law?
Given the complexity and magnitude of modern payroll (including PAYG withholding, payroll tax and determining worker entitlements under the Fair Work Act, Awards, and superannuation law) it’s increasingly common for business owners to outsource the payroll function to contractors/organisations who specialise in this area. This gives the business owner peace of mind that the payroll is in the hands of an expert; allowing the business to get on with more profitable tasks.
If you are one of these contractors/organisations who provide an outsourced payroll service to a client for a fee, are you aware that unless you are registered as a tax agent or BAS agent with the Tax Practitioners Board, you are likely in serious breach of the law.
By way of background, The Tax Agents Services Act 2009 (TASA) permits only tax and BAS agents to provide “BAS services” for a fee to members of the public. A BAS service includes:
- Ascertaining a client’s liabilities, obligations or entitlements under a BAS provision
- Advising a client about their liabilities, obligations or entitlements under a BAS provision
- Representing a client to the Tax Office in relation to a BAS provision.
A ‘BAS provision’ specifically includes dealing with PAYG withholding, which is an integral element of providing a payroll service. Additionally, following recent reforms, a BAS service also includes dealing with a client’s superannuation guarantee obligations as well as the production of payment summaries.
Therefore, where you provide an outsourced payroll service to a client for a fee (or even just a minor service such as advising or ascertaining the Pay As You Go Withholding tax from the wages it would be an unavoidable fact that you would be rendering BAS services pursuant to the TASA legislation. Consequently, you must be registered with the Board either as a tax or BAS agent.
To become a registered BAS agent you must first meet minimum education requirements. These include holding a Certificate IV (Bookkeeping) or Certificate IV (Accounting), including the completion of a course in basic GST/BAS taxation principles approved by the Board. In addition to the Certificate IV qualification, registrants are required to complete ongoing continuing professional education (CPE). Alternatively you can register as a tax agent with a “payroll service provider” condition that will allow you to operate in the payroll space.
Additional qualifications in payroll include a Certificate IV in Payroll Administration or Diploma of Payroll Management. To obtain registration you must also satisfy the Board that you have sufficient “relevant experience” and are a “fit and proper person”. Additional requirements of registration are that you agree to abide by a Code of Professional Conduct and hold a policy of professional indemnity insurance.
The consequences of providing payroll services for a fee without being registered are severe. Under the legislation, the Board has the power to impose fines of between $5500 and $137,500 per offence. Its most recent conviction in December 2013 saw an unregistered person fined $32,000.
In light of the above information, if you are not registered and are providing payroll services for a fee (even just “doing the pays”), you should immediately cease providing such services. If you wish to continue in the industry, you will first need to obtain the above qualifications and meet certain experience criteria before applying to the Board for registration.
For more information about payroll education and accreditation, have a look at the Australian Payroll Association website.
Tracy Angwin is the founder and managing director of the Australian Payroll Association.