Terms of engagement
KSG has been providing accounting, taxation and audit services on Sydney’s North Shore for 15 years. Our highly specialised team has a wealth of knowledge and qualifications including registered tax agents, registered company auditors and registered SMSF auditors.
Terms of engagement
Set out below are our standard scope and terms for all engagements for which we have been appointed as accountants and/or taxation advisors.
By engaging KSG you are bound (as is KSG) to the terms of the engagement as set out here unless these are expressly altered in writing by both parties.
Our engagements are conducted in accordance with the relevant standards and ethical requirements of Chartered Accountants Australia & New Zealand and CPA Australia.
With effect from 1 March 2010, a new regime for the regulation of tax agents has taken effect under the Tax Agent Services Act 2009 and accompanying legislation (TASA). The new regime has implications for registered tax agents and also for their clients.
An important feature of TASA is the provision of a “safe harbour” protection from penalties in certain circumstances for taxpayers who engage registered tax agents.
To obtain the benefits of “safe harbour” protection, the legislation requires the taxpayer to provide the registered tax agent with “all relevant taxation information” to enable accurate statements to be provided to the Australian Taxation Office. This requirement may be important to both parties in identifying and understanding the purpose and scope of the engagement as set out below and may also affect other matters discussed below.
You will find further discussion on the “safe harbour” protections via our website.
Purpose, Scope, and Output
KSG will provide the agreed professional services which will be conducted in accordance with the relevant professional and ethical standards issued by the Accounting Professional & Ethical Standards Board Limited (APESB). The extent of our procedures will be limited exclusively for this purpose.
As a result, (unless it is specifically a part of the engagement) no audit or review will be performed and, accordingly, no assurance will be expressed. Our engagement cannot be relied upon to disclose irregularities including fraud, other illegal acts and errors that may exist. However, we will inform you of any such matters that come to our attention.
Our involvement in this type of engagement will not disclose fraud, defalcations or other irregularities which may occur. However, any material weaknesses in the accounting or internal control systems which come to our notice will be drawn to your attention.
Please be aware that:
(a) you are responsible for the accuracy and completeness of the particulars and information provided in relation to taxation services and this responsibility rests with you;
(b) any advice given to you is only an opinion based on our knowledge of your particular circumstances; and
(c) a taxpayer has obligations under self-assessment to keep full and proper records in order to facilitate the preparation of accurate returns. It is the taxpayer’s responsibility to keep those records for five (5) years.
Any information acquired by us in the course of our engagement, including any information relating to your affairs whether or not it belongs to you or not or is provided by you or not, is subject to strict confidentiality requirements. Information will not be disclosed by us to other parties except as required or allowed for by law or professional standards, or with your express consent.
KSG is subject to quality control review programs conducted by Chartered Accountants Australia & New Zealand, CPA Australia and other independent firms of the KSG network. Our audit files may also be subject to review by the Australian Securities & Investments Commission (or its representatives / agents) to monitor compliance with legislative and professional standards. It is further agreed that our files may be made available under these programs with your prior written consent, which shall not be unreasonably withheld.
Under the standards and ethical requirements of the Institute of Chartered Accountants in Australia and CPA Australia and the Privacy Act the information that you have provided to us is subject to strict confidentially requirements and security. We are prohibited in discussing your affairs, or providing copies of your returns to any other person without your express wish and authorisation excepting the ATO where we act as conduit of information from you to the ATO and vice versa. At all times we shall inform you when we have provided copies of returns to other third parties (e.g. banks to support a mortgage application for a home loan). Our company’s Privacy Statement is on our web site and can be downloaded from here.
You agree that we may communicate with you using electronic media. You acknowledge that electronic media is inherently insecure, may be intercepted, may not be delivered and may contain viruses. Neither of us is responsible for loss suffered in connection with the use of such electronic means.
Our professional services are conducted and the required reports and documents will be prepared for distribution to the relevant specific organisation or party for the purpose as agreed (normally you). We disclaim any assumption of responsibility for any reliance on our professional services to any party other than as specified or agreed, and for the purpose which it was prepared. Where appropriate, our report will contain a disclaimer to this effect.
For the purpose of eliminating any doubt, we will not be held responsible should a financial institution (or any other party) rely on financial statements we have provided to you. Unless we consent in writing:
- Nothing produced by us is to be used or disclosed for any purpose other than its intended purpose. It should not be referred to in any document other than as agreed, not provided to any person other than your professional advisors and representatives;
- Nothing produced by us may be relied on by anyone other than you; and
- You may not name us or refer to us or our work in any written work (other than to your Professional Advisors) except as may be required by law.
You may provide a copy of work produced to your Professional Advisors provided that each Advisor is aware of the limits placed on our work and that they treat our work as confidential and do not use or disclose any of the work produced in a way that it is not consistent with its purpose.
You may provide copies of our work to anyone else with our written permission. We may require such third parties to sign an agreement as to their use of our work.
We are not responsible to anyone (other than you) who obtains access to our anything produced by us without our prior written permission.
Fee accounts and terms
Our aim is to effect a mutually agreed fixed price agreement for all the services as supplied. The fees have been calculated on the basis of the complexity of the noted work assignment and the skills and expertise of the professional staff member who will be required to complete the tax and accounting services work assignment.
Fees will be reviewed annually on or after 1 July of each year.
Payment of any account is required to be made within 14 days, unless special alternative arrangements are made with us prior to the due date. Payments can be made online via our KSG website here.
To assist with cash flow, we offer our clients the option of a monthly direct debited instalment via a Quickfee arrangement.
The interest rate charged on such an arrangement is competitive (especially when compared with other kinds of funding such as credit card and overdraft) and all instalments are fully tax deductible, with no interest penalty if the arrangement is paid out early.
If you would like to be considered for our Quickfee option, please discuss further with a member of your service team.
If fees are not paid within our Terms of Trade, we reserve the right to:
- Levy a charge of up to 10% to cover the costs of recovery action.
- Decline to provide ongoing services until the account has been settled or satisfactory arrangements made in respect of the settlement of the outstanding account.
- Seek legal or other remedy to recover the agreed fee
It is our requirement that the owners/directors of the business personally guarantee the payment of all accounts for professional fees, including out-of-pocket expenses rendered by us from time to time.
Each client in the Group agrees that we can bank into our trust account tax refund amounts received on behalf of that client and can deduct from those amounts any fees owed to us either by that client or by any other member of the Group.
GST – Professional Fees
Our professional fees are inclusive of Goods and Services Tax (“GST”). if the services we are providing are provided to your business then you may be able to claim a GST input tax credit for the GST you pay us. However, this will not be the case if the services we provide are used by you in creating an input taxed supply. In this situation you cannot claim the GST associated with our professional fees as an input tax credit.
if your matter involves a mixture of taxable, GST free and input taxed supplies we will not apportion our professional fees between these categories of supply unless you have expressly requested us to do so.
Please note that if you make such a request after the commencement of any particular matter it may not be possible for us to subsequently apportion professional fees that were incurred prior to receiving your request. if you need separate advice on whether you will receive the benefit of a GST input tax credit for the GST paid to us then please contact us.
GST – Disbursements
In addition to our professional fees, you will be responsible for payment of expenses which we incur on your behalf (together with the GST that we pay in relation to such expenses as set out below).
Certain government charges and fees included in some matters undertaken in the scope of our engagement are effectively “GST-free” to the applicant, but will attract the 10% GST if paid by KSG and then passed on to you as part of our services. Accordingly for certain disbursements in this category, namely:
- ASIC fees;
- new company and trust deed orders; and
- other specific disbursements notified from time to time,
we will act as your agents in incurring those disbursements. You will therefore technically be primarily liable to pay the account to the supplier. Under this agency relationship, you will receive the benefit of any concessional GST treatment of any part of the disbursement.
Where GST is payable on some or all of a supply acquired by us as your agent, we will forward you the Tax Invoice and you will be entitled to claim the input tax credits directly if you have an ABN and are entitled to claim input tax credits.
Occasionally, we may contract with outside parties for services in connection with our professional engagement on your behalf (subject to prior written approval by you). If we do, we may forward the invoice to you and request payment be made directly to the supplier or in some cases require that you provide us with separate cheques for the relevant amounts to be paid directly to the relevant government body or supplier.
For all other disbursements (couriers, searches, photocopying etc) the treatment will be the same as for professional fees – KSG will incur the costs at first instance and invoice them on to you after making allowance for any GST input tax credits received by us on the acquisition. These invoices will include GST for which you may be entitled to claim an input tax credit.
It is our general policy to retain clients’ files for a period of seven (7) years (internal and external storage). After this time, we may destroy those files unless you otherwise advise us in writing.
Termination of Professional Services
You may choose to terminate our engagement by giving us written notice at any time. If you do so, you shall be obliged to pay our fees for work done and for other charges incurred up to the time of the termination. Subject to fulfilling our professional responsibilities, we may terminate our engagement at any time by giving you reasonable notice or if our fees are not paid when due.
Ownership of Documents
All original documents obtained from you arising from the engagement shall remain your property. However, we reserve the right to make a reasonable number of copies of the original documents for our records.
Our engagement will result in the production of various documents, forms, and reports. Ownership of these documents will vest in you. All other documents produced by us in respect of this engagement including our working papers, the general ledger and draft documents will remain the property of KSG, subject to any statutory obligations.
If our services are terminated (by either party), each client separately agrees that we shall be entitled to retain all documents owned by that client (including all tax refund cheques of that client which come into our possession) until payment in full of all outstanding fees outstanding from all members of the Group on any account. Where copies of any documents released to you are required for our records, you will be charged for the cost of photocopying at our normal rates.
Limitation of Liability
Our liability is limited by a scheme approved under Professional Standards Legislation. Further information is available on the CAANZ website: https://www.charteredaccountantsanz.com/member-services/member-obligations/certificate-of-public-practice-reviews-and-compliance/insurance-and-liability/liability-capping-scheme
Engagements of our Common Services
We shall now briefly outline the basis of our engagement in the context of the specific services to be provided.
Income Tax Return(s)
In preparing your income tax return(s), we will rely on the information provided to us. In general, we will assume that we have been given all of the relevant information by you and prepare your return based on this information. Please ensure that you have all source documentation available to allow KSG to analyse the income tax implications of any transaction, if we request to see it. Whilst we will not as a matter of course be looking at these documents, the ATO will expect you (and you are required) to have them available before any claim is made in your income tax return. We may in some circumstances also request to see source documents if a tax issue is particularly contentious.
It is also expected that, in respect of individual income tax returns, each person will have the necessary documents so as to comply with the substantiation provisions of the Income Tax Assessment Act.
We will specifically advise as to the requirements of the substantiation provisions relating to your income tax return and of the necessity to obtain acceptable receipts as specifically required by the legislation. We will not, however, be checking that the requirements of the substantiation provisions have been satisfied.
This specifically means that we will not be reviewing your log book or any calculations or information you provide us, for example a rental property schedule either prepared by you on spreadsheet or by a property manager. If you require assistance in completing a log book or preparing any calculations or you would like us to review such work, please discuss this with us. This will entail work which is outside the scope of this engagement and will be charged as additional services.
From time to time, KSG prepares templates and schedules to assist with the collation of information to complete income tax returns.
These will be provided free of charge.
During the course of preparing an individual tax return, we will check the ATO’s “pre-filling report” that discloses information that the Tax Office have relating to your tax file number. If an item appears on this report that KSG believes should be included in your tax return, we will include it.
Before we lodge any returns on your behalf, we will forward the documents to you for approval. If you are late in providing information, we will do our best to meet the time limits, but we will not be responsible for any late lodgement penalties or interest charges you may incur.
The fee for this service does not cover any inquiries made to us or investigations involving us conducted by the Australian Taxation Office. Substantial penalties apply for an incorrectly prepared income tax return.
Upon signing the declarations included with your tax return, you are acknowledging that you have read the tax returns provided, and accept that they are a true and complete record of your taxable income.
Whilst the Commissioner of Taxation will accept claims made by a taxpayer in an income tax return and issue a notice of assessment, usually without adjustment, the return may be subject to later review. Under the taxation law such a review may take place within a period of up to four (4) years after tax becomes due and payable under the assessment. Furthermore, where there is fraud or evasion there is no time limit on amending the assessment. Accordingly, you should check the return before it is signed to ensure that the information in the return is accurate.
Where the application of a taxation law to your particular circumstances is uncertain you also have the right to request a private ruling which will set out the Commissioner’s opinion about the way a taxation law applies, or would apply, to you in those circumstances. You must provide a description of all of the facts (with supporting documentation) that are relevant to your scheme or circumstances in your private ruling application. If there is any material difference between the facts set out in the ruling and what you actually do the private ruling is ineffective.
If you rely on a private ruling you have received, the Commissioner must administer the law in the way set out in the ruling, unless it is found to be incorrect and applying the law correctly would lead to a better outcome for you. Where you disagree with the decision in the private ruling, or the Commissioner fails to issue such a ruling, you can lodge an objection against the ruling if it relates to income tax, fuel tax credit or fringe benefits tax. Your time limits in lodging an objection will depend on whether you are issued an assessment for the matter (or period) covered by the private ruling.
When a business engages KSG to complete its tax return, KSG will also prepare a set of financial statements where necessary (at the discretion of KSG), or at the specific request of the client.
As a general guide, where a business maintains a set of accounts, KSG will prepare a set of financial statements for the business. Where a business does not have an accounting system in place, the size of the job, and the type of information will largely determine whether or not KSG prepares financial statements.
This service does not include the preparation of one-off accounts for presentation to your financiers for additional finance and the like.
Fringe Benefits Returns
It is generally not possible to determine whether a Fringe Benefit Tax (“FBT”) return is required from the information normally provided to us, therefore we shall not prepare a FBT return unless given specific instructions to do so or based on the responses to our annual FBT Questionnaire.
It is necessary to revert to the source documentation to allow KSG to analyse the FBT implications of any transaction, as this cannot be done from the general ledger.
We can be engaged to complete Activity Statements (BAS, IAS) in one of two ways:
- To lodge a completed Activity Statement through our Electronic Lodgement Service; or
- To compile an Activity Statement from the accounting records or raw information (e.g. bank statements) of a client.
If we are engaged to lodge a completed Activity Statement, we accept no responsibility for the accuracy of the form, but reserve the right to make any enquiries we feel are necessary into the details of the form.
As the BAS returns are prepared quarterly and lodged during the financial year, it is not possible for KSG to review the correctness of the underlying financial information as part of the preparation of the quarterly BAS return. This is because we are engaged to prepare the annual accounts and these are prepared after the conclusion of the financial year.
Therefore, for the quarterly BAS returns, we will rely on and process the financial information provided to us without any review of the primary source documents. In doing that, we will make the following specific assumptions:
- The financial information provided to us is accurate.
- The financial information correctly states the GST position. For example, all input tax credits and GST payable amounts have been correctly recorded in the general ledger. If you are unsure of the correct position or require advice regarding this, we are able to provide this as work which is outside the scope of these terms and charged as additional services.
- You have the necessary supporting documentation to satisfy the Australian Taxation Office for GST purposes. Again, if you are unsure of the ATO requirements or require advice regarding these documents, we are able to provide this as work which is outside the scope of these terms and charged as additional services.
- You hold valid tax invoices and adjustment notes for all expenditure incurred by you in respect of which an input tax credit is being claimed. Substantial penalties apply for an incorrectly prepared BAS.
However, it is possible that, when the financial accounts are prepared, some discrepancies will exist between the information disclosed in the quarterly BAS returns and in the annual financial statements.
Should any discrepancies arise, we will discuss the need to correct either the BAS returns and/or financial accounts. Those services will involve work which is outside the scope of these terms and will be charged as additional services.
If we are compiling your Activity Statement from information provided to us, we will not undertake a review or audit of the information unless specifically requested. We will rely on the information provided to us, and where reasonable assume that the information provided is complete and accurate.
Company Secretarial Services
KSG maintains electronic share registers for all corporate clients and files necessary documents with the Australian Securities and Investments Commissions (“ASIC”). We also maintain minute books for all corporate clients unless otherwise instructed. KSG can assist your company to meet its statutory obligations under Corporations Law.