ALL QUESTIONS NEEDS TO BE ANSWERED UNDER AUSTRALIAN TAXATION RULES 1. Tax Agents

Question

ALL QUESTIONS NEEDS TO BE ANSWERED UNDER AUSTRALIAN TAXATION RULES

1. Tax Agents-False and misleading statements Randy Michaels has prepared an Income tax return for Shady Pty Ltd from the company's records. The managing director of Shady Pty Ltd is furious that the company has a tax liability of $180,000 and tells Randy that if he doesn't reduce the tax liability by at least $60,000 then he will not pay Randys fee and tel other dients that they should use another accountant. What are the potential consequences of Randy agreeing to falsify the return? Refer to who is liable for any penalties, as well as Randy's continued registration. Would your answer be any different if Shady's directors agreed to provide Randy with an amended set of accounts along with a Statutory Declaration stating that they would accept full responsibility for the adjusted taxable income?

Explanation / Answer

1.Randy Michaels should impress upon the officers of Shady Pty.Ltd. that there are very many legitimate tax minimisation options available and planning one's finances in such a way that taxes are maximised , is nothing unethical or unlawful -- whereas, avoidance of tax by deliberate falsification of records ,is totally illegal,unlawful and also an abuse of the tax system.

The potential consequences of falsifying the returns are that the company may have to pay the taxes along with penalties & interest thereon.Moreover, the company will pave its own way for the tax authorities, to view its future records with sustained suspicion--- which it may never ever be able to undo.

Randy's continued registration requires him to be a responsible professional registered tax agent and ensure elimination of false or misleading claims in all tax returns, that pass his hands.He should encourage his client to disclose the fact to the tax authorities and take all genuine efforts ,in this regard----

Failing in all the above,Randy is also legally liable to all the stake-holders including, the owner-shareholders and tax authorities. And his registration is also likely to be suspended till such time he is able to come clean, or if otherwise, can also be cancelled permanently.

2. At the outset, the Declaration as referrred above, is null & void ,ab initio. There can be no such thing as accepting full responsibility for a cooked-up financial figure as adjusted income. Randy should not become a victim in this, both unlawful & unethical bargain.

After having come to know of the intentions, Randy cannot distance himelf ,if he pleads innocence,on the basis of amended documents.

Even though,it is difficult to find out by the authorities, as the figures are well supported by documents, any clue somewhere raised by any of the multi-fold users of the statements, will open a pandora's box and teh tax -return agent will be the first one to be held responsible.  

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