Insurance

Start-ups face taxing time under new TPB rules

By Michelle Hammond
Friday, 29 October 2010

A move to ensure all tax and BAS agents have professional indemnity insurance could hinder start-ups, according to the National Institute of Accountants.

The lobby group claims that a recent announcement by the Tax Practitioners Board could push a lot of part-timers out of tax work due to huge insurance costs.

From July next year, anyone who prepares tax or BAS returns will be required to have a minimum of $250,000 professional indemnity coverage.

According to Tony Greco, senior tax adviser for the National Institute of Accountants, the rules may apply to part-time bookkeepers, which could impact on small businesses.

“A lot of small businesses need bookkeepers because it’s very expensive to have qualified people undertake that [tax agent] role,” Greco says.

“However, a lot of accountants complain that their work is substandard. [The new regulations] will weed out a lot of the part-timers who are filling gaps and earning a bit of money on the side.”

“That’s the price that must be paid for regulation.”

The TPB is also considering introducing compulsory training, with tax and GST professionals expected to do at least 15 hours of continuing professional development or education every year.

Greco says the sudden changes could turn people off part-time tax work altogether.

“Up until now, they haven’t been required to have insurance or go off to maintain their knowledge or pay a registration fee… it’s gone from nothing to a hell of a lot in a very short time,” Greco says.

“Once they get wind of the fact that they have to do all these extra things, they might say, it’s not worth it.

“A lot of small businesses now might be forced to pay more for basic bookkeeping services and some [bookkeepers] might actually vacate the space.”

Greco says unregistered tax professionals could face fines of up to $27,500 under the new regulations.

“There’s nothing forcing a business to use a registered bookkeeper. But if they do [use an unregistered bookkeeper], then they don’t have the protection that the new legislation provides,” he says.