Lodgement Declarations: one for each & every lodgement? Really? Over the top!
In a recent industry newsletter, my attention was drawn to an article about document lodgement declarations for clients. In summary, the article said that a signed declaration in writing must be obtained from clients for every single document BAS/Tax agents lodge on their behalf. My opinion (and that of my clients!) on this: a signed declaration for every lodgement is overkill! I agree that there certainly needs to be written evidence held by both parties that provides BAS/Tax agents with lodgement authority, however, I believe that to ask clients to sign such a document every time lodgement needs to occur, is overdoing it.
Now I must clarify something here: this declaration requirement is not some crazy idea thought up by a bookkeeping association! Rather it is law and can be found in the Taxation Administration Act 1953. Being law, I probably have no hope of ever changing it but I think I’m entitled to complain about it!
I’m not the only one who wants to complain about it! Many of my clients groan when I send through the declarations for signing. They all say the same thing: they just want to sign one document once only, giving me the authority to lodge on their behalf. They are sick and tired of signing these documents, especially when they trust me to lodge for them and/or have been my clients for several years. They just don’t see the point even when it is explained to them. I understand their point of view.
From my side, preparing these documents is very time consuming. Not only do I have to complete a form for each client and send it to him/her, but if s/he forgets to return it to me (happens frequently), I have to spend time following him/her up which is both annoying and an interruption to my workflow. Also, if a client doesn’t send back the declaration on time, this can mean that his/her BAS (or other document) is lodged late which in turn results in a late fee from the ATO. Not good!
So what do I suggest happen instead?
I think this system would be a better idea:
- Ascertain which documents need to lodged for each client each financial year e.g. BAS, IAS, Payment Summaries etc
- Ascertain how often these documents should be lodged i.e. monthly, quarterly or annually.
- Create a lodgement declaration for each type of document for every client to sign at the beginning of each financial year. These declarations cover both parties for the entire financial year.
- Keep signed declarations on record as required by law (clients to keep these for 5 years).
- Continue to send clients the details of what is to be lodged before each lodgement so that they are aware of what you are doing.
- At the start of the next financial year, do a “document review” for each client and delete or add new items to his/her document list.
- Start the process all over again i.e. do it at the start of each financial year.
What does this mean? Basically, it means that clients would only have to sign one declaration per required document lodgement per year e.g. one declaration for BAS, one for IAS and so on. I believe by cutting down the red tape, clients would be happier and BAS/Tax agents would also be happier.
What do you think?