Identify, record and present client’s income tax documentation

Substantiation of Claims   

To claim a deduction, you may need:

• Statements from your bank, building society or credit union 
• Written evidence from your supplier or association 
• Your PAYG payment summary 
• Other written evidence.

A receipt is normally required providing a description of the purchase, the amount, date, and name of supplier in order to claim a tax deduction for a work-related expense.

• Work-related expenses: Any amounts claimed for motor vehicle expenses or travel costs (including tolls and parking) are not included in the $300 limit. The ATO allows 34¢ per hour for electricity for every hour the taxpayer spends working at home in an office separate from the rest of the family. A log needs to be kept for a month of the hours worked.
  Work-related STD and mobile calls can be itemised by reviewing the taxpayer’s phone accounts. The same percentage of work-related calls made can be applied for all other months. Line rental and mobile calls can also be apportioned.¹
• Allowances: Each year the ATO produces a list of considered reasonable travel and overtime meal allowances. A taxpayer is able to claim up to this amount even if the employer pays the employer less than the amount stipulated. Where an employer pays an allowance to an employee and the amount is below the amount listed by the ATO, the amounts do not have to be substantiated with a receipt. The expense must be incurred. A log describing all food expenses, the employee’s activities during the day, and the nights spent away from home (if more than five (5)) is required.

Reasonable allowance amounts are set out in Taxation Determination TD 2016/13 –ruling: Income tax: what are the reasonable travel and overtime meal allowance expense amounts for 2016-17 income year together with Taxation Ruling TR 2004/6 - Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses. These amounts will vary in accordance with the taxpayer’s salary.

Organisational Policies and Procedures    

Within an organisation, the policy outlines the principles of what will be done. The policy document states the principles behind the organisation's views on specific subjects. For example, the organisation's vision sets the overall culture; then the specific policies build on that for a specific area. An organisation may have a privacy policy and document management policy, and so on, yet both will relate to the organisation's vision.

Procedures are related to a policy. They set out how the organisation wants things done, generally concerning a policy area. For example, a machine's Safe Operating Procedure (SOP) will relate to the Safety Policy. There may be a procedure on how the organisation manages its paper waste and a separate one for liquid waste – each of these procedures will relate to the Sustainability/Environment policy.

Policies and procedures are generally set, so everyone knows what they are. Often the organisation has a system to store these documents (such as electronically on an intranet or hard copies in a folder held locally) and also a system to check that the documents are current and valid. They are often reviewed regularly (annually in most cases); new policies/procedures follow the same format as all others within the organisation.

Procedures formats can vary from wordy documents that explain the procedure to graphical documents using flow charts and diagrams to explain what needs to be done. A Safe (or Standard) Operating Procedure (SOP) is also a procedure.

How each organisation formats such documents also varies, as does the terminology with the document. Some may talk about 'Goals' and 'Objectives'; others may view these as the same thing. However, most organisations have accepted templates for developing policies and procedures. The critical aspects are that:

The document is 'fit for purpose', that is, suited to what and who it's designed for. So, for example, it may be best to create a flow chart to explain the number of steps that must be taken instead of words.

The document meets the organisation's requirements. In many cases, the documents will become part of the way things are done and are therefore subject to audit and review requirements of the organisation. If tools and templates are available, these should be used. (If the current tools and templates are unsuitable, then the due process needs to be completed to add the new template to those available).

Policies and procedures may be separate documents, but they are also interlinked. For example, the organisation may commit to addressing environmental issues; part of this may be developing suitable policies and related procedures. Alternatively, the policy may have been developed at a higher level, and as part of its implementation, the relevant procedures must be developed and circulated. 

Examples of policies and procedures may include:

Timeframes

The ATO web portal is the Tax professional's will provide your with the correct timeframes lodge tax returns and statements. 

This information will change from time to time, especially when there are significant changes in legislation, and changes in focus for government policy.

Information available includes:

It is best practice to regularly review and moderate your decision-making processes with the assistance of l advice and feedback from specialists. This may be through industry networks, paid external consultants, and can include the feedback from auditors.

Moderation refers to using accountants' and tax consultants' professional judgements to create a uniform standard for decision-making processes and advice given to clients. 

When moderating:

• Professionals calibrate their judgements through professional conversations and by reviewing work samples, the decisions they made and the advice that was given.
• Conducting professional discussions to confirm decision-making has been applied consistently (for example, meetings with other accountants and tax consultants. Discussions and moderation meetings reference the ATO rulings and legislative changes as part of the primary source materials.

The moderation process enables professionals to develop a shared understanding of their decision-making and professional practice and enhances fairness and consistency in their judgements.

If your business has several offices, conducting internal peer reviews can also be very beneficial to ensure that the client taxation processes you are following are consistent, compliant and effective. 

The Australian Taxation Office (ATO) conducts its own internal process reviews and seeks feedback, your business will be encouraged to do the same. 

Example Moderation Process   

Readings

Read more on the Top Five Tax process improvement goals, from David Deputy, Director, Strategic Development & Emerging Markets at Global Tax Consultancy Vertex Inc. Read more here.

The following article from Arianna Campbell at CPA practise advisor provides a great overview of the process improvement considerations for accounting consultants and the organisations. Read more here.

By Law, your client is required to provide a declaration each time a document, such as an activity statement, tax return, notice, statement, application, or other documents, is to be shared with the Commissioner of Taxation. Therefore, they cannot submit a bulk declaration. Required forms include activity statements and tax returns. 

• The client declaration must be in writing.
• The declaration must state that the client has authorised you to lodge the document.
• The declaration must state that the information is accurate and true.

The client can choose to provide this declaration by email, fax or in paper form. There are, however, some specific requirements when making the declaration electronically.

For the most up-to-date information, refer to the web portal of the Australian Taxation Office; the following link contains additional information and examples of declarations.

Client declarations and lodgement online 2022, Ato.gov.au, viewed 21 September 2022.

Communicating and sharing tax and financial information   

You will use various communication methods when advising clients of their current tax obligations. For example, you can use email, written, or oral communication. When choosing the communication form, you want to use, always consider who your audience is and the importance of the materials.

Verbal Communication skills

Your verbal communication skills are vital when interacting with clients. Especially important is understanding how to use questioning effectively. 

You may have already completed some workplace communication units, but here's a quick reminder of the importance of open and closed questions, active listening and paraphrasing.

Open Questions   

Open questions demand further discussion and elaboration. They broaden the scope for a response. While open questions can take longer to answer, they provide the other person far more scope for self-expression, encouraging involvement in the conversation.

They usually include What, Where or how. For example, "How are the family?" or "What do you think about this solution?"

Closed Questions   

Closed questions limit possible responses to one or two words (often simply 'no' or 'yes'). They limit the scope of responses. These questions allow the questioner to remain in control of the communication. Unfortunately, this is often not the desired outcome when encouraging verbal discussion; many people try to focus on using open questions to gather information and build rapport. 

However, closed questions can be useful for focusing discussion and obtaining clear, concise answers when needed.

Examples of closed questions include: "Did you come by car today?" and "Did you see the football game yesterday?" 

Active Listening   

Active listening involves listening attentively to a speaker to understand their concerns, reflecting on what's being said, then responding to let them know you have heard them; this keeps both listener and speaker engaged in the conversation.

You can demonstrate your understanding by nodding, using verbal nods such as "Yes", "I see", "I hear what you're saying," or paraphrasing the things that just said.

Reflecting and Clarifying or Paraphrasing   

Reflection is feeding back your understanding of what another person has just said

Reflecting is a skill often that can also be applied to various communication contexts and is useful to learn.

Reflective questioning often involves paraphrasing the message communicated to you by the speaker in your own words. Reflective questioning involves capturing the essence of the facts and feelings expressed and then communicating your understanding to the speaker. It is a useful skill because:

• The speaker gets feedback about how their message has been received and can then clarify or expand if they wish.
• You can ensure you have understood the message properly.
• It shows respect for what the other person says.
• You show you are considering the other person's views.

Summarising   

A summary is an overview of the key points or issues raised. Summarising also serves the same purpose as 'reflecting', allowing both parties to review and agree on the message and ensuring that the communication has been effective for everyone. When used effectively, summaries may also serve as a guide to the next steps forward.

Written communication skills   

Written communication will inform the tax arrangements you will devise in consultation with clients and can also be called upon in a court of law in case of a dispute. As a result, you should take great care with your written communications, ensuring they accurately and unambiguously capture the information required.

Many writers do not make adjustments when they write to different audiences, usually because they do not take the time to think about who will be reading what they write. 

To be sure that you communicate clearly in writing, you need to adjust your message - how you say and what information to include, by recognising that readers will respond differently to different contexts, information, and communication styles.