Can bookkeepers lodge tax returns?

To many people, bookkeeper and accountant mean the same thing, and it isn’t always clear who should do what. In Australia, though, the question of who can lodge a tax return isn’t answered by job title. It is answered by registration with the Tax Practitioners Board (TPB).

The short answer: a bookkeeper can’t prepare or lodge an income tax return for a fee unless they are a registered tax agent (or work under one). A bookkeeper who is a registered BAS agent can prepare and lodge business activity statements (BAS) and handle related work such as PAYG withholding, Single Touch Payroll and super guarantee obligations, but not income tax returns.

Below we look at the roles of bookkeepers, accountants and BAS agents, and what each one is allowed to do.

Fundamental Differences Between a Bookkeeper and Accountant

Bookkeepers

A bookkeeper keeps your books up to date and complete, so you, your lenders and your tax agent can rely on current financial information.

Tax preparation isn’t the only reason to keep good books. Current, accurate and complete records help you:

• Run your business operations smoothly
• Avoid bank overdraft charges
• Secure funding
• Plan for growth
• Spend less time and money fixing records at tax time

What are the Functions of a Bookkeeper?

Every business generates receipts, purchase invoices and expense claims. The core task of bookkeeping is to turn these into an accurate, orderly record, usually in accounting software. Bookkeepers who are registered BAS agents can also prepare BAS and run payroll where it involves applying tax law.

Here are some of a bookkeeper’s duties:

• Process expense claims
• Process purchase invoices
• Issue sales invoices
• Manage filing and documentation
• Chase payments from clients
• Reconcile bank accounts in Xero and other software
• Post journal entries and prepare reports
• Run payroll (a BAS service when it involves applying tax law, such as withholding and STP)
• Prepare and lodge BAS (registered BAS or tax agents, or personnel working under their supervision, subject to registration conditions)
• Prepare records for the tax agent who completes the income tax return

Bookkeepers’ frequency of working

Your bookkeeper can take care of your books monthly, weekly, or fortnightly. It all depends on your business complexity and size and the level of detail you need.

Bookkeepers’ education qualifications

There is no general licence to work as a bookkeeper in Australia. The legal line is registration: a bookkeeper who provides BAS services for a fee must be a registered BAS or tax agent (or work under the supervision of one). Registration with the TPB requires set qualifications and experience, and registered agents must meet the TPB’s fit and proper requirements and hold professional indemnity insurance.

Tax skills of bookkeepers

Tax skills vary, so check what your bookkeeper is registered to do on the TPB register. A registered BAS agent can advise on and lodge BAS matters. Preparing or lodging an income tax return, or giving income tax advice, for a fee needs a registered tax agent.

Accountants

Accountants’ advice can go beyond preparing tax returns. They may advise on tax planning, business structure and business performance. Many business owners meet their accountant at least once a year.

What are The Roles of an Accountant?

An accountant who is a registered tax agent can prepare and lodge income tax returns and give tax advice. Accountants also prepare financial statements and can advise on cash flow and strategy.

Here is a breakdown of their duties:

• Prepare and lodge individual and sole trader tax returns (registered tax agents)
• Prepare company financial statements
• Prepare and lodge company, partnership and trust tax returns
• Calculate capital gains tax
• Prepare more complex tax returns
• Prepare management accounts
• Prepare business plans and cash flow forecasts
• Advise on business structure
• Provide tax advice
• Provide specialist tax advice

Accountants’ frequency of working

An accountant usually works with you less often than a bookkeeper, for example on annual accounts and tax returns. Your business may also involve them in specialist work such as cash flow forecasts and business plans.

Accountant’s educational qualifications

In Australia, accountants usually hold qualifications such as:

• Bachelor of Accounting, Commerce or Business
• Master of Professional Accounting
• CPA Program (CPA Australia)
• Chartered Accountant Program (CA ANZ)

To lodge tax returns for a fee, an accountant must also be registered with the TPB as a tax agent.

Accountants’ Tax Knowledge

Tax agents work across income tax, capital gains tax, fringe benefits tax and GST. For a complex tax issue, check that your agent has the relevant experience.

A BAS Agent

A BAS agent is registered with the TPB to provide BAS services for a fee. The agent may be a bookkeeper or an accountant. A registered tax agent can also provide BAS services.

The roles of a BAS Agent

BAS agents can advise you on BAS provisions, prepare and lodge your BAS with the Australian Taxation Office (ATO), and represent you to the ATO on matters including:

• Goods and services tax (GST)
• Collection and recovery of fringe benefits tax (FBT)
• PAYG withholding, including payroll and Single Touch Payroll reporting
• PAYG instalments
• Wine equalisation tax (WET) and luxury car tax
• Fuel tax credits
• Super guarantee and the taxable payments annual report (TPAR)

Additionally, they may:

• Set up accounting software and GST codes for your business
• Reconcile your records to work out the figures for your activity statement
• Deal with the ATO on your behalf on BAS matters, including payment plans for tax debts
• Apply for an ABN on your behalf

A BAS agent can’t prepare or lodge your income tax return. That is a tax agent service.

Conclusion

A bookkeeper keeps your records accurate and, if registered as a BAS or tax agent with appropriate scope, can look after your BAS, PAYG withholding and super guarantee reporting. Your income tax return needs a registered tax agent, or you can lodge it yourself.

If your business is a company, a registered tax agent will usually prepare its financial statements and company tax return.

Before you hire anyone for tax or BAS work, check their registration on the TPB register.

Visory runs bookkeeping, payroll, accounts payable and accounts receivable for growing businesses, with a dedicated team and our AI, Delphi, overseen by that team. We keep your books current so your tax agent has what they need.

Want to see how it would work for your business? Book a discovery call.