Hidden risk in amending BAS
By now, with the benefit of the many Worrells articles and Workshops on the topic, we should all be aware of the current provisions relating to Director Penalty Notices, regarding reported and un-reported ATO debt. But you may not appreciate the ATO is able to issue a Director Penalty Notice against a director for an amended BAS.
These days, with many businesses wanting to save a few dollars, they are calculating and lodging their own BAS. Generally, these BAS's are prepared from their internal records according to what they believe are the relevant figures. At the end of the financial year, they present their internal accounts to their accountant to prepare their external accounts, and to double check the BAS’s lodged during the year for any adjustment.
In one Worrells case, the director under-estimated their PAYG liability on their BAS by a significant amount. When the external accountant reviewed the internal accounts in preparation of end of the year financial statements, the under-estimation of the PAYG was identified, and naturally an amended BAS was prepared and lodged.
In response, the ATO issued a Director Penalty Notice to the director for the under-estimated PAYG liability, on the basis that this under-estimated amount was an un-reported liability during the year. And as it was un-reported within the required supporting time, the liability to the director was unavoidable.
This serves as a word of warning for clients doing their own BAS. Accountants should encourage their clients to have their BAS checked before lodging to avoid liability for unreported ATO debt.
This topic, and many others, are available in our Worrells Workshops. To book, go to: https://worrells.net.au/worrells-workshops/