This comes down to taking reasonable care. Code item 9 states that you must take reasonable care in ascertaining a client’s state of affairs.

Code item 9 doesn’t require you to audit, examine or review books and records or other source documents to independently verify the accuracy of all information supplied by your clients. However, you cannot automatically discharge your responsibility by simply accepting what you have been told by your clients.

Where a statement provided by a client seems credible and you have no basis to doubt the information supplied, you could accept the statement provided by the client without further checking.

If the information does not seem credible, it is inconsistent with past claims, is from a new client or there has been a change in the law, you should consider undertaking a more thorough check to meet your reasonable care requirements.

Bank and credit card statements provide only part of the story of work-related expense claims, they don't always tell the full story. They only show the total amount expended, when the amount was incurred and generally, where it was spent. But they do not outline what the amount was spent on. This is often where further information from the taxpayer is required to substantiate the claim.

Information on conventional clothing can be found on the ATO website.  

To make a claim for mobile phone use your client must have some records to show the work-related calls. We would recommend that your clients keep a diary to document the work-related percentage of their phone calls.

If your clients are looking to claim phone and internet work-related expenses, they must apportion out private use when calculating using the fixed rate method and the actual cost method. They don't need to apportion if they're using the temporary shortcut method.

Your client can email the information they have recorded in the myDeductions tool in the ATO direct to you.

If your clients claim a deduction using the cents per km method, they cannot claim an additional amount for depreciation for the car as it's included in the rate. The cents per kilometre rate incorporates decline in value, registration and insurance as well as maintenance, repairs and fuel costs. You can’t add these expenses on top of the rate when calculating your deduction. 

Where a husband and wife are joint owners and they use the car for separate income-producing purposes, they can each claim up to a maximum of 5,000 business kilometres.

If you have access to the car under a salary sacrifice arrangement or a novated lease, it is usually your employer who is leasing the vehicle from the financing company and making it available for your use. As you don't own or lease the car yourself, you aren't entitled to claim any deductions for using the car, but can claim additional expenses, like parking and tolls associated with your work use of the car.

To make a claim for working from home using the shortcut method your client must have records of all the hours worked at home.

To use the other methods, they must also have records:

• for all depreciating assets or equipment used when working at home
• of their personal and work-related use of assets.

If you think your client may be acting illegally you do not have an obligation to notify the ATO, and in fact if you did, you may be disclosing client information in breach of confidentiality – which is an obligation under the Code of Professional Conduct (Code) – Code item 6. 

An exception to this rule is if you have a legal duty to disclose the information to the ATO, for example if you are issued a notice from the ATO.

You may also want to consider whether you are eligible for whistleblower protection to disclose information to the ATO because you had a previous relationship with the client. If you are protected by whistleblower laws, you will not contravene Code item 6. For further information, see the TPB’s guidance.

At a more practical level, if you suspect your client is acting illegally, talk to your client about it. If this doesn’t resolve the issue, we suggest you decline the engagement of that client. 

Possibly, Code item 6 states you must not disclose your client’s information, unless there is a legal duty to do so. Therefore, if you receive a notice from the ATO pursuant to section 353-10 in Schedule 1 to the Taxation Administration Act 1953, you may have a legal duty to disclose client information to the ATO. 

This requirement is subject to that material being properly withheld by the registered tax agent under legal professional privilege. If you are concerned if there is a legal duty to disclose client information to a third party, you should consider seeking independent legal advice.

This will depend on the surrounding circumstances, but generally, the tax specialist who provided the advice would be responsible for their advice because you had outsourced the provision of tax agent services to the tax specialist. This is a matter that you should clearly set out in your engagement letter with the client, particularly the duties, obligations and responsibilities of the parties involved in the arrangement. This should also be made clear in the terms of engagement with the tax specialist.

Find out more about outsourcing and offshoring.

Ultimately, it is the registered tax practitioner who is responsible for the provision of tax agent services. That is why supervision and control of your employees and anyone providing services on their behalf is so important.

The TPB does not require a tax agent to check every return - periodic spot checks may be appropriate, but the most important thing is to ensure you have appropriate processes in place first. For more information see our supervisory arrangements information sheet.

Taxpayers in receipt of cash income are required to declare this to the ATO. If they choose not to bank the cash, they still may be required at audit to provide evidence of the cash received. This may be in the form of a written payslip, diary record or letter from the employer. In addition, any non-cash income received must also be declared.