Question

robert jones consults a local laeyer in relation to his tax affairs. He has invested in an oliver-growing scheme which did not have a product ruling. Robert gave details of his tax affairs, including expenditure in the scheme, to the lawyer in August. The lawyer did not lodge Robert's return until the following June. The lawyer also omitted to include in the return the rental income Robert derived from a property in New York. Robert was fined for late lodgement and subsequently audited, resultin in an amended assessment, a false or misleading statement penalty and shortfall interest charge.

required:

a. Discuss the above scenario. AND

b. What difference would it make if Robert consulted a registered tax agent?

Answer 1

a. Reading the briefings of the case discussed above, let us discuss in details about the case.

As read above, Robert wants to lodge return for his taxes. So, for this purpose he went to a lawyer or pricisely let's say a local lawyer who does not have practice for tax implications, to lodge his tax returns. The lawyer agreed and Robert presented all the important and required documents to him which he would be needing in lodging the tax return.

Also its mentioned above that Robert has recently invested in a scheme which has no product ruling.

After receiving all documents, lawyer was not attentive enough to lodge the return on time that is till June.

Also, while lodging returns late, he kissed and omitted to include a rental income firm a property. Thus he had to make frequent amendments because of committing certain mistakes.

Now all these late filing and then making frequent amendments led to Robert paying penalties fir all these events. And also there occurred a interest charge shortfall.

Thus was all possible because the individual hired for lodging tax return was not a proficient practisioner of tax related implications.

So, these were the briefings of the key points being mentioned in the case above.

b. Now, let us move to the second questions, which would discuss what difference it would have made, if instead of the lawyer, it was a trained and proficient tax agent being employed for lodging the tax return.

The differences are discussed below:

• The returns which were lodged late have been lodged on time till June by a tax agent as he would be well aware of the facr that there is time limit beyong which, lodging the tax return would lead to charging penalty from the tax payer and increase the expenses for the tax payer.
• The tax agent would be more familiar with tax related situations and will have a better understanding of all aspects. Thus, he would be able to take correct decisions in order to decide what incomes ga r to be included in the tax returns.
• Like the lawyer omitted the rental income, such any mistake would not have been committed by the tax agent. As thus would save from paying penality.
• As the tax agent would be proficient in such works. The audit he would be indulged in would not require any frequent amendments anf thus rhe statements could not be stated as false or misleading.
• There was no any chance of shortfall of interest charges.

Thus, it's clear that if a tax agent had been hired to lodge tax returns, the process would have been very clear and precise without causing any further or extra expense or loss to the tax payer.