THE PURPOSE, SCOPE AND OUTPUT OF ENGAGEMENT

Our firm will provide Accounting and Taxation services, which will be conducted in accordance with the relevant professional and ethical standards issued by the Accounting Professional & Ethical Standards Board Limited (APESB) and The Tax Agent Services Act 2009. The purpose of this Engagement Letter is to set out and confirm the terms of engagement between our firm and you. The Engagement Letter has been strictly adhered to the standards of APES 110 Code of Ethics and APES 305 Terms of Engagement. As a result, no audit or review will be performed and, accordingly, no assurance will be expressed. Our engagement cannot be relied upon to disclose irregularities including fraud, other illegal acts and errors that may occur. However, we will inform you of any such matters that come to our attention.

The objectives of the engagement are to perform the following services for you and will be limited to those services outlined in the engagement letter. Please be aware that we will not conduct an audit or review unless specified in the engagement letter as a service to be performed for you from an external trusted partners and accordingly, no assurance will be expressed.

The recent changes to Section 225 (and 360) of APES 110 on Responding to Non-Compliance with Laws and Regulations (NOCLAR) require us to report a non-compliance with laws and regulations or acts of omission or commission, intentional or unintentional by a client or by Those Charged with Governance, by management or by other individuals working for or under the direction of a client which are contrary to the prevailing laws or regulations. If we decide that disclosure of NOCLAR to the appropriate authority is the correct course of action, then such a disclosure will not be considered a breach of confidentiality under our code of ethics.

The Scope of the engagement period commences on the date the client’s acceptance of engagement of services, signed, dated and will continue until the services has been rendered.

The Output may include but not limited to the Financial Statements, Income Tax Returns, BAS and FBT tax returns and so on, will be prepared for distribution to the specific organization, client or entity for the purpose specified in the report. There is no assumption of responsibility for any reliance on our report by any person or entity other than you and those parties indicated in the report. The report shall not be inferred or used for any purpose other than for which it was specifically prepared. Accordingly, our report may include a disclaimer to this effect.

RESPONSIBILITY FOR YOUR WORK

When dealing with your business many general administration and basic accounting problems may be handled by the team, which will allow The Principal to be available for telephone advice, consulting and other more complex issues. The Principal of the firm are ultimately in charge of your affairs and responsible for all of the matters relating to your file.

The team attends to certain functions relating to your business transactions and tax affairs. This is done to afford you the most cost-effective service possible. The work attended by our team is supervised and reviewed by the Principal or Senior Accountants. The team who assists in providing you with your Professional Accounting Service is outlined towards the end of this agreement together with indicative charge rates.

RESPONSIBILITIES AND CONFIDENTIALITY

The conduct of this engagement will be carried out in accordance with the standards and ethical requirements of The Tax Practitioner Board in Australia, which means that information acquired by us in the course of the engagement is subject to strict confidentiality requirements. We will not disclose any information relating to your business or tax affairs to any third party without your consent, unless required by law.

You may provide us with permission to disclose your confidential information in certain circumstances, or place conditions on the disclosure of certain confidential information. If you do so, we will have permission to disclose the relevant information accordingly, in the performance of our services, unless you instruct us otherwise in writing.

If our files may be subject to review as part of the quality control review program by The Tax Practitioner Board in Australia who monitor compliance with professional standards by its members. We advise that by signing this agreement you acknowledge that, if requested, our files relating to this engagement may be made available under this program. Should this occur, we will advise you prior to releasing any files.

We may on occasion use external contractors and/or third parties to undertake some of the work on your file and they may have access to your information. This will only be done if strict confidentiality agreements are entered into between us and the associated entities to prevent any unauthorised use of this information.

THE TAX PRACTITIONERS BOARD RECOMMENDATIONS

The TPB has determined minimum standards with regard to providing taxation services and, in accordance with those recommendations, our practice:

• uses of properly trained and supervised staff to maintain quality standards and ensures that all qualified staff undertake a minimum of 40 hours of continuing professional education each year;
• maintains professional independence at all times;
• establishes and operates satisfactory quality control procedures;
• provide professional services fees are chargeable time of each staff member.
• staff records time spent so as to enable you to be aware of the extent of the work performed for you; and
• provide an estimate of our billing prior to the commencement of an engagement.

YOUR OBLIGATIONS AND RIGHTS

You are required by law to keep full and accurate records relating to your business transactions and tax affairs. It is your obligation to provide us with all information that would be reasonably be expected to allow us to perform the services for you under this engagement as requested. This includes you providing accurate and complete responses to questions asked of you by us. Inaccurate, incomplete or late information may have a material effect on our services or reports.

The Taxation Administration Act 1953 now contains specific provisions that may provide you with “safe harbour” from administrative penalties for incorrect or late lodgement of returns. These safe harbour provisions will only be available to you if, amongst other things, you provide “all relevant taxation information” to us in a timely manner (the safe harbour provisions apply from 1st of March 2010).

Accordingly, it is to your advantage that all relevant information is disclosed to us as any failure by you to provide this information may affect your ability to rely on the “safe harbour” provisions and will be taken into account in determining the extent to which we have discharged our obligations to you. It is your responsibility to show that you have brought all matters to our attention if you want to take advantage of the safe harbours created under the new regime.

If we require any documents or information from a third party, we will contact you first to seek your approval to contact the third party.

In conducting this engagement, information acquired by us in the course of the engagement is subject to confidentiality requirements. That information will not be disclosed by us to other parties except as required or allowed for by law, or with your express consent.

We are bound by the provisions of the Privacy Act 1988 to maintain all records securely and in accordance with the provisions of that Act. Any breach of these requirements should be notified to the Privacy Commissioner.

THE INVOLVEMENT OF OTHER MEMBERS IN PROFESSIONAL PRACTICE:

At times we may outsource some of our work which involves us entering into an agreement with a third party to provide specific processes, functions, services or activities for us. If we decide to do this as part of performing the services for you, we will contact you first to seek your approval to engage other parties in professional practice.

This engagement is a contract between you and us, and you agree that none of the third parties we use will have any liability to you and you will not bring any claim or proceedings of any nature in connection with this engagement against any third party that we may use to provide the services.  This exclusion will not apply to any liability, claim or proceeding founded on an allegation of fraud or other liability that cannot be excluded under law.

THE FEES AND BILLINGS ARRANGEMENTS:

All professional fees for the services we provide you are based on the time and skill required to complete the agreed services and are charged at the hourly rates detailed below.  At times, we will incur additional out of pocket expenses and statutory charges. Our professional fees are (subject to notification of changes):

TEAM OF PROFESSIONALS – INDICATIVE CHARGE RATES

• Principal-$120 to $200 per hour
• Senior Accountant $100 to $150 per hour
• Accountant $80 to $120 per hour
• Bookkeeper $60 per hour
• Admin $45 per hour

Unless otherwise agreed, we will charge you as per the hourly rates above and in addition to the hourly rate, we will charge you for out-of-pocket expenses and statutory charges as we incur them.

If we provide you with a fee estimate and the actual costs vary due to unforeseen problems, delays, the cooperation of third parties or deficiencies in documentation, we will provide you with an additional engagement letter detailing the reasons for any variation.

OWNERSHIP OF DOCUMENTS:

All original documents obtained from you arising from this engagement will remain your property. The source documents such as ledgers, receipts, invoices, journals, correspondence between the ATO and you, ATO notices of assessment, letters of advice, tax returns and financial statements prepared by us remain your property. However, we reserve the right to make a reasonable number of copies of the original documents for our records. All other documents produced by us in respect of this engagement will remain our property.

THE LIEN OVER DOCUMENTS:

In the event of the termination of services, you are advised that we may invoke a lien over certain documents we have prepared and we will hold these documents until all outstanding fees have been paid, or satisfactory agreements have been made.  A lien is a right to hold certain documents or property until the debt incurred in respect of those documents or property has been paid.

THE CONFIRMATION OF THE TERMS IN THIS ENGAGEMENT LETTER:

The acceptance of our services in conjunction with this information indicates that you understand and accept the arrangements. This information will be effective for future engagement unless we advise you of any change.

We are required to advise you of your rights and obligations where we are acting for you on accounting and taxation matters.

It is your obligation to provide us with all information that you reasonably expect will be necessary to allow us to perform work contemplated under this engagement within a timely manner or as requested. This includes providing accurate and complete responses to questions asked of you by us within a reasonable timeframe. Inaccurate, incomplete or late information could have a material effect on our services and/or our conclusions and may result in additional fees. We will not verify the underlying accuracy or completeness of information you provide to us.

You are also required to advise us on a timely basis if there are any changes to your circumstances that may be relevant to the performance of our services. Specifically, if any subsequent event results in the information you provided to us being inaccurate, incomplete or misleading, then you are obliged to advise us as soon as possible. We take no responsibility to the extent that our advice is inaccurate, incomplete or misleading because it is based on inaccurate, incomplete or misleading information being provided to us.

By accepting the terms of this agreement, you will be taken to have agreed that the performance of our services is dependent on the performance of your obligations relating to disclosure and record-keeping.

You are also required to advise us if you become aware of any conflict of interest or potential conflict of interest. Generally, a conflict of interest is any event which may result in us becoming unable to remain objective in the performance of our services to you. Some examples of events which could give rise to a conflict of interest or potential conflict of interest during this engagement are changes to your business circumstances, events affecting your family (e.g. death and/or marriage breakdown) or a legal action commencing against you.

You are subject to the self-assessment system in relation to any of your Income Tax Returns. The Commissioner is entitled to rely on any statements made in your Income Tax Returns. Where those statements are later found to be incorrect, the Commissioner may amend your Income Tax Assessments and, in addition to any tax assessed, you may also be liable for penalties and interest charges.

You have an obligation to keep proper records that will substantiate the Taxation Returns prepared and which will satisfy the substantiation requirements of the Income Tax Assessment Act. Failure to keep such records could result in claims being disallowed, additional tax being imposed, and the imposition of penalty or general interest charges.

You are responsible for the accuracy and completeness of the particulars and information required to comply with the various Taxation Laws. We will use this information supplied in the preparation of your Returns.

Your rights as a taxpayer include:

• The right to seek a Private Ruling;
• The right to object to an assessment by the Commissioner;
• The right to appeal against an adverse decision by the Commissioner.

Certain time limitations may exist for you to exercise these rights. Should you wish to exercise these rights at any time, you should contact us so that we can provide you with the relevant timeframes and to discuss any additional requirements which may exist.

OUR OBLIGATION

We have a duty to act in your best interests. However, the duty to act in your best interests is subject to an overriding obligation to comply with the law, even if that may require us to act in a manner that may be contrary to your interests. For example, we could not lodge an income tax return for you that we knew to be false in a material respect.

We also have an obligation to ensure that we manage conflicts of interest as they arise. In this regard, we have arrangements in place to ensure that we manage potential or actual conflicts of interest.

The effective operation of these arrangements depends, in part, on you complying with your obligation to disclose any potential conflicts of interest to us.

Unless otherwise stated, this opinion is based on the Australian Tax Law in force at the date of the provision of the advice and/or services.

It is your responsibility to seek updated advice if you intend to rely on our advice at a later stage, due to frequent changes made to Australian Tax Law.

LIMITATION OF LIABILITY

Our liability may be limited by a scheme approved under Professional Standards Legislation. Further information on the scheme is available from the Professional Standards Council at https://www.psc.gov.au

REVIEW AND PREPARATION OF FINANCIAL STATEMENTS

As per out contract with you we will perform as when required throughout the year to review your records and where applicable process certain data to enable the preparation of Interim and End of Year Financial Statements. The Financial Statements will be based on the information you provide to us and other information that our office accesses. As a consequence:

You and your employees are responsible for the maintenance of the accounting systems and internal controls for your business entities. That includes the keeping and maintenance of all required books of account.

Our firm is not being engaged to conduct a statutory audit of the financial records of any of your business entities and we will not express an Auditor’s opinion as to the truth and fairness of the Financial Statements (unless otherwise specifically requested to do so).

Our reports will be prepared for distribution to proprietors for the purpose noted above. We disclaim any assumption of responsibility for any reliance on our report to any person other than the proprietor and for any purpose other than for which it was prepared. Our reports will contain a “Compilation Report” to this effect.

PREPARATION & LODGEMENT OF INCOME TAX RETURNS

We will prepare and lodge all Income Tax Returns based on the Financial Statements prepared, as well as information you provide to us in relation to your business and personal tax affairs.

We are required by the Tax Agents Services Act 2009 to satisfy ourselves as to the reasonableness of the information and claims being made in your Income Tax Returns. The Legislation provides the basis for this and may require us to make further enquiries with you from time to time in relation to your Taxation Returns. Where possible, we will endeavour to identify the information that will be required in advance. We are entitled to rely on the records provided as being both accurate and complete.

We will have your Income Tax Returns lodged on time, as required by the Australian Taxation Office, providing we are in receipt of all information to prepare your Returns no later than two months prior to the due date for lodgement. This avoids the delays that generally occur in our Firm just prior to lodgement dates.

We will take all possible steps to have your Returns lodged on time, however we offer no guarantee unless we have received the information within the abovementioned timeframe.

We also advise that we are legally prevented from electronically lodging your Income Tax Returns until such time as we receive a signed Declaration from you ASAP. When Returns are left to the last minute, due to time constraints it may not be possible to have them forwarded to you for signature and a signed Declaration return to our office to enable lodgement by the due date.

THIRD PARTY RESPONSIBILITIES

We may utilise outsourced service providers to perform the services, we may provide these third parties with access to your data to the extent this is required to perform the services. Your data will be stored in servers physically located in Australia (unless otherwise specified above) and in accordance with the security practices of the third party service providers and Privacy Policy.

CORPORATE AFFAIRS MATTERS

There are various requirements of the Australian Securities & Investments Commission (ASIC) that have to be adhered to in relation to Companies that you may be involved with. This includes notifying ASIC of various changes to the details of Directors and Shareholders, preparation and lodgement of Annual Company Statements etc.

We will prepare and lodge the appropriate documents in relation to matters that affect your company as soon as practical after being provided with the information. These will be forwarded to you for signature prior to lodgement. Many of these documents must be lodged within a short period of time after the change occurs.

In this regard, documents not received by email or handed in our office by the due date will incur additional lodgement fees and/or additional processing fees. You will be advised of relevant due dates for lodgement.

The Corporate Affairs Division of our practice utilises an electronic recording system to keep track of all company data.  It is not possible to maintain the integrity of this system if documents are lodged by other means. We are still required to input the details of a change into our electronic system.  In this regard, we must be informed of any changes or matters that may affect your companies.

BUSINESS ACTIVITY STATEMENTS AND INSTALMENT ACTIVITY STATEMENTS

Should we be instructed by you, we will prepare and lodge the appropriate BAS and IAS as and when required on a quarterly or monthly basis as soon as practical after being provided with the information to do so. At present, the deadline for lodgement of these documents is the 28th day after the end of each quarter (for quarterly lodgers). However, as Tax Agents, we are given a further four (4) week extension, but this must be lodged through our Tax Agent system.

If we are not provided with the information by the 14th day of the particular lodgement month, we will not be able to guarantee that we will have the above Statements lodged on time. This is due to the extra-ordinary level of work imposed by the Australian Taxation Office on our Firm during the two weeks prior to lodgement dates.

If the information is provided later than the 14th day of the said month, we will endeavour to have the documents lodged by the due date, however we offer no guarantees, and penalties for late lodgement may be imposed (subject to extensions that may be provided by the Australian Taxation Office from time to time).

LIMITED POWER OF ATTORNEY

The Australian Taxation Office requires your authorisation each time we lodge an Activity Statement on your behalf. In order to streamline this process each month/quarter (rather than requiring your authority each time), you are able to appoint us as your Attorney to lodge these documents on your behalf.

Please note that this will not entitle our office to lodge any other documents on your behalf with the Australian Taxation Office, such as Income Tax Returns, without you first reviewing and signing. The Limited Power of Attorney only relates to monthly and quarterly Activity Statements.

FRINGE BENEFIT TAX MATTERS

Should we be instructed by you, we will prepare and lodge the appropriate Fringe Benefits Tax Returns and advise you of your appropriate liability.

In some cases, we will calculate the private use component of various expense payments and advise you how this amount should be reimbursed to the business to minimise your Fringe Benefits Tax liability.

In March each year we will forward you details of the information we will require to enable the above to be undertaken. At this time we will advise you of the date that we require the information, to enable the work to be carried out in a timely and efficient manner.

If the information is forwarded to our office by the due date we will guarantee that the appropriate Returns will be lodged on time. If the information is not returned to us by the requested date we will still attempt to have them prepared and lodged on time, however we offer no guarantees in this regard.

SPECIFIC MATTERS TO BE RESEARCHED.

The complexity of the Australian Taxation Laws includes Income Tax, Fringe Benefits Tax, Capital Gains Tax, Goods & Services Tax as well as other non-taxation issues such as Superannuation, WorkCover etc, some questions you may ask may seem simple, however due to all of the above, it may not be possible to provide you with an immediate answer.

More and more these days we are required to research and thoroughly consider all of your particular facts as they relate to the above Legislation, which not only takes time, but also involves the use of our Professional Team and external Consultants.

In these circumstances, the time taken by our team to research and provide you with the appropriate response will be recorded through our Work In Progress System.

We will endeavour to provide you with an immediate and quick answer where appropriate, however to ensure that you receive a professional service and accurate advice a more detailed investigation into the facts may be required.

AUTHORITY TO ACT ON YOUR BEHALF WITH THE ATO

There are a number of tasks we are required to carry out on your behalf with the ATO and ASIC.

• Income Tax Account
• Integrated Client Account
• IAS lodgment
• BAS
• FBT
• Annual ASIC return

The Australian Taxation Office have advised that if we hold a signed Authority from clients to act on their behalf, then we can make various changes as they arise, update communication preferences and lodge the required documents without the need for your signature each and every time. Once you authorise our firm to act on your behalf (by signing this Engagement Agreement), we will undertake these functions until otherwise directed by you.

OTHER AREAS OF LAW

There are numerous other Federal and State Legislations that may affect you, such as Payroll Tax, Superannuation Guarantee and WorkCover. We will attend to lodging documents in relation to the above as requested.

We are not permitted by law to advice in relation to legal matters (other than Taxation Law) such as Stamp Duty and Investment advice, however we will refer you to your other legal firm or financial planners for this advice with a minimum fee charged.

If requested by you, we will endeavour to advise you of other areas of Law that may affect various transactions you undertake.  If we are not able to provide you with advice, we can refer you to a suitably qualified professional, from whom you can seek the appropriate advice.

PHONE & EMAIL ADVICE

Telephone and email communications and advice are recorded in writing on your file for quality assurance and professional indemnity insurance purposes. We encourage you to telephone or email us for advice on matters of concern.  However simple, the advice may save you significant time and money. Our fees are based on time, which includes telephone calls and email correspondence. Time spent by our team in relation to these matters will be recorded on your WIP and may be billed to you at the discretion of the partner in charge.

PRINCIPLES OF DETERMINING FEE LEVELS

The charge-out rates applied to the time incurred take account of staff salaries, direct costs associated with providing the service, and indirect costs associated with operating our practice. These rates are reviewed on a periodic basis. With ever changing taxation and other laws, we are required to undertake significant education and training programs to ensure that we have the ability to provide you with the right advice. On many occasions it is a necessity that specialist research will be undertaken on particular matters that pertain to your file. A clear record of this time is maintained. The manner in which we monitor the work carried out for you is based on the time we spend in relation to your affairs. The time is recorded when the job is completed, we use this as a guide to determine your fees. While we are required to record all time, it does not mean we will bill you for that time.

ISSUING OF FEES

From time to time, we will issue invoices to you for the work that is carried out. It may be appropriate to issue you with monthly or quarterly billings, which will assist in your cashflow management, rather than receiving one invoice at the end of each year. It is our intention to bill on a regular basis. We will also invoice you for specific projects that may be carried out, as and when these projects are completed, or throughout the project if they are for an extended period of time.

RESPONSIBILITY FOR PAYMENT OF ACCOUNTS

You have engaged us to perform work for yourself and/or entities you are associated with. This Engagement Agreement sets out the conditions of the engagement between ourselves and yourself personally. Some of your affairs may relate to a business that is operated via one or more other entities, however the issuing of fees and the carrying out of the work is undertaken on your behalf. It is appropriate for accounts to be paid by an associated business entity, however responsibility for unpaid accounts will be addressed to yourself personally.

TRUST ACCOUNT

We maintain a separate trust account for dealing with all money and property received from you or on your behalf, except for amounts received from you in payment of our fees. We may apply these funds in payment of our bill with your written authorisation.

DESTRUCTION OF RECORDS

Under the current Corporations Law, you are required to retain your company records for a minimum of seven years. The ATO required financial transactions, such as tax invoice, payroll records, FBT, CGT, BAS, etc must be kept for 5 years. After this period our office will confidentially dispose of these old files, being workpapers and correspondence files. If you would like your records returned to you in this regard, please notify our office when returning your acceptance.

CONFIRMATION OF ENGAGEMENT

Obviously, there are many issues to consider in this engagement and we ask that you consider all aspects of this document to ensure you are satisfied with our terms of engagement. When you have signed the Acceptance of engagement letter, the terms of engagement will bind us both.