Both state and federal governments think that they can exploit foreigners by imposing extra taxes including stamp duty and land tax.
There is a danger in this for public accountants. The NSW Office of State Revenue wrote to any trust that owned residential property at midnight 31 December 2020, stating that if the trust deed did not exclude foreigners, then a penalty rate of land tax would be applied.
We heard that one accountant was rung up by a client in the last week of December last year stating that their trust had residential property in it. Amending a trust deed is a job for a lawyer and NOT an accountant.
The accountant correctly replied by email to the client that they were not lawyers and that this late in the year all lawyers were already on holiday. This trust owned a sizeable residential portfolio and thus the extra land tax was considerable. When the client went ballistic over the extra tax, the accountant replied with a copy of the email to them saying that he was unable to do anything this late in the year.
What we learn from this is that the engagements should be in writing and be very clear about what we are going to do and what we are unable to do.
Also, care must be taken when working for clients that may fall into higher tax situations. It also is comforting to know that our Professional Indemnity Insurance will cover us if we do make a mistake.