Australian franchisors that provide services to assist
franchisees with their obligations under GST, FBTand PAYG
withholding laws, among others, need to consider whether new laws,
to commence 1 March 2010, will require them to be registered as
Business Activity Statement (BAS) agents.
Previously, entities that provided a "BAS service"
– such as preparation or lodgement of a BAS on behalf of
a taxpayer or giving advice about a "BAS provision"
– were not required to be registered. However, entities
that provide a "BAS service" for a fee or reward will be
required to be registered from 1 March 2010. A "BAS
service" is defined broadly to mean a tax agent service
relates to ascertaining or advising an entity's
liabilities, obligations or entitlements under a BAS provision,
representing an entity in their dealings with the Commissioner
of Taxation relating to a BAS provision
in circumstances where the entity can reasonably be expected to
rely on the service to satisfy its liabilities or claim an
entitlement under a BAS provision.
A "BAS provision" covers matters such as the
collection and recovery of tax under FBT law, GST law, wine tax
law, luxury car tax or fuel tax law and the PAYG withholding and
The existing requirement for entities providing "tax agent
services" for a fee or reward to be registered will be
retained under the new regime. Tax agent services is likewise
defined broadly to cover any service that relates to ascertaining
or advising an entity as to its liabilities, obligations or
entitlements under a taxation law in circumstances where it can
reasonably be expected that the entity will rely on the service to
satisfy its liabilities or claim an entitlement under a taxation
Franchising arrangements are structured in many different ways.
The broad definition of "BAS service" in the new
provisions, and the introduction of a registration requirement, may
mean that franchisors providing certain services who were not
previously required to be registered may now be caught by the new
For example, if a franchisor prepares or lodges an approved form
about a franchisee's liabilities, obligations or entitlements
concerning GST, and the franchisee is not expected to re-work the
forms prepared, that could constitute the provision of a "BAS
service". Likewise, if a franchisor provides services such as
setting up software for franchisees and the software generates PAYG
reports, and the franchisees are not expected to review the
accuracy of those reports, that could constitute the provision of a
A failure to register where required is a contravention of a
civil penalty provision. Heavy penalties may be imposed for any
contravention. Accordingly, franchisors should review their
franchising arrangements, and particularly their training programs
and operations manuals, to ensure that they comply with the new
laws. Norton Rose Australia can assist franchisors to identify if
any of the services provided may require them to be registered as a
provider of "BAS services". Norton Rose Australia can
advise what modifications to the services or the agreements in
place with franchisees would be required to remove any need for
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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