November 27, 2017

Why do Advisers put advice in writing?

Have you ever wondered why your adviser won’t give you the answer over the phone? Sometimes a matter that seems so simple on the surface becomes quite complicated the further we dig. We often hear, “but you’re my accountant this is what you do”. Yes it is, however, each client’s circumstances are different, the rules are the same, yet the outcomes quite often vary.

Deloitte recently found this out the hard way. Their client, Mr McEvoy claimed that Deloitte gave him verbal and written advice that the sale of his shares in Spreets to Yahoo!7 for $37 million was eligible for the 50% general discount and the small business CGT concessions. They lodged a tax return on behalf of Mr McEvoy in the relevant year showing a $0 taxable gain.

The ATO reviewed Mr McEvoy’s tax affairs and subsequently denied access to the concessions and he was handed a tax bill of $3.5 million (inclusive of tax, penalties and interest). Unsurprisingly Mr McEvoy is suing Deloitte for amount outstanding to the ATO.

It is a requirement of our professional indemnity insurance that advice is carefully considered and put in writing where appropriate. Professional bodies such as the Institute of Chartered Accountants Australia and New Zealand also enforce strict guidelines when it comes to acting in public practice and the provision of advice. This is all win for you, the client – it holds us accountable.

We proudly owe our clients a duty of care to ensure that we provide advice that is appropriate to their circumstances. This is why it is important we act diligently and ensure that the advice we provide considers all circumstances.

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