Why are proof-of-identity checks required?
It is vital to take measures to check the true identity of individuals asking tax agents to act on their behalf in order to prevent errors and help stamp-out tax fraud through identity crime. Under the TPB Code of Professional Conduct an agent must take reasonable care to ascertain a client’s state of affairs and to ensure tax laws are applied correctly.
Proof-of-identity documents and discrepancies in information provided by people should be carefully checked and questioned to combat identity fraud.
Verifying individual identities
Tax agents are strongly recommended by ATO to perform identity checks for:
- all new clients before accepting them as clients
- existing clients, in particular when personal information has been altered or information relating to tax affairs is inconsistent with information tax agent already hold (and have previously verified) about their tax affairs
- all representative of clients (whether they claim to represent new or existing clients)
Clients attending agent premises (face-to-face)
New clients
At least one piece of current photo identification, including
- Passport (including an overseas passport with evidence of Australian immigration status)
- Driver’s license
- Government or student identity card, if applicable.
- Australian full birth certificate
- Australian citizenship certificate or Extract from the Register of Citizenship by Descent.
- Last year’s notice of assessment
- Medicare card
- Recent bank statement (not credit card)
- A current valid passport
- Some temporary visa holders have work rights, although some classes of visas only allow limited work rights (for example, working holiday and student visas).
- The working rights attached to the visa type
- That the individual is a resident for tax purposes
Existing clients
Tax agents can use the following details to ensure the client’s identity has not been stolen:
- Tax file number (TFN)
- Full name
- Date of birth
- Current residential address
- Current contact telephone number
- Current bank details
- Employment details (including the employer’s address and phone number) where applicable
- A current valid passport
Any discrepancies with information tax agents already hold should be checked directly with the client to see if it matches information tax agents already hold.
Online interactions with new clients
There is an augmented risk for tax agents dealing with information online, particularly with clients they have not physically met.
For any online or electronic transaction, tax agents still need to take appropriate steps to satisfy that the:
- Client is a genuine taxpayer
- Client is who they say they are and the identity has not been stolen
- Information they are providing to tax agents are correct and can be substantiated
If tax agents receive information from an existing client to prepare and lodge a tax return or activity statement via an online channel, tax agents should use the identity checks recommended for existing clients to validate the information.
If the information tax agents received is inconsistent with the information and usual reporting patterns tax agents hold for that client, additional checks should be used.
For new online clients, a wide range of personal details can also be compared against existing ATO information on online services for agents:
- TFN
- Full name
- Date of birth
- Current residential address
- Current contact telephone number
- Medicare number
- Current bank details
- Employment details (including the employer’s address and phone number) where applicable
ATO suggested to check original documents to verify an identity. Tax agents may be able to use the Document Verification Service (DVS) which is a national online system that assists the business to build greater confidence in the identities of the clients. It allows tax agents to compare a client’s identifying information on government-issued identity documents against details held by a DVS provider.
Chang Accounting Advisory Pty Ltd, we are CPA practice and tax agent. If you or your families or friends need our services, please feel free to contact our team for any assistance.
This article is for informational purposes only and does not form part of our advice. This article is based on Australian Taxation Office guideline. Please contact our team if you need any assistance.
Claire Chang, 0497 131 419, claire.chang@changadvisory.com.au, wechat: clairechang26
Michelle Cui, 0433 539 870, michelle.cui@changadvisory.com.au, wechat: michellejc
Claire Chang