The unit can be applied across the financial services industry, and is appropriate for a person with suitable qualifications and experience such as an accountant and taxation specialist.

FNSACC502A

Prepare income tax returns for individuals

ELEMENT

PERFORMANCE CRITERIA

1. Assess tax liabilities

1.1. Organisational and operational tax liabilities are identified by analysis of external and internal taxable transactions

1.2. History and trends in obligations arising from organisational transactions are quantified using standard accounting techniques

1.3. Data from transactions are analysed to resolve ambiguities and determine the nature of taxation options

1.4. Effects of taxes are analysed and scheduled by assessing methods of determination, tax bases and timing of incidence

2. Optimise tax positions

2.1. Implications of obligations on operations and structures are assessed to develop a range of treatments and responses

2.2. Financial management strategies are developed to ensure the alignment of cash flow with incidence and schedules of tax payments

2.3. Trends in tax liabilities are analysed and monitored to develop a history of obligations and compliance

3. Establish processes and plans

3.1. Management plans and record keeping systems are developed to implement financial management strategies and ensure the maintenance of an audit trail

3.2. Management processes are documented to ensure they promote standard application of compliance requirements

3.3. Taxation liabilities are derived from income and expenditure estimates using standard accounting techniques

3.4. Budgets are prepared in accordance with estimates and reviewed to ensure ongoing relevance of liability estimates

4. Evaluate tax policies

4.1. Variances between liabilities and taxation plans are analysed to identify errors in tax strategies

4.2. Performance of tax liabilities in similar or related organisations and operations are monitored and evaluated to measure tax effectiveness and prepare benchmarks and standards

4.3. Data is reviewed for accuracy, completeness and reliability of assumptions in liability projections

5. Review tax compliance

5.1. The achievement of performance indicators is assessed and reviewed against key result areas

5.2. Taxation preparation processes are monitored and reviewed in line with professional taxation and accounting standards requirements

5.3. Failures in compliance are analysed to diagnose shortcomings and to remedy processes in line with taxation authorities' requirements

Required skills

well-developed communication skills to:

determine and confirm taxation planning and compliance requirements and deal with client's, using questioning and active listening as required

liaise with others, share information, listen and understand

use language and concepts appropriate to cultural differences

highly developed research skills such as:

accessing and managing complex financial services information

accessing and interpreting complex taxation plans and legislation

literacy skills for analysing information needs and preparing clear written advice for clients and taxation planning documentation

well-developed numeracy skills for financial calculations and analysis

IT skills for developing, using and troubleshooting integrated financial systems, spreadsheets and databases and using internet information

learning skills to maintain knowledge of changes to taxation legislation and requirements

high level problem solving skills to identify any taxation issues that have the potential to impact on clients and to develop options to resolve these issues when they arise

organisational skills, including the ability to plan and sequence work and correctly schedule taxation lodgements

research skills to identify valuations and applicable professional standards

Required knowledge

current financial legislation

taxable transactions

reporting requirements

detailed knowledge of formats required for submission of statutory returns

ethical considerations for preparation of returns including disclosure

methods and principles of accrual accounting

principles of internal control including statutory requirements

principles of valuation and common methods of depreciation

range of acceptable practices required to obtain deductions under relevant tax legislation such as:

Capital Gains Tax (CGT)

income tax

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the ability to:

interpret and use standard accounting techniques

work within organisational policies and procedures

assess tax liabilities and optimise tax position

establish processes and plans

evaluate tax policies and review compliance.

Context of and specific resources for assessment

Assessment must ensure:

competency is demonstrated in the context of the financial services work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment

access to and the use of a range of common office equipment, technology, software and consumables

access to an integrated financial software system and data.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:

evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency

assessment as set by the Tax Practitioners Board for BAS and tax agent registration

verbal or written questioning on underpinning knowledge and skills

setting and reviewing business taxation simulations

evaluating samples of work.

Guidance information for assessment

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Tax liabilities may include:

Fringe Benefits Tax (FBT)

fuel tax credits.

Goods and Services Tax (GST)

income tax including corporate tax and CGT

instalments

luxury car tax

Pay-As-You Go (PAYG) tax withheld

PAYG income tax instalments

State government charges such as payroll taxes

superannuation requirements

wine equalisation tax

withholdings.

Taxable transactions may include:

allowable deductions

capital gains

financial adjustments such as:

write-offs

revaluations

income

payments

purchases

superannuation payments.

Obligations may include:

explanatory statements

lodgement dates

repayment schedules

supporting documentation.

Standard accounting techniques may include:

deprival asset valuations

direct allocation

discounted cash flows

forecasting techniques

impact statements

pay-back periods

pro rata and percentage apportionment

rates of return.

Data may include:

Australian Bureau of Statistics (ABS) economic data

budgets and forecasts

credit ratings

financial markets monitoring services

financial statements and reports

market valuations

revenue and sales.

Methods of determination may include:

forecasted income

fringe benefits assessments

income assessment

investment income

sales receipts

superannuation contributions.

Tax bases may include:

employees

revenue gathering practices

salaries

superannuation.

Financial management strategies may include:

adjustment of borrowings

asset liquidation

budget absorption

cost recoveries

long-term investments

purchases.

Record keeping systems may include:

centralised and decentralised recording

classification by account performance

classification by account type

invoices

periodic updates:

daily

transaction-based

monthly

purchase orders

receipts

recording authorities

requisitions.

Management processes may include:

decision making authorities

expenditure authorities

lending approvals

program responsibilities

signature approvals.

Variances may include:

budget expenditures

profits and losses

rates of investment returns

unit costs.

Assumptions may include:

cash and business returns

competitors' behaviour

expenditure limits

market share growth

productivity levels

regulatory stability.

Unit sector

Accounting

This unit contains employability skills.