How to avoid being hit with a $26,000 ‘lazy tax’ over an AFAA trust account
It’s simple really. Lodge your audit reports on time.
Late lodgement of trust account audit reports under the Agents Financial Administration Act 2014 is a big issue here at the OFT. In 2017-18 alone, 438 licensees failed to lodge their trust accounts on time. Of those, 256 were issued with formal warnings and 182 were fined. And with fines of up to $26,110, it’s no small matter.
Your audit report must be lodged with the OFT within four months following your audit period. Many auditors will submit the final audit report to the OFT on your behalf as part of their service, however, it’s important to remember that legally it remains your responsibility to ensure the report is submitted on time.
Aside from a possible fine, if your trust account audit report is not lodged on time, you can be disqualified from holding a licence and may be prevented from renewing a licence, which could wind up costing you a lot more.
If you think you may have trouble meeting your audit deadline, you can ask us for an extension before your audit is due. You must make your request in writing, setting out the reason you are seeking the extension. Please be aware that extension requests submitted after the due date will generally not be considered. Another common issue we see is a failure to reconcile trust account cash books on time.
The Agents Financial Administration Regulation 2014 states that you must reconcile your trust account cash book within five business days after the end of each month.
This entails reconciling:
• the trust account cash book balance at the end of the month with the trust account ledger balances at the end of the month
• the trust account cash book balance at the end of the month with the financial institution’s trust account statement balance at the end of the month.
You must keep your reconciliations on file and be able to produce them for inspectors upon request.
And finally, if you identify a problem with your trust account, it is imperative you discuss it with your auditor and, where necessary, advise us of the issue. Covering up any discrepancies is never a good idea, even if they are caused by a rogue staff member or an oversight.
For more information on audit requirements, to access OFT forms, or to download Trust accounts – a guide for property agents, motor dealers, debt collectors and their auditors, visit www.qld.gov.au/fairtrading or call 13 QGOV (13 74 68).
Alternatively, you can order a hard copy of the trust account guide by emailing OFT.Comms@justice.qld.gov.au.