Can a tax agent legally prepare a deed update?
There are a lot of grey areas in regard to the scope of work tax agents are legally allowed to conduct on behalf of an SMSF, warns a leading law firm.
In a recent webinar, Shaun Backhaus, senior associate with DBA Lawyers, said engaging in legal practice will depend on the definition of preparing, which may stray into the area of things such as preparing a data update.
“Legislation on the provision of legal advice is state-based,” Mr Backhaus said.
However, he said it is best to go through the definition of legal advice provided by Legal Profession Uniform Law.
The LPUL definition of ‘engage in legal practice’ includes practise law or provide legal services but does not include engage in policy work which, without limitation, includes developing and commenting on legal policy.
Additionally, ‘legal services’ means work done, or business transacted, in the ordinary.
“As you can see, it’s a bit circular,” Mr Backhaus said.
“Some states with their own specific legislation have specific prohibitions so they guide you on what legal practice is, which is helpful.
“Even the states that have removed them, going back and seeing what they used to have would be helpful in understanding what would be legal practice.”
Mr Backhaus said some states still have specific prohibitions on things that are legal practice such as preparing an instrument creating or regulating rights between parties, instruments relating to legal proceedings, relating to real or personal property, acting as an advocate in legal proceedings (or otherwise acting) (taking responsibility for litigation), and preparing wills or testamentary instruments.
“It seems like taking responsibility for litigation and appearing in court, preparing wills and testamentary instruments is pretty clearly legal practice,” he said.
The area in which tax agents may get caught up is whether they are preparing work which is not required to be done by a solicitor but is usually done by a solicitor and is being done in such a way as to justify the reasonable inference the person doing it is as a legal practitioner.
“That’s probably most relevant for situations where people would offend these prohibitions.”
“It talks about the consumer protection test and says that if the work is something that should be done by a legal practitioner, as a matter of public policy, it should be to protect the rights of consumers.
“These principles are really based on the protection of consumers and ensuring their rights are properly protected.”
He said, the three main principles that must be adhered to before a tax agent engages in any work that may come under the jurisdiction of ‘legal work’ is that it is not conduct/work only for lawyers, it is not conduct/work done in a way that implies being done as a lawyer and that it is not conduct/work affecting legal rights, required a lawyer to protect public.
“However, the court has said that other professions can provide such advice that protects the public adequately and not be legal practice such as tax agents on tax, architects advising on legal ramifications of their proposed design,” he said.
“One of the tips that I would give tax agents is to have disclaimers on their paperwork, letting clients know that you are not providing legal advice if it was ever in question, although that may still not be enough.”
