Aussies’ tax returns sent offshore, says financial services boss

Australians are unaware accountants and financial advisers are sending their personal details overseas.

Kevin Nicol, managing director of the Quill Group, says most of his competitors sent work to The Philippines and India. Picture: Supplied

Australians are unaware accountants and financial advisers are sending their personal details overseas — including information in tax returns — as offshoring ­becomes commonplace, according to the head of a Queensland-based financial services firm.

Kevin Nicol, the chief executive of Quill Group, said he employed 65 local staff but most of his competitors sent work to The Philippines and India.

Amid calls from Labor and the unions to crack down on offshoring, Mr Nicol said many accounting firms and self-managed superannuation fund adminis­trators did not tell their clients who was handling their work.

He said some firms were breaking company regulations by sending data offshore without permission.

“I have no issue with people ­engaging contractors or outsourcing work onshore or offshore if it is done with complete transparency,” Mr Nicol said.

“I have ­issues where accountants, financial planners and SMSF administrators are hiding the fact that they are sending their clients’ personal financial data offshore without their knowledge or specific signed acknowledgment, as ASIC requires.”

Mr Nicol, who runs one of the largest financial services firms on the Gold Coast, said the accounting bodies required members to have their clients sign an “engagement letter” that said in the fineprint that a firm “may contract your work to third parties”.

“It doesn’t necessarily say they are giving us permission to send that work to Third World countries where Australian privacy laws may not be held as closely and respectfully as we do with our clients onshore,” he said.

He has called for the Morrison government to force companies to disclose in a clear and prominent way the amount of accounting or financial work done offshore.

“I get at least one email a week soliciting me to send my client work offshore or attend a fact-find tour to these Third World countries,” Mr Nicol said. “I could easily export 40 of my employee jobs offshore, like many firms are. They are chasing $7 an hour in Manila and $12 an hour in India, rather than paying wages and superannuation and income tax and payroll tax, as I do here in Australia.”

Paul Drum, external affairs manager of accounting body CPA Australia, said members were encouraged to disclose all details of outsourcing. “However, we note this guidance note is relevant only to accountants who are members of the professional accounting bodies,” Mr Drum said.

He added the Tax Practitioners Board had advised there was a legal duty for firms to tell clients before giving their data to a third party. Mr Drum said the banking and corporate regulators had similar requirements.

“Any accounting practice outsourcing work to a third party, either domestically or offshore, would still be subject to the provisions of the Privacy Act,” he said.

There has been a push by Labor MPs to regulate offshoring, with senator Murray Watt and Victorian Andrew Giles arguing ­labour market testing should be considered. The Australian Ser­vices Union said there should be transparency measures around offshoring, while the communi­cations union would support “any measure” to stop it.