In this article, we highlight potential tax administration traps for Queensland law practices which they should be aware of, particularly in light of upcoming renewals.
Accountants and tax practitioners often liaise with the Australian Taxation Office (ATO) on behalf of clients in the context of debt management, including to seek extensions of time and/or to arrange payment arrangements for outstanding debts.
Whilst it is not uncommon for these arrangements to be entered into, particularly on behalf of small businesses, consideration needs to be given to any adverse ramifications that may arise for clients who are members of professional bodies, including for instance lawyers and tax agents.
This article focuses on the professional obligations of members of the Queensland Law Society (QLS) to illustrate the issues Queensland legal practitioners need to be mindful of.
BAS debt
Ordinarily, Australian businesses have the options of entering into payment arrangements with the ATO to pay debts arising from business activity statements (BAS) via instalments. This is commonly used as a method of debt management when businesses are experiencing cash flow difficulties. However, if such arrangements are entered into by a Queensland law practice, it is a matter that each principal of the law practice is required to report to the QLS.
This is because QLS regards the non-payment of tax debts by their due dates (as reflected by interest charges continuing to accrue during the period any instalment arrangement remains on foot) as conduct capable of constituting professional misconduct on the part of the principals of the law practice.
In contrast, requesting and obtaining an extension of time may not necessarily be a failure to comply with a law practice’s tax obligations, if the ATO formally varies the due date in accordance with its powers to do so.
Reporting, to QLS, a failure to comply with tax obligations must occur by no later than the application for renewal of the principal’s practising certificate, immediately following the failure to comply.
Superannuation liabilities
In the context of meeting superannuation obligations, principals of Queensland law practices need to be particularly mindful of ensuring due dates are complied with.
Currently super guarantee payments are required to be received by an employee’s super fund within 28 days of the end of the quarter.
From 1 July 2026, employers (including Queensland law practices) will be required to pay employees their super guarantee on payday (Payday Super), at the same time as the employee’s salary and wages. Each time ordinary earnings are paid to employees, there will be a new seven day ‘due date’ (subject to some limited exceptions) for contributions to arrive in the employee’s superannuation fund. This seven-day window provides time for movement of funds through the payment system, including clearing houses. If funds are not received in an employee’s superannuation fund within seven calendar days, then the employer will be liable for the new superannuation guarantee charge. If the employer is a Queensland law practice, of which QLS members are principals, then based on current QLS policy, those principals will have an obligation to report any failure to pay superannuation to the QLS.
It is therefore imperative that Queensland law practices, and their advisors, take steps to ensure they are ready for Payday Super.
Professional obligations – Queensland legal practitioners
The majority of Queensland law practices are sole practitioners and one principal practices (76%) or law practices with two to four principals (13%). 66% of Queensland solicitors work in private practice.[1] These figures emphasise that the majority of Queensland law practices are likely to be small to medium businesses.
The Queensland Law Society (QLS) has a policy in place regarding Failure of a Law Practice to meet Tax and Superannuation Obligations (QLS Law Practice Tax Policy), which applies to any failures by a law practice to comply with taxation and/or superannuation obligations that exist unremedied as at 1 March 2021, or which occur after that date.
The QLS considers that a law practice failing to comply with its tax obligations and/or superannuation obligations are factors which increase the risk of default in relation to that law practice.
The QLS Law Practice Tax Policy sets out:
- the QLS position that a law practice’s failure to comply with various tax obligations is conduct capable of constituting professional misconduct on the part of the principals of the law practice;
- the action the QLS expects principals of law practices in such circumstances to take, including an obligation on each principal (either jointly or severally) to report to the QLS failures to comply with tax and superannuation obligations (by no later than the application for renewal of the principal’s practising certificate, immediately following the failure to comply); and
- the action to be taken by the QLS when law practices do not comply with tax and/or superannuation obligations.
‘Taxation obligations’ are defined in the QLS Law Practice Tax Policy to mean:
- the obligation to lodge BASs by relevant due dates;
- to pay, by the due date, any BAS liabilities (including associated penalties, interest or charges assessed by the ATO as payable regarding a BAS);
- to pay, by the due date, any assessed liabilities as per instalment activity statements (where BASs are not required to be lodged).
‘Superannuation obligations’ are defined to mean:
- the obligation to pay the super guarantee as required by the Superannuation Guarantee (Administration) Act 1992 (SG Act);
- to lodge a superannuation guarantee statement and pay superannuation shortfall (including choice liability), interest chargeable and any administration fee by the relevant due date.
The QLS has published a form, available on the QLS website, to assist principals of law practices to report failures to comply with tax or superannuation obligations.
Due dates – impact of common interactions with the ATO
In ascertaining whether a Queensland law practice has complied with its obligations to pay tax and superannuation liabilities by the relevant due date, consideration should be given to the impact of common requests to the ATO, including requests for:
- extensions of time to pay; and
- instalment arrangements, so that tax debt can be repaid over a longer period.
Extensions of time to pay
Section 255-10(1) of Schedule 1 to the Taxation Administration Act 1953 (Schedule 1 Tax Admin Act) provides the Commissioner with a power to defer the payment time for particular taxpayers, having regard to the circumstances of the particular taxpayer. If the Commissioner does so, then:
- the time is varied accordingly;
- general interest charge (GIC) or any other applicable penalties for any unpaid liabilities will begin to accrue from the time as varied;
- the Commissioner must issue a written notice to the taxpayer, confirming the varied payment due date.
Section 255-10(2) of Schedule 1 to the Taxation Administration Act 1954 (TAA) provides a similar power to the Commissioner to defer the time at which amounts of tax related liabilities are, or would become, due and payable by a class of taxpayers. Deferrals in this instance require a notice to be published on the ATO website. If the Commissioner does so, that time is varied accordingly. GIC or any other applicable penalties for any unpaid liabilities will begin to accrue from the time as varied.
Payments by instalments
Section 255-15(1) of Schedule 1 TAA provides the Commissioner with a power to permit taxpayers to pay tax related liabilities by instalments under a payment arrangement, having regard to the circumstances of the particular taxpayer.
Where a payment arrangement is granted, permitting a taxpayer to pay by instalments, section 255-15(2) of Schedule 1 TAA clarifies that the payment arrangement does not vary the time at which the amount is due and payable. Instead, any GIC (and other applicable penalties) continues to accrue from when the liability is due and payable (or any varied date as confirmed by the Commissioner in accordance with section 255-10 of Schedule 1 TAA.
Suggested action
If principals of Queensland law practices (and their tax agents) were not aware of the QLS Law Practice Tax Policy, then steps should be taken to ensure all tax and super obligations are lodged by relevant due dates.
Law practices should be operating with sufficient cash-flow to facilitate payment of tax and superannuation obligations by due dates, so that reporting obligations on principals are not triggered.
While ATO instalment arrangements are commonplace for many small businesses, if such arrangements are entered into on behalf of Queensland law practices, there will be a professional reporting obligation for any principal of the practice who is a member of the QLS.
With the pending introduction of Payday Super, to take effect on 1 July 2026, it is imperative that Queensland law practices ensure they have appropriate systems in place to ensure superannuation obligations are paid within the shorter due date periods.
[1] ‘2024 National profile of solicitors’, prepared by Urbis for the Law Society of NSW, 13 June 2025
