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RMAs concerned about PD Training Offer
RMAs may have recently received an offer from PD Training offering a ‘Finders Fee” for referring clients who purchase some of their courses. Some RMAs have written to us concerned about the tax implications of the offer. Migration Alliance does not provide tax advice and therefore we suggest that RMAs consult their accountants in respect of any tax concerns. We have however put RMAs concerns to PD Training and set out their response below. We would like to hear what you think of this offer after you have spoken to your tax consultant.
The PD Training offers sets out as follows, quoting the wording of the offer:
“New Finders Fee Structure*
- 35% Finders Fee for agents when the client purchases eLearning including many Trade based courses - 100's of courses for all industries available*
- 10% Finders Fee for agents when the client purchases Instructor-led training*
How does it work?
- At the end of each month pd training orders you a Visa debit card pre-loaded according to the finders fee schedule above for each training plan fully paid during that month.
- Cards are supplied by a 3rd party company, all card activation, delivery questions and support is provided by the card issuer.
How do I claim it?
- To receive the Finders Fee simply complete the Training Plan Request form , including the new section under 'Agent Use Only'. That's it!
- Your Finders Fee will be processed at the end of the month that the plan is paid in full.”
As some RMAs were concerned about the offer especially in respect of the tax implications or for that matter how to report the ‘Finders Fee’ for tax purposes, the Migration Alliance requested clarifications from PD Training regarding the tax implications of the offer.
Mr Don Fairweather of PD Training responded as follows:
“We sought advice from our Tax Agents upon structuring our offer. We have no intention to avoid tax, in fact quite the contrary, the difference between the structure of your other partners and our approach is that because they receive an invoice from the migration agents for commission they can claim GST form the agents invoice - and therefore they pay less tax.
“Because we don't require an invoice from the agent we can't claim the GST on the Gift Card that we provide to our agents as a thank you for referring business to us.
“We are giving a Finders Fee/Gift - NOT COMMISSION.
“This is very common commercial practice, in fact we order the cards from a company called Corporate Pre-Paid Gift Cards who manage the process on our behalf. You can see one of their case studies of rewarding existing customers here: http://www.corporateprepaidgiftcards.com.au/case-studies/competition-to-reward-existing-customers/
“So since we don't have a Tax Invoice from the agents to claim GST against, we are paying 10% MORE Tax and giving our agents a giant thank you for their business.
“There is an expectation that all agents will show the tax office all forms of income - the cards are Cash Debit Gift Cards, which means they can re-gift them in anyway they choose.
“Regardless of how they spend the money or what they do with the cards agents should declare gift as income to both the tax office (as income) and to their clients (as a personal interest).
In short, we are paying EXTRA tax, we expect agents pay their fair tax as well.”
Comments
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Tuesday, 11 February 2014In law, unsolicited gifts are goods delivered to an individual with a view to the individual acquiring them, but where the individual has no reasonable cause to believe that they were delivered for legitimate business and had not previously agreed to acquire them.
I think the issue here is that this is being dressed up as a gift, but that it isn't really a gift because it requires something from the receiving party first, plus the receiving party is having the gift delivered for legitimate business plus the receiving party previously agrees to aquire the funds.
Yeah, this is kind of borderline. Can a tax guru put in their 2c worth on this? It looks like commission to me. -
Tuesday, 11 February 2014
As mentioned in the response from PD Training that it is a taxable income and must be disclosed to ATO, then why it cannot be paid in a straight forward way? I don't think that by calling it a Finder Fees, it does not remain a referral commission any more or it changes the genuine intentions of either the giver or the receiver. I am just concerned about the purpose behind it. If it is a marketing gimmick to attract RMAs who may want to avoid the tax, then the scheme is offered to a wrong industry as RMAs are law abiding people and are highly regulated. What if someone forgets to declare this so called gift income and then caught? After all why? What about the 35% finders fees payable to overseas agents, particularly in those countries where avoiding tax is a norm? Will this scheme help in reducing corruption in those countries? If not, are we, as Australian businesses, sounding like a responsible corporate citizen of the world?
McKkr's is also offering the same 35% Referral Fees on e-learning and a much higher fee of 25% on face to face but in a straight forward way. I agree with Chris that it is better to be safe than sorry. -
Wednesday, 12 February 2014
If it is a marketing gimmick to attract RMAs who may want to avoid the tax,
DOH -
Wednesday, 12 February 2014
Marketing gimmick to help agents avoid tax and receive money. Nothing more nothing less. Wolf dressed up as a lamb.
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Wednesday, 12 February 2014
Tax evasion
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Friday, 14 February 2014
Here is the latest email from PD Training. They obviously want to pretend that there is no problem with their 35% referral thingie and commission for tax avoidance scheme. So here it is:-
You asked, we listened:
402 Visa's
Many agents have asked us to begin offering 402 Professional Development Visa Options - please see our new plans here: Visa 402 Professional Development Program (we would love your feedback - these plans can be tailored and adjusted to your clients needs)
Finders Fee for 457 Benchmark B - up to 35%
One thing we all have in common - we don't like paperwork! So we have made it easier than ever to get a reward to sending us business, simply enter your details at the bottom of the Training Plan Request Form for each training plan requested.
Business Plans:
Would you like better, faster, cheaper business plans for your clients?
pd training is working hard on some really easy ways for you to order business plans for your clients.
Our plans will be comprehensive, professional and thorough..... and really well priced.
You tell us what is most important to you when requesting Business Plans - speed or price?
Speed - what is your ideal turn around time?
Price - what do you think is a fair price for a high quality business plan that meets the departments needs?
We look forward to supporting you, talk soon!
Call today, for free advice, and an auditable training plan.
Discuss your requirements with Don at the Benchmark Training Helpline.
Immigration blog
Hmmmmmmmmmmmmmmmm this is also not an unsolicited gift. If you receive the gift as a result of the referral it is unlikely that the regifting is going to remove the tax liability. However, it is fair to say that commission is also income and I guess it is a question of what the RMA feels about the offering that is important.
By the way consideration must also be given to the requirement that the client being referred is away of the commission payment or referral fee or the cash debit card etc...it really doesn't matter what form it takes, it is taxable in any form and must be disclosed to the client. maybe that is a bit conservative but it is overall better to be safe rather than sorry. a well drafted fee agreement can solve these disclosure obligation.