TPB puts 7k tax agents on notice over outstanding debts, lodgments
BUSINESS
Tax practitioners with outstanding obligations have been warned to get their tax affairs in order with the ATO and TPB renewing their focus in this area.
The ATO and Tax Practitioners Board have warned tax practitioners of the consequences of failing to comply with their own tax obligations with recent ATO analysis revealing that thousands of tax agents have outstanding obligations.
Speaking in a recent webinar, TPB chief executive Michael O'Neill said the latest statistics from September suggest that while most tax practitioners are doing the right thing, a substantial number of practitioners are falling behind in their debt and lodgment obligations.
The statistics indicate that there are 2,000 tax practitioners who have outstanding tax debts exceeding $10,000 without an ATO payment plan.
The TPB also revealed that there are around 5,000 tax practitioners with one or more outstanding ATO lodgments, including income tax returns and activity statements.
Within that group, around 700 tax practitioners have outstanding ATO lodgments and outstanding tax debts exceeding $10,000 without an ATO payment plan.
O'Neill said that the outstanding tax debts owed by the tax practitioners were not debts in contest and were debts that had been self-assessed and included taxes such as PAYG withholding, GST and super. He also said the non-payment of these debts could have knock-on disadvantages for workers for retirement benefits.
O'Neill said the number of tax practitioners falling behind on their obligations was "far too high" and represents approximately 10 per cent of the registered tax practitioner population.
He warned that when a tax practitioner falls behind on their obligations there can sometimes be a spread of that behaviour to their clients' affairs as well.
st December we put out a reminder to remind people of their obligations and it was great to see that many people brought their obligations up to date," O'Neill said.
"Since that time we've been directly contacting practitioners with outstanding tax obligations, where whether their lodgements or debts are behind and again we've seen a good response rate.
"If you've received correspondence and been engaged by the ATO or the TPB, the very worst thing that you can do is to ignore that nudge. The best thing to do is to engage with the ATO and the TPB. Where people engage with openness and transparency, they're always going to get a better outcome."
Speaking in the same webinar, ATO assistant commissioner, frontline risk and strategy, Adam O'Grady, agreed that while most tax practitioners are very compliant in terms of their tax affairs, a minority were failing to keep up to date with their obligations.
"Most of the tax practitioner groups are very compliant, if they do have debts, they've entered into arrangements with us. Unfortunately, there is a small minority that are largely ignoring their obligations for payment or lodgement and in many cases, we're seeing poor lodgment in the client base of that agent as well," O'Grady said.
"That is concerning to us and something that we're looking to address with not only the client's behaviour but also the agent's behaviour and how their attitude to some of these issues is trickling down to their client base."
ATO’s warning to agents: stop ‘grave digging’ for GST refunds | Accounting Times
28
October 2024
Advisers who aggressively hunt down old tax claims to collect
contingency fees will attract regulator scrutiny.
Large market advisers who bend the rules to maximise claims for
goods and services tax will attract increased scrutiny from the ATO, senior
officials have warned.
In a speech to practitioners, deputy commissioner Rebecca Saint
and senior director Virginia Gogan said the ATO would act quickly to stamp out
advisers’ dodgy practices, including those engaging in “grave digging”, or
seeking out past GST claims that were overlooked or missed by clients.
While retrospective GST claims were legal, ATO was concerned
some advisers were pursuing aggressive claims without proper documentation or
in direct contradiction to published guidelines.
“We have long been concerned with the exercise of ‘grave
digging’,” the pair said at the Tax Institute’s recent national GST conference.
“We have an even greater level of concern when there is a lack
of substantiation and taxpayers seemingly are not advised of the legal and
compliance risk associated with the activities.”
“These business models bring high levels of risk for
businesses.”
Of particular concern were advisers working on a contingency
basis by receiving a percentage of recovered GST refunds, which the ATO said
created incentives for high-risk behaviour.
These arrangements were most commonly associated with advisers
working on retrospective input tax claims as well as those engaged
“independently” to conduct data testing for the justified trust program.
“Engaging an advisor on a contingency fee basis in these
circumstances represents a clear conflict of interest and cannot be
independent,” Saint and Gogan said.
“The solution is not to put in place arrangements that seemingly
separate the ‘grave digging’ activity from the independent data testing
engagement.”
The warning comes after the ATO published statistics for the top
100 and top 1,000 groups last month.
Saint and Gogan said about 40 per cent of compliance reviews
among the top 1,000 resulted in voluntary GST disclosures, with nearly
one-third of these companies also having reported GST errors in prior reviews.
In the top 100, about 44 per cent of completed reviews also “had
issues or concerns with the correct reporting of GST obligations”.
“Notwithstanding improvements in governance and tax control
frameworks, we continue to see a significant rate of voluntary disclosures of
GST errors with the root cause being deficiencies in governance controls and
systems,” they said.
Many errors were immaterial but in some cases resulted in
substantial corrections and penalties for failure to take reasonable care.
“If the ATO is to lessen the intensity through the justified
trust program, we need to be confident that businesses have got appropriate
processes in place to address these issues,” they said.
As a result, they said tax advisers played an “important role”
in helping large taxpayers meet their obligations, echoing the earlier comments
of Commissioner of Taxation, Rob Heferen.
“The ATO has been focused on the role of advisers in supporting
large business,” they said.
“We are agnostic as to which adviser a business may choose.
However, if an adviser is directly linked to possible facilitation and
promotion of tax schemes or is influencing their clients to adopt high-risk tax
positions, we will take action.”
“We want to actively support the vast bulk of advisors that are
doing the right thing and prevent those operating in the grey space from
gaining a commercial advantage.”
