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High-risk tax practitioners and unregistered agents will fall squarely in the Tax Practitioners Board’s sights over the next 12 months as it details behaviours that will attract its scrutiny.
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TPB highlights risky agent behaviour ahead of crackdown
27 November 2020
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Some high-risk behaviours that the TPB will home in on include lodging incompetent, incorrect or false returns for their clients, practitioners with a poor history of compliance with their own tax affairs, have allegations of fraudulent or criminal activity against them, and those who promote aggressive tax schemes.
TPB board member Peter de Cure said the regulator’s use of data and analytics would also help it pinpoint indicators that could lead to reckless behaviour down the track.
“For example, a tax practitioner known to previously being involved in problem gambling may be more likely not to account appropriately to their clients for funds or property. We’ve seen a number of instances where severe gambling losses have led to real malpractice,” said Mr de Cure on a TPB webinar.
“A small practice with not enough staff to undertake independent reconciliation of financials may also have a high likelihood of misappropriating client funds.
“Once we identify these high-risk practitioners, we assess the risk and priority based on the impact on the public and the tax system.”
Mr de Cure said the regulator would work closely with the ATO through its joint compliance program to identify such practitioners.
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The joint compliance program has already seen a 25 per cent increase in referrals from the ATO over the last financial year.
“Increasingly, our actions have become more coordinated with the ATO,” said Mr de Cure.
“For example, the ATO will review a tax practitioner’s affairs and their clients and see patterns of fictitious claims, including over-claimed work expenses or manufactured losses from a business or rental property. Concurrently, at the TPB we’re examining their compliance with the Code and the TASA.
“This collaboration allows us to bring a timely resolution and supports the integrity of tax practitioners and protects their clients.”
Unregistered practitioners
Mr de Cure said the TPB would also focus its attention on unregistered practitioners but acknowledged that the regulator had its work cut out for it in identifying and pursuing these agents.
“[Unregistered providers] are sometimes hard to identify because they cannot use traditional lodgement software methods to provide services to the public,” said Mr de Cure.
“Some purport to represent the public while only lining their own pockets and they may not lodge any tax documents that might identify them. They may also use false details. They may be offshore or operate on behalf of criminal groups.
“They do pose significant challenges; they require a lot of effort to pursue through the courts.”
The TPB is also currently undertaking 40 investigations into unregistered practitioners after receiving over 200 complaints over the last year.
While it looks to seek court-imposed sanctions for such unregistered practitioners, the regulator noted that the independent review of the TPB may provide it with new compliance actions to deal with unregistered agent activity.
The review was completed in October last year but has yet to be released by the government.
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