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Private, wealthy professional advisers are less compliant than the ATO had expected and are therefore being targeted by the avoidance taskforce.
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ATO’s adviser strategy zeroes in on late-paying partners
11 March 2024
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This financial year, the ATO has raised $29.8 million in liabilities from partners of professional firms with multiple overdue lodgments. The ATO has received $15.2 million in payments while a “significant amount” is under payment arrangements.
The Tax Office has initiated ongoing monitoring of late-paying partners as preliminary analysis of privately owned professional firms with “wealthy group populations” has revealed lower-than-expected lodgment compliance among partners.
Through profit distribution analyses, the ATO found examples of distributions being reported under incorrect labels, only partially reported, and completely omitted.
“It’s very important for all privately owned and wealthy group advisers to keep their personal tax obligations up to date, in line with community expectations and taxation laws,” said the ATO.
These activities form a part of the ATO’s Tax Avoidance Taskforce’s efforts to target advisers given their “important role” in supporting businesses.
“Taxpayers take their lead from their advisers. Therefore, it’s critical that advisers ensure their own tax and super affairs in order,” said the ATO.
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Under the same adviser strategy, the ATO has engaged with “privately owned and wealthy group clients and advisers” to re-engage non-lodgers, data match individual tax returns against professional firms’ data and assess compliance with the PCG 2021/4.
That guideline sets out the ATO’s approach to compliance relating to the allocation of profits or income from professional firms in the assessable income of the individual practitioner. The ATO uses risk modelling to assess compliance with the guidelines.
The adviser strategy was introduced last year and applies to a range of advisers from tax and BAS agents, to legal and insolvency practitioners, financial advisers, and research and development consultants.
While “prevention rather than correction” was among the founding intentions of the adviser strategy, this update shows prevention can only go so far.
"We recognise that most advisers do the right thing and uphold high ethical standards," said the ATO.
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