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A recommendation to equip the ATO with the power to penalise egregious tax agents directly has been slammed by the Institute of Public Accountants.
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‘Judge, jury and executioner’: IPA shoots down proposed ATO penalty regime
02 December 2020
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The recommendation, contained in the final report of the review of the Tax Practitioners Board, had called for the government to provide the ATO with a new administrative penalty regime to allow it to impose penalties on tax practitioners who demonstrate an intentional disregard of the taxation laws.
The report argues that the current law only allows the Commissioner of Taxation to penalise taxpayers for intentional disregard of tax laws, despite it being more appropriate to impose it on the tax practitioner who knowingly made false and misleading statements.
It also believes that administrative penalties would allow the ATO to address misconduct in a timely manner, instead of pursuing civil penalties through the courts.
The IPA’s general manager of technical policy, Tony Greco, said the thought of the ATO dishing out penalties would “send a shiver up the spine” of tax practitioners.
“[It is] a case of judge, jury and executioner,” Mr Greco told Accountants Daily.
“That is the whole point of having the TPB as an independent regulator of the tax profession.
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“There needs to be a degree of separation from the authority whose principal role is to administer tax laws.”
In response to the final report, Assistant Treasurer Michael Sukkar said the government would first consult on providing new sanction powers to the TPB and determine its operational effectiveness before considering the need for the new ATO penalty regime.
Mr Greco said the professional body was supportive of providing the TPB with a new range of sanctions including permanent disbarment, enforceable undertaking and interim suspensions.
“The current penalty regime is deficient to enable the TPB to act in a rapid-fire way when presented with evidence to support cases that show a total disrespect of the rules,” Mr Greco said.
“An application to the Federal Court to deal with such instances is to too slow, cumbersome and is not fit for purpose, and we support moves to increase penalties to deal more rapidly with tax practitioners who demonstrate an intentional disregard of the taxation laws.
“We do acknowledge that the ATO in the administration of the tax system may be the first to notice bad behaviour among tax professionals. There needs to be a way through information sharing for the TPB to act quickly to deal with such egregious behaviour that is causing the community harm.
“We fully support providing more powers to the TPB to deal with the bad apples in our profession.”
Other key recommendations handed down in the final report include increasing education standards for tax and BAS agents and distancing the TPB from the ATO by transitioning it to a standalone agency to receive direct funding from the government.
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