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The government is unlikely to confer new powers to the ATO to allow it to impose administrative penalties on tax practitioners after strong pushback from the professional accounting bodies.
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Proposed ATO penalty regime faces backlash
27 January 2021
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The ATO-administered penalty regime was one of 28 recommendations contained in the independent review of the Tax Practitioners Board that was released late last year.
The review, chaired by Keith James, argued that the current tax system was ineffective in targeting tax practitioners who were intentionally disregarding taxation laws, and proposed to allow the ATO to directly address such practitioners by imposing administrative penalties.
In a joint response, Chartered Accountants Australia and New Zealand and CPA Australia have both taken aim at the recommendation, noting that it would go against independence requirements and allow the ATO to overlap with the TPB’s regulatory purview.
“Such an ATO power risks compromising the principle that there should be independence of the administrative decision-maker imposing the penalty on the tax practitioner,” said the joint submission.
“Independence is not achieved when the party on the other side of the tax dispute is also imposing penalties.
“We observe that the Commissioner of Taxation already has administrative and criminal penalties for false and misleading statements, as well as civil promoter penalties which can currently be applied to tax practitioners, but which are subject to appropriate safeguards, burden of proof and natural justice.”
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The government has trodden lightly on the issue, with Assistant Treasurer Michael Sukkar noting there was no rush to introduce an ATO-administered penalty regime ahead of new sanctions being afforded to the TPB.
New TPB sanctions
The review has also recommended introducing new sanctions into the Tax Agent Services Act, including permanent disbarment from the tax profession, enforceable undertakings, interim suspensions, quality assurance audits, infringement notices and external intervention to wind up a practice.
The review believes the additional sanctions are necessary to plug a gap in the TPB’s disciplinary powers, which currently only include low-level sanctions such as written cautions and further education or high-level sanctions such as the suspension or termination of registration and civil penalties.
Both CA ANZ and CPA Australia support the recommendation in principle, and have called for further details around the sanctions to be published.
“Detailed discussions are required to design an appropriate sanction system which incorporates the principles of natural justice and due process,” the professional bodies said.
“This may include infringement notices and administrative penalties such as fines as well as summary offences which result in a criminal conviction.”
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