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A former KPMG partner has had his tax agent registration ripped up after the Tax Practitioners Board determined he engaged in a scheme to help clients evade over $1.5 million in capital gains tax.
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Former KPMG partner banned over tax evasion scheme
12 June 2020
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The Tax Practitioners Board has announced the registration termination of Christopher Phillip Allenby, a former partner of KPMG Sydney.
Mr Allenby, who left KPMG late last year after close to 26 years at the firm, will also be barred from reapplying for registration for a period of three years.
According to the TPB, during his time at KPMG, Mr Allenby engaged in dishonest behaviour by enabling two clients to avoid over $1.5 million in capital gains tax through an arrangement involving call options which were not genuine.
The arrangement involved a company which was being sold. At the time of sale, Mr Allenby’s clients, who together owned the majority of the company, attempted to reduce their capital gains tax exposure by first transferring more than half of their shareholdings to related discretionary trust entities through the use of call options purportedly agreed to in the year prior, at a time when the company had a reduced valuation.
The ATO determined the call options were not genuine and the clients were subject to additional tax, penalties and interest in excess of $3.1 million.
The TPB did not accept Mr Allenby’s submissions that he had no reason to doubt the call options were genuine, and that he was not required to inquire into the validity of the call options.
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The regulator also found that Mr Allenby continued to assist the clients, resulting in false statements being made to the relevant state revenue authority, ASIC and the Commissioner of Taxation.
In determining that Mr Allenby was not a fit and proper person, the TPB considered that the validity of the call options had a material impact on the correct lodgement of his clients’ income tax returns and how he failed to undertake appropriate inquiries.
TPB chair Ian Klug said Mr Allenby’s termination was a reminder for all tax practitioners to steer clear of schemes or unlawful practices while assisting clients with accessing the government’s stimulus measures, including JobKeeper and the cash-flow boost.
“[Tax practitioners need to] act lawfully and ethically, especially now when the majority of practitioners are working hard to support their clients, including accessing stimulus measures to protect the Australian community and economy,” Mr Klug said.
“We will act firmly against tax agents who engage in evasion or avoidance of taxes.”
Public sanction details
The details of Mr Allenby’s termination have now been made public on the TPB’s register, a change that the regulator has put in place in a bid to improve transparency, following a recommendation from the independent review of the TPB.
The TPB register had previously not provided any detailed explanation as to why a practitioner had not met their registration requirements.
The register will now provide reasons for all matters where a sanction has been imposed, with the exception of written cautions.
The register will be updated with the new details once the board’s decision is effective, 28 days after the affected practitioner has been notified by the TPB of its decision.
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