The ATO is targeting unlawful tax and super scheme promoters, citing “serious” penalties and reputational risk.
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The ATO has released an update on its website, claiming it will continue to target those who promote unlawful tax schemes.
“Anyone who promotes unlawful tax schemes is taking big risks. They risk our attention, serious penalties, as well as their reputation,” it said, adding, “They’re also risking their client’s money for their own financial gain.”
The Tax Avoidance Taskforce is responsible for targeting the promotion of unlawful tax schemes among practitioners “regardless of the firm size, occupation, position in their organisation, or standing in the tax community.”
The promoter penalty laws prevent the promotion of unlawful tax and super schemes or schemes that differ materially from their described operation in a product ruling.
By way of penalty, the courts can impose the greater of 5,000 penalty units for an individual, 25,000 penalty units for a body corporate, or twice the consideration received or receivable by the entity or its associates by operation of the scheme whether directly or indirectly.
In 2021, the Federal Court handed down the largest penalty issued under the promoter laws, totalling $22.68 million.
Paul Enzo Boggiato and entities within his control were penalised for “systemic abuse” of the research and development tax incentive scheme.
“The size of the penalty is the highest ever seen in Australia and reflects the scale and abusive nature of these schemes,” said ATO assistant commissioner Ash Khera.
“Those who encourage others to do the wrong thing and claim the incentive to which they are not entitled will be caught and held to account for their actions.”
That case built on a series of ATO victories which involved applying the promoter penalty laws, such as the Federal Court decision of the Commissioner of Taxation v Rowntree and others in which three advisers were ordered to pay a total of $9.4 million.
“We have the tax technical and investigative skills to deal with those who promote non-compliance with the tax and superannuation system,” said Khera.
Last year, the ATO announced it had filed an application to the Federal Court against a former EY partner who had allegedly promoted a tax exploitation scheme.
According to the ATO, the former partner promoted three tax loss access schemes to seven clients between November 2016 and April 2021.
The news of the Tax Commissioner’s case against the former partner was first reported by The Australian Financial Review and became a major issue in the Senate consulting inquiry.
“If proven, these allegations will provide stark evidence of the failure of regulation in the sector. Once again, we ask the question, ‘Is this just the tip of the iceberg?’” Pocock said to the AFR.
“The ATO alleges that the illegal activity was conducted for seven clients and the partner in question is reported to be claiming that others at the firm were involved,” she said.
While the former partner’s identity has yet to be revealed, EY successfully applied to vary a suppression order that had prevented it from being named as the former employer of the scheme promoter.
In a statement, EY revealed the partner had been terminated for cause in August 2022 after disclosing they had received more than $700,000 in unauthorised financial benefits connected to the schemes.
While EY stated the Commissioner had made no allegations of wrongdoing against the firm itself, it did enter into an enforceable voluntary undertaking to improve its internal processes, training, and notification activities.
David Larocca, chief executive at EY Oceania, said the allegations related to the “isolated actions of a rogue operator and are in no way reflective of the way we do business.”
“We fell short in this instance, and I regret that we didn’t identify and stop this behaviour earlier.”
The ATO said tax advisers should be aware of the warning signs of unlawful tax schemes, report suspected unlawful schemes, advise clients against involving themselves in unlawful schemes, and encourage implicated clients to work with the ATO.
Nick Wilson
17 April 2024
accountingtimes.com.au
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Avi Paluch became a partner in 1975. His client base comprises of professionals in a diverse range of industries, sole traders, national, multi-national and international groups in relation to taxation and management issues.
His clients also include large family groups and high net worth individuals. In addition, he is involved in a range of audits. Avi currently involves himself in various community boards in the capacity of honorary treasurer.
His other interests are being with his family and attending sports events.
Andrew Goldberger joined Guests in 1987. Prior to that he occupied a senior position with the Australia Taxation Office. As well as looking after a diverse range of groups of SMEs and high wealth individuals, Andrew is an expert in taxation. He has been involved in a number of Large Income Tax and State Revenue Audits and provides advice on various technical tax issues and areas of tax planning. Andrew also consults to other practitioners in these areas.
Andrew has also written articles for various taxation publications including CCH and participated in taxation focus groups. He is regularly called on to address various public practitioner groups on taxation matters and has conducted training sessions for CPA Australia.
Moshe joined Guests Accounting in 1985 and has more than 40 years of extensive experience. He has an indepth understanding of business and is responsible for a diverse group of clients and is in charge of the Superannuation Team and the Audit of superannuation funds.
Moshe’s knowledge in many different areas including business structuring, accounting, taxation, auditing, SMSFs and business planning in various industries enables him to provide advice on ‘the big picture’, taking into account both present and future needs of clients.
Moshe has been involved in various not-for-profit organisations during his career in an honorary capacity. This has given him a good grounding in the corporate governance area. Moshe continues his interest in the new regulatory environment of the not-for-profit sector.
Mory graduated from Monash University in 1979 and joined our team with more than 20 years experience. He is a member of both the Institute of Chartered Accountants and the CPA and a Fellow of the Association of Taxation and Management Accountants.
After more than 18 years experience with a Chartered firm, Mory travelled to the United Kingdom and gained invaluable experience working with various Accounting and Legal firms in London, developing operating systems and in investigative accounting roles.
Mory joined Guests in March 2002 and became a partner in July 2005, specialising in Taxation and Business Services. Mory has also served on the executive of community boards and not-for-profit organisations.
Gary Bryfman is a FCPA, having a Masters Degree in Taxation. His earlier accounting background was in industry, specialising in costing and budget preparations.
He has been a partner of Guests for 31 years. Gary has been involved in a number of Jewish organisations, including JCCV as honorary treasurer; CSG, JEMP and advisor to MDA executive.
Boruch brings a wealth of experience and dedication to our team, having demonstrated exceptional leadership and expertise in accounting and taxation matters over the years. His commitment to providing outstanding client service that is solution- and results-focused has been attributed to our clients’ success.
Boruch’s leadership extends beyond his technical skills, he is also known for his ability to mentor and inspire his colleagues, fostering a collaborative environment within the practice.
Outside of work, Boruch enjoys spending quality time with his young family. His passion for outdoor adventures and family life reflects his balanced approach to both personal and professional endeavours.
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Email is very convenient in our business world, there is no doubting that. However email messages and attachments can be intercepted by third parties, putting your privacy and identity at risk if used to send confidential files or documents. Secure File Transfer eliminates this risk.
Please enjoy the links to these free tools supplied by MoneySmart - a great resource for general financial information. Please get in touch if you would like to discuss any questions that you may have as a result of using these calculators.
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