In his commissioner’s address to the Tax Institute’s 2021 Tax Summit, Commissioner Chris Jordan called out the important role tax practitioners have in helping the ATO stamp out high-risk behaviours, such as the facilitation of fraud, phoenix activity and scheme promotion.
“Given the level of influence tax practitioners can have over their clients’ compliance with their tax and super obligations, the ATO has an important role to both support you to help your clients and protect the system from high-risk behaviours,” Mr Jordan said.
“Our tax practitioner engagement strategy sets out how we tailor our interactions with you, based on the risks we see in your client base, and in your own affairs. Where our data indicates that a practice may be drifting into risky behaviour, we reach out to the agent early.
“For example, this year, under our shadow economy program, we plan to engage with over 500 tax agents where our experience indicates most of these agents will voluntarily correct errors and improve their processes as a result of the engagement.”
Where the ATO observes high-risk behaviours it will undertake “comprehensive reviews and audits” by looking at the agent’s client base, their practice and where warranted, compliance with their personal tax affairs, Mr Jordan flagged, noting that from targeted compliance activities in 2020-21, “the ATO made 169 evidence-based referrals” to the Tax Practitioners Board, as well as an additional 605 referrals based on intelligence it holds.
“After its own investigations and consideration of these referrals, 36 registrations were terminated and a range of other sanctions were imposed,” Mr Jordan explained.
Mr Jordan also referred to the release of the “Pandora Papers”, a cache of nearly 12 million financial documents that detail how hundreds of political leaders, celebrities, and billionaires have exploited offshore companies and banking structures over recent decades. It is dubbed the largest leak of financial documents in history and sparked an investigation of up to 400 Australians whose affairs were implicated.
“You will have seen the recent reports on the Pandora Papers. We will analyse information that becomes available, compare it with data we already have and, where necessary, will investigate and take action against those who are involved in offshore tax evasion. If you have any doubts over the legality of an arrangement, come to us for advice. We will always be keen to help you stay on the right path,” Mr Jordan said.
“While the ATO has always had a strong focus on fraud against the tax and super systems, our delivery of economic stimulus measures and even greater digital engagement reinforced the need to remain vigilant and embed a fraud prevention mindset into the design of the programs we administer.
“Our new System Integrity Program brings together the ATO’s response to external fraud. It will strengthen the ATO’s ability to identify fraud vulnerabilities and determine if our countermeasures work effectively.
“With the large amounts of sensitive information the ATO and the profession hold, and the growing instances of cybercrime like refund fraud, we all need to be prepared to take that extra step to protect the community. This may mean we ask you for a stronger level of identity proofing and additional verification before accessing our systems or seeking information.”
In concluding the topic surrounding high-risk behaviours, Mr Jordan advised tax practitioners to go through the proper steps in order to protect themselves and their clients.
“The ATO and Tax Practitioners’ Board have been working closely with the tax profession to help tighten cyber security controls and take practical steps to improve physical security measures,” he said.
Mr Jordan’s commissioner's address to the Tax Institute’s 2021 Tax Summit also saw him reiterate support for the tax profession, noting that how it partners with practitioners will be a big focus area going forward.
Emma Ryan is the deputy head of content at Momentum Media and editor of the company's legal publication, Lawyers Weekly.
Emma has worked for Momentum Media since 2015 and has been responsible for breaking some of the biggest stories in corporate Australia. In addition, she has produced exclusive multimedia and event content related to the company's respective brands and audiences.
A journalist by training, Emma has spent her career connecting with key industry stakeholders across a variety of platforms, including online, podcast and radio. She graduated from Charles Sturt University with a Bachelor of Communications (Journalism).