Government releases draft legislation to expand TPB's sanction powers

The amendments introduce five new criminal offences for unregistered preparers, including providing either tax or BAS agent services for a fee, advertising tax or BAS agent services, and false representation of being a tax or BAS agent.

Under the proposed legislation, the maximum penalty for each offence would be 40 months’ imprisonment, or 200 penalty units, or both.

The draft legislation also introduces new civil penalty provisions, including contravention of the code by registered tax practitioners and false or misleading statements to the Commissioner of Taxation or the TPB by unregistered preparers.

The maximum penalty amounts for all civil penalty provisions, including the new provisions, will also increase from 250 penalty units to 2,500 penalty units for individuals.

For bodies corporate and significant global entities, the maximum penalty units will increase from 1,250 to 50,000 under the proposed reforms.

The Explanatory Materials stated that the increased penalty amounts provide “an appropriate and strengthened deterrent for unethical behaviour targeted by the civil penalty provisions”. 

The proposed amendments also extend the maximum period before a terminated practitioner can reapply for registration from 5 years to 10 years.

They also introduce new powers for the TPB, including the ability to issue infringement notices for breaches of certain civil penalty provisions and to accept enforceable voluntary undertakings.

The TPB will be able to suspend registration for up to 90 days for a suspected breach of a criminal offence or civil penalty provision. This power will only be used where a client of a practitioner is likely to suffer harm, or the TPB is satisfied it is in the public interest to do so.

The suspension may be extended in certain circumstances, including when an investigation has commenced.

The government previously released a consultation paper on enhancing the TPB’s sanctions regime in December 2023, as part of its response to the PwC tax leaks scandal, and also announced the reforms in the 2025-25 budget.

The explanatory materials said that the PwC tax leaks matter exposed limitations in the current regulatory framework for tax practitioners and the broader system in which they operate.

"The amendments implement a stronger compliance framework that more effectively penalises and deters inappropriate conduct by both registered tax practitioners and unregistered preparers," the government said.

"The reforms improve protections for taxpayers against tax agent misconduct, including poor and unlawful tax advice, and maintain community confidence in the integrity of the tax system."