Speaking on the TPB’s webinar, chair Ian Taylor said the ATO’s claims that tax agent-prepared returns required more adjustments than self-prepared returns, contributing to the $8.7 billion individual tax gap, was just a “little concerning”.
“The commissioner of taxation Chris Jordan has been quite vocal and indeed the most recent report by the ATO has very clearly identified that tax agents have in essence been involved in providing return services to their clients where the extent of over claiming is in fact greater than the extent of over claiming for self-preparers,” said Mr Taylor.
“This is a little concerning and the ATO has identified this because clearly tax practitioners are meant to understand the application of the laws better than a client or taxpayer who is unskilled in tax law and more likely to make mistakes.”
“As a result of the ATO's announcements, we know that the ATO during this tax season is going to focus on work-related expenses so you should be prepared for claims made in your agent-prepared returns to be subject to possible review by the ATO.”
Responding to a question on clients threatening to leave for ‘cowboy agents’ promising more returns, Mr Taylor advised practitioners to let them go.
“We do see it often where a client says I want to claim this because one of my mates uses another agent and he claims it. My answer to that will be, go see your mate's accountant, if I believe the item being claimed was being claimed illegally,” said Mr Taylor.
“Is there a legal obligation to dob in the other agent? No, there's not, at least for the moment but we are still waiting for further information in the context of the black economy taskforce and the fact that it has identified specifically that it is not appropriate for a tax agent or BAS agent to turn a blind eye to circumstances where they believe their clients are acting illegally or outside of the tax law.”
The ATO will be receiving an additional $318.5 million over four years to implement new strategies to combat the black economy, including measures to target egregious tax practitioners who enable black economy activities.
Alongside the new black economy measures, Mr Taylor said the proposed whistleblower laws would lead to an increased focus on egregious tax practitioners.
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced in Parliament late last year, and if passed, will see a single whistleblower protection regime covering the corporate, financial and credit sectors.
“The fact is if you have information that you've got confidentially from a client and you're passing it on to a third party, i.e. the ATO, that would be a breach if you don't have the client's permission to do so and you're not going to get their permission to dob them in,” said Mr Taylor.
“The new whistleblower legislation will allow immunity from breaches. Once that whistleblower legislation is in place and once the black economy taskforce arrangements are in place, there will be an increased focus on practitioners to ensure that they are doing the right thing.”