Yesterday, the TPB announced it would launch a new compliance strategy to target tax practitioners who may have failed to lodge income tax returns and activity statements and those who may have outstanding debts with the ATO.
According to the TPB, over 2,500 tax practitioners have not lodged one or more of their personal income tax returns or for those of their associated entities and over 1,000 have more than one outstanding BAS or for their associated entities. Of these numbers, nearly 500 tax practitioners have a combination of both.
In addition, over 2,700 tax practitioners, who are also trustees of their own SMSF, have outstanding SMSF annual returns.
In relation to ATO debt, over 5,000 have a debt of over $300 with no active payment arrangements, representing a total debt of nearly $115 million.
Speaking to Accountants Daily, CPA head of policy Paul Drum said that while the statistics were surprising, there could be a variety of reasons why tax practitioners were not fulfilling their own personal tax obligations.
“It comes as quite a surprise to us that there are so many tax agents not fulfilling their own personal tax obligations – particularly those cases where there is more than one lodgment year involved,” said Mr Drum.
“While it comes as a surprise, there will be a variety of reasons why certain tax practitioners are not fulfilling their own obligations.
“For example, some will be experiencing personal and or financial difficulties, or in some circumstances it may be another case of ‘the good auto mechanic driving the worst car’. Arguably these tax agents may be putting their client’s obligations ahead of their own obligations – which is, of course, no excuse for their unacceptable behaviour.”
The Tax Institute’s senior tax counsel Professor Robert Deutsch said the TPB’s compliance strategy should come as a reminder for the profession to keep their personal tax obligations up to date.
“The statistics released by the TPB are a concern. Tax practitioners should set the standard for tax compliance behaviour,” said Professor Deutsch.
“Any tax practitioners with outstanding lodgments and debts will have until 31 January 2019 to get their affairs in order before the TPB is likely to look at imposing sanctions on non-compliant practitioners.”
Professor Deutsch believes the TPB will take into account any extenuating circumstances, such as illness, both personal and immediate family; how many returns are outstanding; and whether the practitioner in question has taken active steps to rectify their non-compliance including seeking extensions to lodge.
“The combined action by the ATO and the TPB is a salutary reminder to tax agents that it is an obligation of their registration with the TPB that they keep up to date with their personal tax obligations,” said Mr Drum.
“We encourage those agents contacted by the ATO to follow up expeditiously discuss their tax affairs and make the relevant arrangements where necessary.”
The tax agent population is largely compliant, despite these warnings from professional bodies and the TPB.
“Most tax practitioners who are the focus would be well aware, and in some cases, have received a dozen or so reminders from the TPB or the ATO about getting their affairs in order. This would come as business as usual, and not a shock, to those agents,” Michael O’Neill, CEO at the TPB, told Accountants Daily yesterday.
Accountants Daily has long been reporting the vast majority of the tax profession are low-risk operators, and not the principal focus of the regulators’ compliance campaigns.