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Agent’s tax debts could trigger client audits: ATO


The Tax Practitioners Board’s incoming compliance program targeting tax agents with outstanding tax obligations could trigger ATO client audits, the agency has revealed.

By Jotham Lian and Adam Zuchetti 9 minute read

Last week, the TPB announced the launch of a debt and lodgment project for tax practitioners who have personal tax debts with no payment plans, and outstanding lodgments including their income tax and SMSF annual returns.

According to the TPB, around 5,000 tax practitioners have a personal tax debt of over $300, with no active payment plans, and 2,500 practitioners who have not lodged one or more of their personal income tax returns or for those of their associated entities.

An ATO spokesperson has now revealed to sister publication My Business that a tax practitioner’s own affairs could potentially be a trigger for client audits.

“A tax agent’s own obligations are one of a number of factors we use to determine which tax practices are reviewed, reviews may lead to agent and/or client audits,” the ATO spokesperson said.

Speaking to Accountants Daily, Institute of Public Accountants general manager of technical policy Tony Greco said the ATO may have reason to conduct such audits because of the possible connection to questionable client work.

“Non-compliance in meeting one’s own personal tax obligations could also extend to non-compliance in other areas such as bending the rules to meet client expectations,” said Mr Greco.

“Whilst this might be the situation in some isolated cases, this causal connection is not always the case as other factors might be at play such as putting the interests of their clients before their own.

“We do not condone not attending to one’s own tax obligations as this can result in loss of trust in the guardians of the tax system. Hence the TPB code requirement of meeting one’s own personal tax affairs to be a fit and proper person that needs to be adhered to remain eligible for tax agent registration.”

The TPB’s program coincides with a number of ATO initiatives aimed towards the tax agent population.

This includes the ATO’s early intervention program, aimed at identifying stressors causing agents to make avoidable mistakes, with 2,000 agents set to be visited each year for the next four years.

High-risk agents of concern, including those who are involved in criminal activity or facilitate illegal phoenixing activity, are also on the ATO’s agenda, although they are limited to around just 500 agents.

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Jotham Lian and Adam Zuchetti


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