The ATO will develop a holistic tax practitioner risk model to identify agents who are potentially facilitating black economy behaviour, as part of the government’s multi-faceted approach towards tackling the issue.
ATO to refine tax practitioner risk model amid black economy crackdown
The black economy has been a focal point for the government in recent years, with the economic impact estimated to be as large as 3 per cent GDP or around $50 billion.
With 96 per cent of small businesses relying on a tax or BAS agents to manage their tax and super affairs, ATO assistant commissioner Peter Holt said it was only natural for the tax office to leverage on practitioners to weed out black economy behaviour.
“More than 90 per cent of small businesses use a tax practitioner and so it is extremely important for us to use that as leverage and help tax practitioners understand the risks we are identifying and what more they can be doing to get the information and accuracy in tax and super payments,” said Mr Holt at MYOB Partner Connect 2019.
“We see tax practitioners and bookkeepers as perfect leverage to be encouraging small businesses to improve their record keeping.”
While the ATO leans on practitioners to facilitate compliance, practitioners can also expect the tax office to scrutinise their personal obligations to identify agents of concern facilitating black economy behaviour.
“We are developing holistic tax practitioner risk models, looking at the tax practitioner's own business, looking at their client base and talking to those tax practitioners to call out that we think there is a bit of a risk or an emerging issue,” said Mr Holt.
“Where we identify tax practitioners not doing the right thing, we'll collect that information and evidence and refer that to the Tax Practitioners Board to take further action, so it is not just a soft approach for those tax practitioners that we believe are facilitating [the black economy] or not living up to the due diligence that we expect from them.
“Where we find a tax practitioner not meeting their obligations, we can follow up on that as a priority.”
The ATO’s work in this area will be supplemented by the TPB’s own compliance actions, including its debt and lodgment compliance project, its continuing professional education audits, and crackdown on annual declaration non-lodgments.
The TPB have kicked off the new financial year by identifying 350 high-risk tax practitioners set to be contacted over the coming months.
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