The Australian Treasury (the Treasury) is interested in views on the effectiveness of the current regime in deterring scheme promotion; whether exemptions adequately protect compliant tax practitioners; and how comparable regimes deter misconduct. The government says it is committed to ensuring the Australian Tax Office (ATO) 'has the tools needed to address schemes'. The consultation paper outlines the purpose, administration and operation of the tax promoter penalty laws; emerging behaviours; and other frameworks which may apply to promoters of tax exploitation schemes. The consultation closes on 1 November 2024.
The review is partially prompted by the 2022 PwC tax leaks scandal, which provoked an angry response from the government. The affair, in which confidential government information was allegedly used to help clients avoid tax, 'exposed severe shortcomings in Australia's regulatory frameworks', said the government, which promised to 'oversee the biggest crackdown on tax adviser misconduct in Australian history.' It undertook to 'increase penalties, giving regulators stronger teeth to investigate and prosecute perpetrators and boosting transparency, collaboration and coordination within government'. The tax promoter penalty laws in force at the time had remained largely untouched since their creation in the 2000s and had only been applied six times, it said. ＜登入＞
Strengthening regulatory arrangements to avoid leakage of confidential information from government will be the priority area of the new consultation, said the Treasury. It is also reviewing the sanctions regime administered by the Tax Practitioners' Board (TPB); the ATO's and TPB's investigation and information gathering powers; the regulation of consulting, accounting and audit firms; the tax practitioner registration requirements; the secrecy provisions that restrict information sharing by government bodies; and any emerging fraud and systemic abuse of the tax and pension systems.
Fraud and abuse can include facilitation and promotion of schemes via social media; promotion of non-lodgement and non-payment of tax debts; promotion of schemes across jurisdictions; schemes to make fraudulent claims; promotion of bespoke but similar schemes; involvement of multiple tax intermediaries in the promotion of a scheme; and tax intermediaries encouraging aggressive tax positions on existing transactions which are contrary to the law.
Several of these work streams have already been consulted upon during 2024. The Treasury is also collaborating with the Attorney-General to prepare a review of tax practitioners' use of legal professional privilege in investigations. 'The ATO can be faced with uncooperative participants or obstructive legal professional privilege claims', it says. 'There is no mechanism for the ATO to request an extension of time in cases of promoter penalties for tax exploitation schemes or promoting schemes on the basis of conformance with product rulings'. Consultation on this project has not yet begun.