17 Oct Airo AV Reported Tax agents probed over $1b in dodgy work claims
“We need to be mindful of the intense public examination this sector is subject to now,” Mr Klug said. “Although registration of tax practitioners will always be a central function of the [Board], our attention and focus is moving more into the regulatory space.”
In 2018-19, the Board applied 749 sanctions against rogue tax advisers, a 200 per cent increase over 2017-18. “We expect to see this trend continue upwards into the future,” he said.
Over the past two years, a decrease in work-related expense claims has lifted tax revenue by an estimated $560 million. If the so called “tax gap” for individual taxpayers had been completely closed in 2018-19, Mr Klug said, ATO figures suggest the federal budget would have been in surplus by $8 billion.
Late last year, the Board wrote to 6000 tax agents who had not filed tax returns for themselves or owed tax debts.
“[We] saw in a space of only six weeks – as a result of one letter – some 2000 agents voluntarily paid almost $40 million in tax debt and updated around 6000 lodgements.”
The move by the Board to seek a wider role in overseeing tax accountants, replacing smaller industry bodies to reduce the compliance burden, comes as former deputy chair of the Board of Taxation, Keith James, and former president of the Tax Institute, Neil Earle, are finalising an independent review of the Board and the Tax Agent Services Act.
Mr Klug said the review supports a recommendation from the Hayne royal commission that information sharing between agencies should be formalised through legislation to make it mandatory rather than discretionary.
The review also suggests expanding the Board register with further details of tax practitioners, including detailed reasons for any sanctions or terminations, reasons for rejections of renewal, and a list of known unregistered providers.
“We’ve got a new strategic direction, a renewed energy and a common goal to work towards – which is protecting consumers and ethical practitioners by strengthening the Board as an efficient and effective regulator,” Mr Klug said.
The Board is pressing for wider disciplinary powers as it focuses on the 2.5 per cent of tax agents labelled high risk. This was “a group that has significant leverage, often as the drivers or initiators of illegal tax schemes.
“Tax practitioners who are involved in the black economy and related activities such as phoenixing are clearly at the more extreme end of the misconduct scale.
“At the pointy end are those advisers involved in tax crime, evasion or avoidance. And in the middle is a graduated mix of practitioners who display low-to-high risk behaviours.”