Tax Practitioners Board bans three agents who falsified records

In August, three tax practitioners had their registrations terminated for five years after breaching the Code of Professional Conduct.

Their offences included failure to:

  • act honestly and with integrity, having falsified supplier invoices and personal bank statements
  • lodge a personal income tax return and quarterly activity statements by their respective due dates and pay a tax liability to the Australian Taxation Office
  • advise the Board they had become an undischarged bankrupt.

In June the Tax Practitioners Board (TPB) also investigated a tax agent who allegedly lodged fraudulent BAS and failed to pay $1.6 million of outstanding tax liabilities.

In this case, the agent breached the code by:

  • lodging false BAS for clients to generate a GST refund to which they were not entitled
  • altering clients’ financial details to receive their refunds into the agent’s personal account
  • failing to pay an outstanding tax liability for themselves and for 24 related entities
  • being subject to legal recovery action.

TPB Chair, Mr Ian Klug AM, said these recent cases highlight the scrutiny that tax practitioners must be prepared to undergo in meeting the stringent requirements of registration.

‘Tax practitioners who are involved in fraudulent activities of this kind undermine public trust in honest tax advisers,’ he said. ‘Where we see criminality, we’ll also refer to the authorities for investigation and possible prosecution.’

The Tax Practitioners Board regulates tax practitioners in order to protect consumers and ensure tax practitioners meet appropriate standards of professional and ethical conduct.

Tax deductions now disallowed for non-compliant payments

As of 1 July 2019, you can no longer claim a tax deduction for a worker payment if you failed to comply with PAYG withholding and reporting obligations.

Payments can include:

  • employee salary, wages, commissions, bonuses or allowances
  • directors’ fees
  • labour-hire arrangements
  • contractor services (except supply of goods and real property) where no ABN was provided
  • non-cash benefits to any of the above parties

When PAYG rules require you to withhold an amount, you must

  • withhold the amount from the payment before you pay it to them
  • report the amount to the ATO

If these steps are not followed, you won’t be able to claim a deduction.

However, if you do accidentally withhold or report an incorrect amount, you won’t lose your deduction, but you should correct your mistake as soon as possible to minimise any penalties.

If you genuinely believed your employee was a contractor you can correct the mistake by lodging a voluntary disclosure.

You also won’t lose your deduction if you fail to report withholding payments on a taxable payments annual report (TPAR) or a payment summary annual report (PSAR).

You might be getting a call from the ABR

There are almost 8 million active Australian Business Number (ABN) holders in Australia. Last month, the Australian Business Register (ABR) began contacting a randomly selected sample in order to measure the ABR’s data quality.

If you’re contacted, you will be asked to confirm your business information and discuss your understanding, usage and experience of the ABN.

“The ABR is trying [to] understand and improve the experience for clients applying for, maintaining and cancelling an ABN,” said the ATO.

This is another step to help strengthen the integrity of the ABN system. It follows on from a recent announcement that all ABN holders who have an income tax return obligation will be required to lodge an income tax return from 2021.

From the following year, ABN holders will also need to confirm their business details annually.

Currently, ABN holders can retain their ABN even if they are not meeting their obligations to lodge an income tax return or update their ABN details.

The new requirements aim to make ABN holders more accountable while minimising the impact on already compliant businesses.