"Not A Theoretical Exercise": accountants who ignore warnings from the Tax Office may be subject to professional investigations by the TPB

SUMMARY

• Earlier this year, the Australian Tax Office (ATO) issued final warnings to over 500 self-managed superannuation funds (SMSF), where at least one trustee was either a tax agent or auditor, about failures to lodge annual returns.
• The ATO reported last week that over 350 of those funds ignored final warnings.
• Accountants should now be prepared for compliance action by the ATO, including referrals for breaches of the Code of Professional Conduct to the Tax Practitioners Board (TPB).
• Get in touch to find out more, including to work through your circumstances and determine the best way forward: + 61 3 8644 3522.

Last week, the ATO issued a public statement that it had identified over 702 trustees from 356 SMSFs who had failed to lodge one or more annual returns for those funds.?The ATO takes non-compliance with the superannuation law extremely seriously, and in the case of tax agents and auditors, it has higher expectations in respect of compliance.

The failure to lodge annual returns may result in SMSFs being deemed as non-compliant, causing for example, payments by employers to their employees for superannuation guarantee to be rejected and separately, significant adverse tax consequences to the fund.?Trustees can be subject to criminal penalties.

Non-compliance with reporting obligations could also be indicative of failures to complete SMSF audits and unlawful early releases of superannuation benefits, including where there has been a rollover of members' benefits to a new fund.??????

The Code of Professional Conduct under the Tax Agent Services Act 2009 imposes an obligation on tax agents to, amongst other things, act with honesty and integrity, and comply with the tax law in respect of their personal affairs.?There is also an overarching obligation not to obstruct the proper administration of the tax law.? We have been writing on this topic for some time .

Crucially, accountants' obligations in this regard are not a theoretical exercise.?Cases involving the TPB and non-compliance with the superannuation law have been published by the Administrative Appeals Tribunal in recent times.?The cases originated from referrals by the ATO and include:

??????????????Cross v Tax Practitioners Board [2021] AATA 441; and

??????????????Gylman v Tax Practitioners Board [2015] AATA 1012.

We recommend that tax agents and auditors act quickly to bring all of their tax and superannuation obligations up to date before the ATO and/or the TPB come knocking.?Severe sanctions, including criminal penalties and deregistration can otherwise occur.?It may also be appropriate to come forward and make a voluntary disclosure in certain circumstances.?

HWL Ebsworth lawyers’ national tax team have experienced professionals who can assist you in managing interactions with the TPB or the ATO.?The team has successfully negotiated with the ATO and the TPB in matters involving potential deregistration or sanction, audits and investigations, debt recovery and prosecution.?Contact one of our National Taxation Group to find out more.

This article was written by Vincent Licciardi, Partner .??