ATO’s adviser strategy zeroes in on late-paying partners
Private, wealthy professional advisers are less compliant than the ATO had expected and are therefore being targeted by the avoidance taskforce.
This financial year, the ATO has raised $29.8 million in liabilities from partners of professional firms with multiple overdue lodgments. The ATO has received $15.2 million payments while a “significant amount” is under payment arrangements.
The Tax Office has initiated ongoing monitoring of late-paying partners as preliminary analysis of privately owned professional firms with “wealthy group populations” has revealed lower than expected lodgment compliance among partners.
"All taxpayers have an obligation to lodge on time and pay the right amount of tax. Our preliminary analysis of professional firms within the privately owned and wealthy group population has revealed that partners' lodgment compliance is lower than expected," it said.
Through profit distribution analyses, the ATO found examples of distributions being reported under incorrect labels, only partially reported, and completely omitted.
“It’s very important for all privately owned and wealthy group advisers to keep their personal tax obligations up to date, in line with community expectations and taxation laws,” said the ATO.
These activities form a part of the ATO’s Tax Avoidance Taskforce’s efforts to target advisers given their “important role” in supporting businesses.
“Taxpayers take their lead from their advisers. Therefore, it’s critical that advisers ensure their own tax and super affairs in order,” said the ATO, adding that TPB-registered advisers are required to have "compliant personal tax affairs" as a condition of their registration.
Under the same adviser strategy, the ATO has engaged with “privately owned and wealthy group clients and advisers” to re-engage non-lodgers, data match individual tax returns against professional firms’ data, and assess compliance with the PCG 2021/4.
That guideline sets out the ATO’s approach to compliance relating to the allocation of profits or income from professional firms in the assessable income of the individual practitioner. The ATO uses risk-modelling to assess compliance with the guideline.
The adviser strategy was introduced last year and applies to a range of advisers from tax and BAS agents, to legal and insolvency practitioners, financial advisers, and research and development consultants.
While “prevention rather than correction” was among the founding intentions of the adviser strategy, this update shows prevention can only go so far.
"All taxpayers need to pay their tax bills in full and on time to avoid interest charges and firmer action. Taxpayers shouldn't wait for us to follow up with them for payment or expect concessions from us," said the ATO.
