Late lodgments with the ATO: Time ticks down to pay the piper

TPB has been working closely with the ATO to examine data which shows about 5 per cent of tax practitioners have late lodgments with the ATO.

Australian accountants lagging in their various tax obligations are being put on notice.

The Tax Practitioners Board (TPB) is providing a limited opportunity to practitioners with outstanding income tax or activity statement lodgments and ATO debts to settle their legal obligations before the end of January.

As part of a new project targeting non-compliant behaviour, the TPB has been working closely with the Australian Taxation Office (ATO) to examine data which shows about 5 per cent of tax practitioners have late lodgments with the ATO.

The data reveals 7 per cent of practitioners have outstanding debts to the ATO totalling nearly A$115 million, with no arrangement to repay. There are also more than 2700 tax practitioners who are trustees of their own self-managed superannuation fund (SMSF), with outstanding annual returns.

“Many tax practitioners continue to serve their clients with professionalism and integrity,” TPB chair Ian Taylor says. “However, we are concerned with those practitioners acting in breach of the law. The number of tax practitioners failing their tax obligations can undermine trust and confidence in the profession.”

Addressing a longstanding  problem

To help resolve the issue, in recent years the TPB introduced an annual declaration process which registered practitioners must complete to declare they meet ongoing registration requirements.

One requirement is to fulfil personal tax obligations, outlined in the Code of Professional Conduct (code item 2). In 2018 the TPB began working closely with the ATO to access data to identify practitioners with outstanding tax obligations.

CPA Australia public practice manager, Keddie Waller, says it is vital non-compliant tax practitioners take appropriate remedial action.

“If you are a professional accountant in this space providing taxation services, you have an obligation not only to your clients but to the broader public interest, which means you need to keep your own personal tax affairs in order,” Waller says.

Providing support to affected practitioners

Affected practitioners will first be contacted by the ATO regarding their outstanding obligations. The TPB will then follow up with reminder communications that personal tax affairs should be settled by the end of January 2019. From February 2019, the TPB will take firmer action against practitioners who still fail to comply.

To assist tax practitioners, a new information sheet has been published, outlining what is required: Code of Professional Conduct – complying with taxation laws in the conduct of your personal affairs.

How to respond

The best way to avoid punitive action is to ensure all tax obligations are up to date. This includes practitioners resolving any personal lodgment or debt issues, as well as for their practice, any associated entities and any entity that the registered tax practitioner has direct or indirect control over. This may include entering into a payment arrangement or seeking a lodgment extension 

“If they have received an ATO reminder letter, call the number on the letter,” Taylor states.

“If they want to ask a question about their own lodgment but have not received an ATO reminder letter, call 137286 and for individual lodgement, fast key code 1312. If their practice is a separate business entity, fast key code 1311.”

He says the response from practitioners and the general public to the announcement of TPB’s proactive approach to compliance has been largely positive from practitioners and the general public.

“We have received support from professional associations and the media in delivering this strong message to all.”

Steps after January 2019

The TPB will look at all practitioners on a case-by-case basis and anticipates many will have their affairs in order by the end of January.

“However, at the least we expect to see steps taken to commence getting their personal tax obligations in order, such as engaging another tax practitioner or contacting the ATO about [any] outstanding obligations,” Taylor says.

During 2019, the TPB will evaluate the project to ensure it is working effectively and then share key results with stakeholders and the community. Subsequently, it will design the next phase of the strategy, including closer scrutiny of practitioners’ individual tax returns.

“We will also begin investigations into practitioners who have failed to rectify their outstanding obligations,” Taylor warns. “If we find they have failed to comply, there is a graduated level of administrative sanctions we can apply.” These include:

  • issuing a written caution;
  • completing a training course;
  • subjecting a practitioner to specified restrictions;
  • requiring a practitioner to practise under the supervision of another registered practitioner;
  • suspending registration for a period; and
  • terminating registration.

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