Australia Releases Tax Adviser Compliance Guide

by Mary Swire, Tax-News.com, Hong Kong

22 April 2011

The Australian Commissioner of Taxation Michael D’Ascenzo has launched a new guide to help tax intermediaries avoid contravening the Promoter Penalty Legislation.

The 'Tax Intermediaries - Good Governance and Promoter Penalty Laws' guide is aimed at helping professionals manage controversial tax planning risks that could impact on them and their clients.

"The promoter penalty laws prohibit promotion of tax exploitation schemes. The laws also address implementation of product ruling arrangements in a materially different way to that described in the product ruling," said the Commissioner.

"The guide discusses the consequences of contravening these laws and how to establish the right governance controls to avoid those consequences. It also offers several suggestions to help reduce the risk of inadvertently marketing or encouraging tax avoidance schemes or incorrectly implementing arrangements.”

Speaking at the Institute of Chartered Accountants of Australia National Tax Conference, Mr D'Ascenzo talked about the need for tax intermediaries to manage these risks, giving examples of what may happen if entities get it wrong.

“In most cases involving less serious conduct, we aim to help tax intermediaries self-correct where possible. However, when it is appropriate to go to the Federal Court to seek a civil penalty or an injunction, it will have serious financial and reputational consequences for the entities involved”, he said.

As well as helping reduce the risk of inadvertently marketing or encouraging tax avoidance schemes the guide also encourages people to reject them and to bring the arrangements to the Australian Tax Office’s (ATO’s) attention so that prompt action can be taken.

The current value of a penalty unit is AUD110, and penalties of up to 5,000 penalty units for individuals and a lot more for companies may apply to entities which contravene the promoter penalty laws. The Commissioner can also apply to the Federal Court of Australia for restraining and performance injunctions against entities who have contravened or are about to contravene these laws.

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