ATO set to disqualify non-lodging tax agents

tax agents SMSF trustees

Hundreds of tax agents who are SMSF trustees face disqualification for failing to lodge an annual return unless they urgently engage with the ATO.

The ATO is set to take compliance action against hundreds of tax agents who are members of an SMSF and have failed to meet their obligations as trustees, according to a senior figure with the regulator.

ATO SMSFs, risk and strategy assistant commissioner Justin Micale said the regulator has sent ‘red letters’ to 750 tax agents who are trustees of an SMSF as part of a second mail-out under its ‘three strikes’ enforcement campaign.

Under the campaign, SMSF trustees who fail to lodge an annual return receive a blue letter reminding them to lodge the return. Failing that they receive an orange letter warning of the consequences of failing to lodge and if no action is taken, a red letter is sent stating the ATO will commence disqualification as a trustee.

Speaking at the Chartered Accountants Australia and New Zealand National SMSF & Financial Advice Conference 2022 in Sydney today, Micale said the warning letters have been sent over a period of time and relate to outstanding non-lodgements.

“There is a significant amount of time [between sending letters] and I want to highlight that we are not sending these to people that have just missed a lodging date for the last financial year; it relates to stuff that’s quite old,” he said.

“The first batch of red letters that went out had a really good response rate. We got about 70 per cent of people responding through either lodging or engaging with us.

“For the recent batch that includes tax agents, so far we have had a response rate of a little bit less than 40 per cent after the letters went out in May, June, July.

“We are about to move into the next phase, which is disqualification [as a trustee], so it is important that if anybody has any of those letters, they get in touch with us as soon as possible or we move on to the next stage.”

He added the ATO will also inform the Tax Practitioners Board (TPB) of any disqualification of a tax agent as an SMSF trustee and has previously noted tax agents will be held to a higher standard in keeping with their annual declaration to the TPB that they meet its ongoing registration requirements.

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