ATO, Compliance, financial advice

ATO recovers $30m in tax from advisers

ATO ATO tax avoidance taskforce adviser strategy Financial advisers Tax liabilities

An ATO project set up under the auspices of the tax avoidance taskforce has recouped almost $30 million in overdue tax liabilities from advisers and advisory firms.

An ATO initiative aimed at ensuring tax compliance among privately owned and wealthy advisory firms and individual advisers has resulted in the recovery of nearly $30 million in overdue liabilities.

The regulator’s Tax Avoidance Taskforce adviser strategy involved evaluating firms’ adherence to Practical Compliance Guideline (PCG) 2021/4 – which deals with the allocation of profits within professional firms – reaching out to non-lodgers and cross-referencing individual tax returns with professional firms’ data.

“During 2023/24 we’ve raised $29.8 million in liabilities from these engagements, with $15.2 million payments received and a further significant amount under payment arrangements,” the ATO stated.

“We’ve commenced engaging with partners who have multiple overdue lodgments to obtain lodgment, assess compliance with PCG 2021/4 and pursue liabilities. Our preliminary analysis of professional firms within the privately owned and wealthy group population has revealed that partners’ lodgment compliance is lower than expected.

“We have ongoing monitoring in place to ensure continued compliance by these partners.”

Additionally, the adviser strategy analysis showed distributions were often being reported under incorrect labels, only partially reported or omitted in full.

SMSF Alliance principal David Busoli noted the project is designed to align with the wider community’s expectations for tax compliance from firms tasked with upholding the system’s integrity.

“The project is targeting people whose job it is to make sure that everyone does the right thing and I suppose the value of such an exercise is not just in the additional tax that they raise, but the additional focus on compliance by people whose job it is to focus on compliance,” Busoli told selfmanagedsuper.

“You’ve got a situation where a demographic whose job it is to be the example are being made to live up to it. The message is clear: get your act together or expect a visit.”

He also raised the question of whether the regulator might investigate the client arrangements of advisers and firms that consistently fail to comply with their legal obligations.

“I wonder if the ATO finds that there is some chronic non-compliance from a particular operator that they might take a closer look at their clients. There’s been no suggestion that is the case, but I don’t think that’s out of the question,” he noted.

“We’ve seen a similar situation with auditors. If you find that there is an auditor who’s not doing the right thing in the SMSF space, the ATO, on occasion, have taken a closer look at the funds that person’s been auditing.

“It’s not too much of a stretch to suggest that there might be a follow-up project on the clients of these practitioners who have shown deliberate and wilful non-compliance.”

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