Major increase in civil penalties on the table for rogue tax agents

Assistant Treasurer Stephen Jones has told accountants, lawyers and other professionals they have until January 21 to respond to a raft of changes to tax agent regulation as a part of the government’s response to the PwC confidentiality breach.

Jones announced a consultation period yesterday for a discussion paper that proposed beefing up the penalties the Tax Practitioners Board can hand a rogue tax agent as well as a regulation adding material to the Code of Professional Conduct for tax agents.

Members of the TPB only have four penalties available to them — cautions, orders, suspensions and terminations — and the government is proposing to expand its disciplinary toolkit.

The proposals would criminalise the provision of tax advice by an unregistered individual, expand the circumstances in which suspensions could apply, and allow the TPB the ability to enter into enforceable undertakings and infringement notices.

Proposed civil penalties include a major increase in financial penalties that would mean an individual who could currently face a maximum penalty of $78,250 would wind up facing a financial hit of up to $782,500.

Entities that are body corporates currently face a maximum fine of $391,250 but that would increase if the new proposals are introduced to the greater of $15.7 million or 10% of aggregate turnover that is capped at $782 million.

Significant global entities would cop the same fines as body corporates under the new regime but existing laws provide for up to $391,250, depending on the structure of the entity involved.

“Coupled with the expansion of civil penalties to breaches of the code, the increase in the maximum civil penalty units takes into account the intention of the proposal to expand the role of pecuniary penalties in the TPB’s array of tools to address tax practitioner misconduct and protect taxpayers and the tax system,” the discussion paper says.

“The increase in maximum penalties will deter tax practitioners from treating civil penalties as a cost of doing business.”

Jones also released draft text for a determination or regulation that adds further material to the Code of Professional Conduct for tax agents.

This includes references to issues that were at the centre of the discourse over the tax confidentiality agreement breach by PwC: conflicts of interest and maintaining the confidentiality of government information.

This article was first published by The Mandarin.