CA ANZ has lodged a submission on Treasury’s consultation paper, Review of tax promoter penalty laws. Treasury’s review of the tax promoter penalty laws is part of the package of reforms the Government announced in 2023 in response to the PwC matter.

The consultation paper seeks feedback on:

• how effective the current regime is in deterring scheme promotion.
• the current operation of the framework, focusing on:
  • the scope of key defined terms
  • whether exemptions adequately protect compliant tax practitioners.
• other frameworks, and how comparable regimes deter misconduct.

As the changes to the tax promoter penalty laws have only recently commenced on 1 July 2024, it is too early to determine whether the current regime is effective in deterring scheme promotion. However, we have commented on various policy matters in response to the consultation paper including:

• Consideration of whether the tax promoter penalty laws should be administered by the Australian Taxation Office (ATO) or another agency - To avoid the potential for perceived conflict of interest we suggest there be independence between the ATO and the agency that investigates and penalises promoters under the tax promoter penalty laws
• CA ANZ’s concern about the multitude of changes to the regulation and governance of tax and BAS agents and the need to examine these changes at a holistic level with a view to streamlining the regulation
• Recommendation that all conduct-related powers and functions in relation to tax practitioners should sit with the Tax Practitioners Board (TPB), e.g. including the promoter penalty provisions. Furthermore, Treasury should consider whether the tax promoter penalty laws could be administered solely by the TPB in all cases, regardless of whether the promoter is a tax practitioner.