Last week, the Australian Tax Office (ATO) issued a public statement that it had identified 702 trustees from 356 self-managed super funds (SMSFs) who had failed to lodge one or more annual returns for those funds. The ATO takes non-compliance with the superannuation law extremely seriously, and in the case of tax agents and auditors, it has higher expectations in respect of compliance.
The failure to lodge annual returns may result in SMSFs being deemed as non-compliant, causing, for example:
- payments by employers to their employees for the superannuation guarantee to be rejected; or
- significant adverse tax consequences for the fund.
Trustees may be subject to criminal penalties.
Non-compliance with reporting obligations could also indicate failures to complete SMSF audits or the unlawful early releases of superannuation benefits, including where members’ benefits have been rolled over to a new fund.
The Code of Professional Conduct under the Tax Agent Services Act 2009 imposes an obligation on tax agents to, amongst other things, act with honesty and integrity, and comply with the tax law in respect of their personal affairs. There is also an overarching obligation not to obstruct the proper administration of the tax law. We have been writing on this topic for some time.
Crucially, accountants’ obligations in this regard are not a theoretical exercise. Cases involving the Tax Practitioners Board (TPB) and non-compliance with the superannuation law have been published by the Administrative Appeals Tribunal in recent times. The cases originated from referrals by the ATO and include:
- Cross v Tax Practitioners Board  AATA 441; and
- Gylman v Tax Practitioners Board  AATA 1012.
We recommend that tax agents and auditors act quickly to bring all of their tax and superannuation obligations up to date before the ATO and/or the TPB come knocking. Severe sanctions, including criminal penalties and deregistration, can otherwise occur.
HWL Ebsworth Lawyers’ national tax team have experienced professionals who can assist you in managing interactions with the TPB or the ATO. The team has successfully negotiated with the ATO and the TPB in matters involving potential deregistration or sanctions, audits and investigations, debt recovery and prosecution. Contact one of our National Taxation Group to find out more.
This article was written by Vincent Licciardi, Partner and Josh Hanegbi, Solicitor.