Tax promoter penalties take aim at big four partners

afr.com:

Partners in big-four accounting firms could be on the hook for nine-figure payouts from new tax-promoter penalties, although draft legislation released on Wednesday shows the maximum sanctions will be less than the $780 million figure previously flagged by the government.

Treasurer Jim Chalmers told an event held by The Walkley Foundation in Sydney that the government remained committed to what he again called the biggest crackdown on misconduct by tax advisers in Australian history, in response to the PwC tax leaks scandal.

Treasurer Jim Chalmers in Sydney on Wednesday. Draft tax promoter penalty laws will target big four partners. Dion Georgopoulos

For a partnership that is a “significant global entity”, the draft legislation explicitly rules out previous exceptions for partners who can say they had no knowledge that tax exploitation schemes were being marketed by other partners.

“What is particularly concerning is the fact that a partner in a partnership cannot rely on the exception for having no knowledge, where the conduct of a partner in the partnership results in the partnership contravening the promotor penalty provisions,” MinterEllison head of tax Adrian Varrasso said.

“It appears that all partners might therefore be jointly and severally liable for any penalty that may be imposed due to the conduct of a single partner.”

This applies even if the partner who promoted the scheme has left, and to uninvolved partners who have left the partnership.

Regarding the size of the penalties, a leading tax lawyer told The Australian Financial Review: ”The message is, don’t even think about it. It puts pressure on firms to create internal controls that will ensure that advice on tax will be very conservative.”

The draft