About the Program
The Private Wealth Adviser Program has been established under the Tax Avoidance Taskforce and aims to help strengthen the integrity of the tax and super systems by recognising the important role advisers have in influencing the tax performance of privately owned and wealthy groups.
We recognise there are many types of advisers operating in the privately owned and wealthy groups market, including tax and BAS agents, insolvency practitioners, legal practitioners, research and development consultants, and financial advisers.
The Program recognises the influence of these advisers on their client's behaviour to drive voluntary compliance and improve the tax performance of professional firms, advisers and their clients.
We use a tailored, risk-based approach depending on:
- the type of adviser
- the degree of influence the adviser has on tax planning and decisions affecting the tax outcomes for their clients
- the adviser's behaviour both in their capacity as an adviser, and as an individual taxpayer.
Our focus areas
The focus of this program is to:
- ensure that professional firms and advisers are paying the right amount of tax in relation to their own affairs
- leverage the influence that advisers have on their clients' behaviour in our treatment strategies to get better compliance outcomes
- detect and escalate behaviours of advisers who are doing one or both of the following
- designing and promoting unlawful tax schemes to privately owned and wealthy groups
- influencing their clients to adopt high-risk or uncertain positions.
We use a range of data to identify risks, behaviours of concern, and common errors. We'll progressively share these insights with advisers and their clients to help them put corrective actions in place. Wherever possible, our focus is on prevention rather than correction.
Tax advisers' own affairs
Taxpayers take their lead from their advisers, who set the standard for integrity, so, it's critical that advisers ensure their own tax and super affairs are in order.
All privately owned and wealthy group advisers need to keep their personal tax obligations up to date, in line with community expectations and taxation laws.
In addition, all taxpayers need to pay their tax bills in full and on time to avoid interest charges and firmer action. Advisers shouldn't wait for us to follow up about payments or expect concessions from us. Read our paying tax information to find out more about our expectations and your obligations.
PCG 2021/4
Practical Compliance Guide PCG 2021/4 Allocation of professional firm profits – ATO compliance approach helps practitioners self-assess their risk (and those of their clients) of what we consider inappropriate income alienation, against a range of risk assessment factors. These factors rate the arrangements as low, medium or high risk. This determines the appropriate compliance action we'll take.
A transitional period applied for the PCG until 30 June 2024. After that date, high-risk arrangements are subject to increased enforcement action following the lodgment of the relevant tax returns.
We're using risk modelling and a range of data to assess compliance with PCG 2021/4. Through our analysis of profit distributions, we've seen examples of distributions being:
- reported at incorrect labels
- only partially reported
- omitted in full.
We remain focused on income alienation by all taxpayers, including advisers. This approach is not restricted to a specific structure or arrangement utilised by taxpayers.
Influence on taxpayers
Our cluster approach regarding tax risks
We're seeking to work collaboratively with advisers where we identify clusters of their clients who exhibit similar tax risks and issues. This helps advance interactions and lessens the impact on tax practitioners in dealing with our inquiries.
Getting the basics right
We’ve seen advisers sometimes not getting the basics right, which can lead to bigger issues down the track. Keep an eye out for warning signs like:
- being consistently time-poor
- understaffed
- spread too thin
- fees based on refunds
- having inconsistent treatments across the firm.
Advisers' clients who get the tax basics right are more likely to report correctly. This means that one of the best ways you can support them is to ensure they have good governance and record-keeping processes in place.
Good tax governance means having clear processes and procedures in place in a corporate governance framework to support tax decision making and manage tax and super risks. A group's tax governance is effective when the processes and procedures it has in place consistently results in the correct tax outcomes and in ensuring they're meeting their obligations.
Read more information about behaviours, characteristics and tax issues of privately owned and wealthy groups that attract our attention.
What we expect
As part of our program, we'll be showcasing the best practices we see many advisers already using. That way, others can adopt the same high standards in a way that works for their business.
Some of these best practices are:
- keeping up to date with developments in the areas of tax and super law that they advise on
- understanding their client's business and having the right information and records to lodge correctly
- encouraging their clients to use digital solutions, such as accounting and point of sale software
- engaging positively with us
- ensuring their own tax and super affairs are in order
- being dedicated to promoting ethical and compliant tax strategies
Sanctions and consequences (relative to behaviour)
Our Private Wealth Adviser Program addresses the full spectrum of adviser behaviour ranging from those who make mistakes to those who in engage in uncooperative, misleading or obstructive behaviour.
While we monitor the role of advisers in the market and intervene where appropriate, it's the presence of tax risk that attracts our attention. How an adviser engages with us during a review will influence how we engage in that process.
We'll act quickly with advisers who undermine the integrity of the tax system or who facilitate non-compliance. In serious cases, promoter penalty laws may apply to promoters of unlawful tax schemes.
The types of behaviour that cause us concern include:
- engaging in conduct designed to frustrate and prevent the collection of facts and information, and the proper administration of tax laws
- the promotion of unlawful tax schemes.
Tax Practitioners Board
We work closely with the Tax Practitioners Board (TPB) to address tax practitioners who are not meeting their own obligations or are driving non-compliance, including tax avoidance and evasion. We'll continue to work with the TPB to maintain trust and integrity in the tax system and ensure a level playing field in the community and tax professional service industry.
We make referrals to the TPB where any of the following occur:
- The tax practitioner, during a case engagement, consistency fails to respond to formal requests for information, causing delays. This is a potential breach of the Tax Agent Services Act (TASA) 2009 for obstructing the proper administration of the taxation laws.
- The tax practitioner doesn't meet their own lodgment obligations.
- The tax practitioner fails to take reasonable care in ascertaining a client’s state of affairs, which then results in serious penalties.
This may result in the TPB undertaking an investigation that may result in:
- termination of registration
- a written caution for more governance
- education
- no further action (for intelligence only).
Refer to Tax Practitioners BoardExternal Link.
In the news
See our recent newsroom articles about the program:
- Increasing system integrity through our adviser strategy
- Professional firms – get your lodgments right