On 4 December 2019 a case of fraud and theft was heard in Mt Druitt Magistrates Court NSW against an unregistered tax agent. The case highlights the risk of identity crime and the importance of not sharing your private myGov password information.
Information obtained from the hearing of Benjamin Cox revealed that
he had fraudulently posed as a tax agent and lodged over a thousand
individual tax returns using each taxpayer’s personal myGov access. He
charged clients for his services and also stole some refunds his clients
were due,using his own bank details to take the payments.
Mr Cox advertised his services through Facebook and Gumtree,
targeting vulnerable people in the community who were unfamiliar with
the Australian tax system.
In court Mr Cox pleaded guilty to the following charges:
- Dishonestly obtained financial advantage etc by deception under the NSW Crimes Act 1900 paragraph 192E(1)(b).
- Dealt with identity information to commit etc indictable offence under the NSW Crimes Act 1900 section 192J.
As a result of his actions, Mr Cox received a two-and-a-half-year
prison sentence to be served in the community by way of an Intensive
Corrections Order. He was also ordered to pay over $13,000 in
compensation to the ATO and his victims, and has had $22,000 worth of
his assets seized.
Tips to identify unregistered preparers
People pretending to be tax agents often promise refunds that are too
good to be true or provide discounted services much cheaper than
legitimate registered tax agents.
Another tell-tale sign to look out for is that unregistered preparers
often use a taxpayer’s personal login details to access their ATO
Online account through myGov to lodge tax returns. A legitimate tax
practitioner will never ask for your myGov credentials – they use
dedicated ATO Online services to lodge returns for their clients.
Giving an unregistered agent your myGov password also puts your personal information at risk.
Make a complaint
If you know of someone providing tax agent services for a fee or other reward who is not registered, you can let the Tax Practitioners Board know at tpb.gov.au/complaints
As part of the 9th of May 2017 federal budget, the Australian Government proposed amendments to legislation relating to plant and equipment (division 40) deductions.
The proposed changes, outlined in Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 , have now been legislated after being passed by the Senate on the 15th of November 2017.
This has resulted in a change to the Income Tax Assessment Act 1997 and denies property investors from claiming income tax deductions for the decline in value of ‘previously used’ depreciating assets (plant and equipment) within residential investment properties.
The government’s intention in making this legislation amendment was to deliver an integrity measure which addressed concerns that some plant and equipment assets were being depreciated by successive property investors in excess of their actual value.
These changes affect investors who purchase second-hand residential properties after 7:30pm on the 9th of May 2017 by limiting the depreciation they can claim on existing plant and equipment assets.
The Federal Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) included an announcement that from 1 July 2017 the Australian Taxation Office (ATO) can disclose to Credit Reporting Bureaus the tax debt information of businesses that have not effectively engaged with the ATO to manage those debts. This will be a new and unprecedented power for the ATO.
This measure is part of the Government’s strategy to reign in overdue tax and improve transparency of taxation debts, and will initially only apply to businesses with an Australian Business Number and tax debt of more than $10,000 that is at least 90 days overdue.
The policy should not come as a surprise given it has been on the Government’s agenda for a number of years, having been touted at least as far back as 2014.
The MYEFO confirms the ATO is owed $19b in overdue tax, approximately two thirds of which is owed by small businesses with a turnover under $2m. The rising level of debt, particularly in small business, presents a growing challenge for the ATO as they are faced with managing the delicate balance of collecting tax arrears without (where possible) suffocating the cash flow of the business.
Compounding this challenge, the current consequences for failing to pay the ATO have no real tangible impact on the day-to-day operations of a business. Failure to lodge and general interest charge penalties, and in some instances imposing personal liability on directors, do not typically influence a business continuing to trade. This means that ATO debt is often pushed to the back of the queue, and will be allowed to accumulate—often until the ATO pursue legal proceedings.
That landscape is about to change, as defaults being recorded on a taxpayer’s commercial credit file will have immediate and lasting consequences for a defaulting taxpayer. A credit default is a black mark that lasts for five years, and creates an environment where support from financiers may be withdrawn and supplier credit stopped.