Tax agents and accountants now face significantly harsher penalties for two new accounting offences following the enactment of the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth) which came into effect on 1 March 2016 and amends the Commonwealth Criminal Code Act 1995.
It is now an offence for any person (including a corporation) to fabricate, alter or conceal any “accounting document” which provides or disguises any benefit that has not been legitimately obtained. The offences also apply where a person fails to alter an accounting document when there is a legal requirement to do so.
Tax agents and accountants need to be aware that “accounting documents” have been defined very widely to cover almost every document a tax agent or accountant may produce in the course of their practice.
Although the new offences relate to the same conduct, the penalties differ depending on the intention of the parties:
- The first offence applies when a person intentionally commits the offending conduct. The penalties for individuals can be up to 10 years imprisonment or a $1.8 million fine, or both. The penalties for corporations, however, are even more severe and can be the greater of $18 million, three times the value of the illegitimate benefit or 10% of a corporation’s annual turnover.
- The second offence applies when a person is reckless in committing the offending conduct. The penalties for individuals and corporations are half of the penalties for intentional conduct. Importantly, in either offence, the conduct of the tax agent or accountant does not need to result in the benefit actually being received, nor does a tax agent or accountant need to be operating on instructions from their client. It is the intention or the reckless conduct of the tax agent or accountant themselves that is relevant.
These offences add to the already strict obligations imposed on tax agents and accountants under sections 8K and 8N of the Taxation Administration Act 1953 (Cth) which penalise the intentional or reckless giving of any false statement to a taxation officer.
Because an employer can be vicariously liable for the acts of an employee, it is prudent that all tax agents and accountants not only be aware of the wide scope of the new laws, but also educate employees about the new laws, and in particular, the significant penalties that they can attract.
Arthur Athanasiou | Partner | +61 3 8080 3563 | firstname.lastname@example.org
Travis McCarthy | Lawyer | +61 3 8080 3628 | email@example.com