ATO private wealth adviser program to ensure ‘adviser accountability and compliance’

In September, the Australian Taxation Office (ATO) said its new private wealth adviser program is targeting practitioners and firms – including tax and BAS agents, insolvency practitioners, and financial advisers – that are making “basic” errors.

“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,” the ATO said at the time.

It said tax advisers were still failing the basics and were at risk of driving non-compliance of their clients.

“We’ve seen advisers sometimes not getting the basics right, which can lead to bigger issues down the track,” it said.

Kaitilin Lowdon, principal lawyer with Sladen Legal, said the ATO update on its Private Wealth Adviser Program specified what it will be looking for in terms of compliance and integrity.

The regulator stated that 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.

“The ATO considers that program will strengthen the integrity of the tax and super systems, by ensuring adviser accountability and compliance at the adviser level, which it hopes will result in greater compliance at the client level through the adviser’s influence,” Lowdon said.

“It also aims to detect and address advisors promoting unlawful tax schemes or high-risk positions.”

Lowdon continued that the focus on accountants and legal advisers is unsurprising as there is a long line of cases recording a surprising number of practitioners’ tardiness in lodging returns.

“Further, the ATO’s transitional period in its professional firm’s guidance in Practical Compliance Guideline PCG 2021/4 ended on 30 June 2024. However, this is far broader than that, both in terms of the issues the ATO will consider and the types of advisers who will fall within the scope of the program,” she said.

“The program isn’t solely focused on promoters or exploiters of tax avoidance schemes. While the ATO’s program will be a tailored, risk-based approach, it includes advisers who are accountants, legal advisors, financial advisers, insolvency practitioners, and all other advisers to private wealth clients including valuers, research and development consultants, and real estate agents.”

The regulator states on its website that 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.
• It adds that the ATO uses a range of data to identify risks, behaviours of concern, and common errors and that it will progressively share these insights with advisers and their clients to help them put corrective actions in place.

Lowdon said she understands from the update that the ATO key areas of focus include capital losses, dividend stripping (Taxpayer Alert TA 2023/1), Division 7A, omitted income and incorrect reporting, and non-compliance with PCG 2021/4 (allocation of professional firm profits).

“Those focus areas overlap, in many respects, with the ATO’s intended focus areas in the private wealth space for the 2025 year which also specifically mentions the Private Wealth Adviser Program,” she said.