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Investigations information sheet

Investigations process information sheet

Contents

What we can investigate

The Investigation process

  1. Identifying potential breach
  2. Making preliminary enquiries
  3. Please explain letter issues
  4. Notice of investigation issues
  5. Investigation begins
  6. Outcomes of an investigation
  7. Notification of decision

Review and appeal


What we can investigate

We have the power to formally investigate certain matters under the Tax Agent Services Act 2009 (TASA).

Matters we have the power to investigate include:

  • applications for registration
  • conduct that may breach the Code of Professional Conduct (Code)
  • any false or misleading statements to the Commissioner of Taxation
  • advertising or supplying tax agent services when not registered.

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The investigation process

  1. Identifying potential breach

A potential breach is identified based on our analysis of data or by receiving a complaint or referral.

  1. Making preliminary enquiries

We conduct preliminary enquiries with complainants, third parties or other regulators to establish relevant facts.

We then make risk-based decisions on whether to commence an investigation. We’ll also conduct profiling activities, looking at the:

  • broader relationships of the practitioner
  • client base
  • trends; and
  • nature of lodgements, including ATO risk information.

This is key information which supports the decision on whether an investigation should be commenced.

  1. Please explain letter issues

If our enquiries identify a potential breach of the TASA, we may issue a 'please explain letter' to the practitioner providing them with an opportunity to respond and clarify any issues.

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  1. Notice of investigation issues

We must notify the tax practitioner when we begin an investigation. Once we start an investigation, we must reach a final decision within six months unless the Board decides to extend the investigation.

  1. Investigation begins

To begin an investigation, we start to gather evidence. How and why we gather evidence will depend on the nature of the behaviour. We may go to third parties such as financial institutions, witnesses and co-regulators. We assess the evidence based on its reliability and necessity in addressing the behavioural concerns of the investigation.

Once a formal investigation has started, we have the power to require a person, including a complainant or another third party to:

  • provide us with information, documents or other items
  • appear before us and give evidence.

Persons required to appear before us will be notified by a formal notice and be eligible for an allowance for time and/or expenses incurred.

Anyone who is issued with a formal notice under the TASA is required to comply with it. It is a criminal offence under the Taxation Administration Act 1953 not to comply.

We are allowed to:

  • take possession of and make copies or take extracts of, any document
  • keep the document or other items.

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  1. Outcomes of an investigation

Possible outcomes from an investigation include:

  • granting or rejecting an application to register with us
  • imposing one or more of the available sanctions such as a written caution, an order, suspension or termination of an entity's registration
  • applying to the Federal Court for an order for payment of a penalty and/or an injunction
  • making a decision that no further action will be taken.

If a breach of the TASA is found, our Board Conduct Committee is required to determine an appropriate sanction for the behaviour.

In the more serious cases, including those where false or misleading statements are made to the Commissioner of Taxation or where there is a finding of unregistered activity, the investigation can also lead to an application being made to the Federal Court for pecuniary penalties (fines).

  1. Notification of decisions

We will notify the practitioner in writing within 30 days of the outcome of the investigation, giving reasons for the decision.

We are required by law to notify:

  • the decision to any complainant
  • the decision and reasons for the decision:
    • to any recognised professional association that the registered tax practitioner under investigation is a member of
    • in certain circumstances:
      • the Commissioner of Taxation
      • the Australian Securities and Investments Commission
      • a monitoring body for a compliance scheme.

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Review and appeal

Tax practitioners can apply to the Administrative Appeals Tribunal (AAT) for a review of most decisions following an investigation. However, decisions to take no further action, issue a written caution or apply to the Federal Court for an order for payment of a penalty or an injunction are not reviewable in the AAT.

Tax practitioners and complainants may also apply to the Federal Court or Federal Circuit Court for review of administrative decisions under the Administrative Decisions (Judicial Review) Act 1977.

In some cases tax practitioners and complainants may request an internal review of TPB decisions, or make a complaint to the Inspector-General of Taxation and Taxation Ombudsman (IGTO).


Last modified: 31 March 2020