Tax gap proves the bar needs to be raised, says IPA
Tax non-compliance amongst individuals is substantially higher than amongst large corporate groups, with figures released by the Australian Taxation Office (ATO) showing the “individual not in business” tax gap sits at $8.7 billion for the 2014-15 financial year.
The figure, which equates to a 6.4 per cent gap as against the 5.8 per cent gap for large corporate groups, is substantially bigger than the corporate tax gap in absolute terms.
Institute of Public Accounts (IPA) chief executive officer, Andrew Conway, said while the report was alarming, 72 per cent of the 858 cases in the ATO’s random sample contained errors.
Conway said the ATO even acknowledged the report was not adequate to define a trend, but served as a reminder that individuals and tax agents must commit to raising the bar.
He said it was “human nature” for individuals to want to maximise refunds and in doing so, may mislead their agent in the course of preparing their return.
“The IPA continues to carry out quality assurance of its members and actively seeks to weed out unprofessional behabiour and reduce error rates,” he said.
Conway stressed that a vast number of tax agents were highly professional, driving home that all tax agents should not be tarred “with the one ATO brush”.
AUTHOR
Anastasia Santoreneos
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
