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
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
