Compliance program 2008-09

Feature: Promoter penalty laws yield results

A measure to restrain the promotion of tax exploitation schemes is delivering tangible results, with several promoters offering to enter into enforceable voluntary undertakings to curb their activities.

The promoter penalty laws provide for a graduated set of legal responses to the development and marketing of tax exploitation schemes - that is, aggressive arrangements with little or no economic substance that are created mainly to obtain a tax benefit not intended by the law. The laws also enable us to respond where a scheme promoted on the basis that it conforms with a product ruling is implemented in a way that is materially different to the ruling.

The aim of the promoter penalty laws is to deter the promotion of such schemes. They enable us to intervene early when we get information on promoter behaviour - to prevent the schemes from going ahead in the first place.

Options available to us include the ability to enter into enforceable voluntary undertakings with promoters. We can also apply to the Federal Court for injunctions to stop the further promotion of schemes to others.

The Federal Court can impose a civil monetary penalty. Where it has been established that a promoter has marketed a tax exploitation scheme and received commissions, we can seek a civil penalty of the greater of double the commissions received, or $575,000 for an individual, or $2.75 million for a company.

Sections within Feature: Promoter penalty laws yield results

• Current areas of concern
• Practice statements guide administration of the laws