Largest promoter penalty in R&D history handed down
The Federal Court has handed down a judgement against Mr Paul Enzo Bogiatto and ordered $22.68 million in penalties be paid.
Last Friday, Mr Bogiatto was ordered to pay $6.51 million, in addition to $6.01 million and $3.65 million penalties for his related entities, Ryusei, Lambda Chase Chartered Accountants and Lambda Chase Service respectively.
Between 2012 and 2015, Mr Bogiatto operated as a Research and Development Tax Incentive (R&DTI) adviser for a range of businesses in his capacity as a registered tax agent and chartered accountant.
Investigations into Mr Bogiatto’s activities began in late 2015 and uncovered Mr Bogiatto’s promotion of arrangements for his clients to lodge overstated and unsubstantiated R&DTI claims. In total, research and development (R&D) tax offset refunds of $45.5 million were paid to Mr Bogiatto’s clients.
Evidence gathered in relation to Lambda Chase’s activities indicated systematic abuse of the R&DTI, with claims that were not reflective of taxpayers’ actual R&D expenditure for the relevant years.
Mr Bogiatto avoided regulators when investigated and never looked to redress any amount of loss or damage incurred by scheme participants.
“This outcome reflects the scale of Mr Bogiatto’s scheme, which had a devastating impact on the individuals and businesses that followed his advice and trusted him. The size of the penalty is the highest ever seen in Australia and reflects the scale and abusive nature of these schemes,” said Assistant Commissioner Ash Khera.
“We want to protect individuals and businesses from being unwittingly caught up in schemes like this one. Those who encourage others to do the wrong thing and claim the incentive to which they are not entitled will be caught and held to account for their actions.”
This decision builds on several previous successful results under promoter penalty laws that are designed to ensure that promoters are held accountable when they encourage their clients to enter into risky tax schemes.
The ATO will continue to protect the tax system by those seeking to undermine it.
“We have the tax technical and investigative skills to deal with those who promote non-compliance with the tax and superannuation system,” said Mr Khera.
This decision provides further judicial clarification on the application of the promoter penalty laws and the eligibility of the R&DTI.
“The ATO and the Commissioner view this recent decision as a strong deterrent for the advisers exhibiting repeated poor behaviour,” said Mr Khera.
We expect high standards by tax professionals. As a result of these investigations, Mr Bogiatto was also investigated and de-registered as a tax agent in October 2017, as well as forfeiting his membership of the Institute of Public Accountants. He had his CA membership terminated and his name removed from the Registers in 2018.
“If you think you have been approached by a scheme promoter or are inadvertently involved in a tax avoidance scheme you should contact us right away. If you approach us early, you may be eligible for a reduction in any penalties imposed,” said Mr Khera.
To report a possible scheme email firstname.lastname@example.org or call us anonymously on 1800 060 062.
For more information on how to recognise a dodgy scheme visit ato.gov.au/taxplanning
The Federal Court has handed down a judgement against Mr Paul Enzo Bogiatto and ordered $22.68 million in penalties be paid. Investigations into Mr Bogiatto’s activities uncovered Mr Bogiatto’s promotion of arrangements for his clients to lodge overstated and unsubstantiated R&DTI claims.Last modified: 15 Feb 2021QC 64678