Risk assessment process
Our aim is to be transparent with tax professionals about the risk we see, how we categorise those behaviours and what you can expect from your interaction with us based on that behaviour.
On this page
How we assess risk
We have enhanced our tax professionals engagement strategies by improving our ability to:
- identify good compliance indicators
- detect concerning behaviour.
We draw on a range of data and information about a practice and their client base to find clusters of risk.
If we identify risk in an agent's client base, we:
- look at the risk holistically
- assess whether there are similar concerns in
- the practice or the agent
- their own obligations as a taxpayer (as compliance with personal tax obligations is a legal requirement of registration).
We look across a range of tax obligations including:
- correct registration
- lodgment patterns
- correct reporting and payment.
We also monitor trends and client migration. We don't consider performance against the 85% lodgment threshold as this can often indicate an agent is helping new clients get back on track with lodgment rather than being an indicator of risk.
We supplement our risk view with intelligence from the public, government agencies and other sources. Our modelling uses this information along with established statistical methods to produce a holistic risk view that is:
- observed at a given point in time – as data and information is updated and added, our view of risk will also change
- relative to your peers – aimed at identifying outliers and behaviour we do not expect to see when compared with similar practitioners and client base groups
- preliminary – we will use the risk view to start a conversation with you
- transparent – if we engage with you, we will share our risk view with you.
We use our risk view to make a preliminary categorisation of behaviour using the teardrop model, and this is always reviewed by a human decision maker before we engage with you.
We are working towards a future where our risk view will be available for all practitioners to access in confidence and on demand.
Right of review
Our internal risk assessments do not carry rights of objection or review under legal review processes.
Risk assessments are preliminary views we derive from information available at points in time and can change as we gather new information. These views help to inform our decision on whether to interact with you and your clients. Where we choose to engage, we will share our risk view with you and talk to you about our concerns. In doing so:
- we want to better understand your client's specific circumstances
- you and your client have the right to dispute our underlying assumptions.
Tell us if you have new information we may not have considered in our original deliberations.
Confidentiality of risk views
We are obliged by law to keep confidential any information we have that could identify you or your practice. We respect your privacy.
In some circumstances, the law allows us to disclose information about you or your practice to other regulators, such as the TPB, for specific purposes. Generally, this will be in the form of underlying administrative data and outcomes rather than our internal views on risk.
Dealing with matters arising from our interactions
During the course of our interactions with you, or other parties, we may identify information or behaviours which cause us to consider whether further action is warranted. This may take the form of
- internal referral or escalation
- referral to one of our partner agencies for advice or action.
Aggressive tax planning, avoidance and promotion
If we have concerns that you may be promoting contestable schemes or other arrangements we believe may contravene an Act we administer, we may consider the application of the promoter penalty regime.
The promoter penalty regime seeks to deter:
- the promotion of tax avoidance and evasion schemes
- the implementation of schemes that have been promoted on the basis of conformity with a product ruling, in a way that is materially different to that described in the product ruling.
Fraud and tax crime
We fight against tax crime. Where we identify behaviour or activities which we believe are representative of phoenix, tax evasion or black economy activity, we will refer that matter for further investigation. In cases warranting it, we may refer the matter for administrative or criminal prosecution, working with partner agencies including various taskforces and the Commonwealth Director of Public Prosecution.
We maintain a special focus on areas where these behaviours are particularly evident, including the cash economy, international tax evasion, refund fraud, tax avoidance schemes and organised crime.
Tax Practitioners Board
While there is a clear separation of responsibilities between us and the Tax Practitioners Board, both parties help maintain community confidence by promoting a capable and well-regulated tax profession.
If we identify intermediaries who we suspect operate contrary to their obligations under the Tax Agent Services Act 2009, we will refer them to the Board for review. A breach of the law may fall within the following categories:
- There is evidence or information that a registered agent may have breached the Code of Professional Conduct or no longer meets the ‘fit and proper’ requirements to remain a registered agent.
- There is evidence or information that an unregistered entity has provided a service for a fee or other reward, advertised that service or otherwise presented themselves as a registered intermediary.
We may also support the Board by providing information we hold to aid investigations they may have initiated into the conduct of intermediaries. We may also use this process where we require information the Board may hold in relation to a matter we are investigating.
Australian Securities & Investment Commission
The Australian Securities & Investment Commission (ASIC) is responsible for the registration, licensing and regulation of some intermediaries including those conducting a financial services business and approved self-managed superannuation fund (SMSF) auditors.
Where we identify intermediaries who we believe to have acted contrary to their regulatory roles, we may refer those entities to ASIC for further investigation and action. We do not undertake an enforcement role in these situations as responsibility for enforcement falls to ASIC.
We prioritise how we apply our resources in order to maintain our service offers and address perceived compliance risk.