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Government Proposes Enormous Increase in Maximum Fines for Firms Engaged in Tax Exploitation Schemes

In response to the recent scandals in the tax profession, the Government has proposed to increase maximum fines on firms engaged in tax exploitation scheme by around 100 times.

The move would see firms face fines of up to $780m for exploiting tax loopholes, and other changes made to regulators’ powers.

The promoter penalty laws are concerned with arrangements that avoid or evade tax, and where the benefit claimed isn’t available under the tax laws. They are collectively referred to as tax exploitation schemes.

The promoter penalty laws have only been applied a limited number of times in Australia (around six), however two of these matters to our knowledge have applied to schemes involving the R&D Tax Incentive, including:

• The Bogiatto matter resulting in the order of $22.68 million in penalties;
• The Australian R&D Funds and Grants Services Pty Ltd matter resulting in the order of $4.25 million in penalties.

Swanson Reed supports measures that preserve the integrity of the tax system and the R&D Tax Incentive.

Please get in touch with our office if you would like to speak to someone about a potential  R&D claim, or check out our website for more information.