There are several civil penalty provisions in the Tax Agent Services Act 2009 (TASA) for tax and BAS agents (collectively referred to as tax practitioners). These civil penalty provisions can be grouped into two categories, those relating to:

From 1 January 2024, civil penalty provisions also apply to some entities who are considered disqualified and they fail to provide a written notice to a tax practitioner about their disqualified status in circumstances where they are:

• employed or used by the tax practitioner to provide tax agent services (including BAS services) on the tax practitioner’s behalf, or
• in an arrangement with the tax practitioner in connection with the provision of tax agent services.

For further information about who is a disqualified entity and their obligations refer to Code obligations when you employ, use or have an arrangement with a disqualified entity.

What is a civil penalty?

A civil penalty is a pecuniary (or monetary) penalty imposed by courts exercising a civil rather than criminal jurisdiction. State and Commonwealth government bodies can apply to the courts to have a pecuniary penalty imposed against an entity for breaching a civil penalty provision in some circumstances. Civil penalties do not include criminal convictions or imprisonment.

Penalty amounts

Penalties for breaching the civil penalty provisions are imposed in the form of penalty units. The current value of one penalty unit is $275.

The penalty amounts listed below reflect the current penalty unit value. For example, one penalty unit = $275, so 250 penalty units = $68,750.

Conduct prohibited without registration

You will breach a civil penalty provision if you are unregistered and:

*Note: Tax agent services include tax (financial) advice services.

Exemptions

Conduct of registered tax practitioners

Making false or misleading statements

You will breach a civil penalty provision if you knowingly or recklessly (by inclusion or omission):

• make a false or misleading statement to the Commissioner of Taxation (Commissioner)
• prepare a false or misleading statement which you know, or should reasonably know is likely to be made to the Commissioner
• permit or direct an entity to make or prepare a false or misleading statement to the Commissioner.

Employing or using the services of deregistered entities

You will breach a civil penalty provision if you employ or use the services of a deregistered entity to provide tax practitioner services, when you know or should reasonably know:

• that the entity is not currently registered but was previously registered, and
• you first employed, or first used the services of, the entity within one year of its deregistration.

However, you will not breach a civil penalty provision if the:

• entity’s registration was terminated because it surrendered its registration, became an undischarged bankrupt or went into external administration, or
• entity is a disqualified entity and you have obtained our approval to employ or use the services of the entity to provide tax agent services on your behalf.

Signing of declarations

You will also breach a civil penalty provision if you sign a declaration or statement in relation to a taxpayer that is required or permitted under a taxation law, which was prepared by someone else who is not:

• a registered tax or BAS agent
• working under the supervision and control of a registered individual tax or BAS agent

Civil penalties for disqualified entities

From 1 January 2024 a disqualified entity will breach a civil penalty provision (subject to transitional provisions) if they fail to meet their obligation to give a written notice to a registered tax practitioner of their disqualified status as outlined below:

• A disqualified entity must notify a registered tax practitioner that they are a disqualified entity before the registered tax practitioner:
  • enters into a contract, or renews / agrees to extend an existing contract, to employ or use the services of the disqualified entity to provide tax agent services on the tax practitioner’s behalf
  • enters into an arrangement, or renews / agrees to extend an existing arrangement, in connection with the provision of tax agent services by the registered tax practitioner.
• If the entity becomes a disqualified entity whilst already in a contract or arrangement with a registered tax practitioner relating to the provision of tax agent services, the entity must provide written notice to the registered tax practitioner they are a disqualified entity within 30 days of the day on which they become aware, or ought to have become aware, that they are a disqualified entity.

For further information about the obligations of disqualified entities refer to Code obligations when you employ, use or have an arrangement with a disqualified entity.
 

Consequences of contravening a civil penalty provision

If you breach a civil penalty provision under the TASA, we may, within 4 years, apply to the Federal Court of Australia for an order that you pay a pecuniary (monetary) penalty. If the Federal Court is satisfied that a civil penalty provision has been breached, it determines an appropriate penalty, being no more than the penalty stated in the relevant civil penalty provision.

Once the Federal Court orders that a pecuniary penalty be paid, the penalty is payable to the Commissioner. The Commissioner can also enforce the order as if it were a judgment of the Federal Court.

If more than one civil penalty provision is breached, we may begin proceedings for breaches of any or all of the relevant civil penalty provisions, however only one pecuniary penalty will be imposed in respect of the same conduct.

Partners in a partnership

If a partnership breaches a civil penalty provision, each partner of the partnership at the time of the breach, is taken to have contravened the civil penalty provision. This is unless the partner proves that they:

• did not engage in the conduct
• did not aid, abet, counsel or procure the conduct
• were not in any way knowingly concerned in or a party to the conduct