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SMSFA concerned about regulatory overreach in ATO information gathering

By Keeli Cambourne
June 11 2024
2 minute read
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The SMSF Association said it is concerned by the number of measures being introduced as a “response to PwC” and that any policy response must be balanced to ensure it does not result in regulatory overreach.

In response to the consultation paper on the reform of tax regulator information-gathering powers, the SMSFA said that although regulators need to have the appropriate powers and information to allow them to meet the objectives of their respective remits, the extent of those powers should not extend beyond that remit.

“The PwC case highlighted the need for significant improvements in inter-agency sharing of information and intelligence. This, in turn, provides opportunities for joint-agency investigations, case management, which can be run in a more timely, effective, and efficient manner,” the association’s submission said.


“Had this been in place while the PwC matter was on foot, the regulatory system, and cross-agency engagement would have operated more efficiently and effectively. It is likely that this case would have been identified and addressed at a much earlier point in time.”

The submission continued that a more cautious approach should be made when comparing the powers of one government agency to another in isolation, and the respective roles and remit of the regulators should be the guiding light on the powers that should be afforded to them.

“The expansion of powers should not of itself result in an expansion in remit,” it said.

The SMSFA said it broadly supports the expansion of the ATO’s document production powers for tax-related criminal offences, and the use of such powers should be subject to review to ensure that they are appropriately applied.

“The broadening of these powers should not see an investigation commenced under the guise of an offence such as fraud to be used as a wedge to obtain an admission to a civil offence. There must be reasonable grounds that a criminal offence has been or are being committed,” it said.

Although the association acknowledges the Tax Commissioner’s desire to access telecommunications data or stored communications to aid its investigations, it said it is concerned this will capture personal and other information unrelated to the investigation.

“Information gathering of this nature puts at risk the privacy of those being surveilled, and other innocent parties. Because of these risks, it is a power that should not be used lightly,” it said.

Finally, the association said it also supports the expansion of the Tax Practitioners Board’s (TPB) investigation and document production powers, noting that as a regulatory body, the TPB needs to have the powers necessary to fulfil its remit and meet broader community expectations.

“The TPB has shown to date that despite its inherent limitations, it has the ability to be an effective regulator,” it said.

“There must be reasonable grounds for the TPB to request information that crosses the threshold of the Privacy Act 1988. Noting that the outcome of any preliminary investigation may not necessarily lead to a formal investigation commencing.”

It continued that the TPB plays a vital role in protecting the integrity of the system and the consumers who use it, and to do this effectively, the TPB needs the ability to conduct reviews and gather information to risk profile certain individuals, firms, behaviours, or activities.

“Doing so will enable them to act in an effective and timely manner, focusing resources where they are needed,” the submission said.

“To ensure integrity in the application of any expanded powers, we would recommend that they are subject to review.”

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