The Federal Court has handed down its largest ever promoter penalty of nearly $23 million against a former research and development tax incentive adviser for systemic abuse of the scheme.
The court ordered Mr Paul Enzo Bogiatto was ordered to pay $6.51 million, in addition to $6.01 million and $3.65 million for his related entities, Ryusei, Lambda Chase Chartered Accountants and Lambda Chase Service respectively.
The court found that Mr Bogiatto between 2012 and 2015 operated as an RDTI adviser in his capacity as a registered tax agent and a chartered accountant.
Investigations began in late 2015 and uncovered his promotion of arrangements for clients to lodge overstated and unsubstantiated RDTI 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,” Australian Taxation Office assistant commissioner Ash Khera said.
“The size of the penalty is the highest ever seen in Australia and reflects the scale and abusive nature of these schemes.
“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.”
The decision builds on several previous successful results under promoter penalty laws designed to ensure that promoters are held accountable when they encourage their clients to enter into risky tax schemes.
“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.
“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,” he said.