SENATOR THE HON. ROD KEMP
9 March 2001
Bankruptcy and Taxation Obligations
The Federal Government is acting against those who seek to use bankruptcy to avoid
their taxation obligations.
Procedures will be introduced to ensure that Commonwealth Departments and agencies do
not engage barristers who use bankruptcy as a means of avoiding tax.
And the Australian Taxation Office has been discussing with the NSW Bar Association
measures to require barristers to disclose their financial position to their governing
professional body. This does not require any changes to the secrecy provisions which are
an important and integral part of the tax law and protect the privacy of individuals
The Commissioner of Taxation identified the issue of persistent tax debtors in the
professions some time ago and has been conducting highly focussed prosecution and debt
collection activities as a result. He is unable to name persistent tax debtors due to the
secrecy provisions in the tax law, which make it a criminal offence for him to do so.
Regulation of the legal profession, including the right to practise and the handling of
complaints, is a matter for the States and Territories. The Commonwealth supports the
constructive move by the NSW Attorney-General to require continuous disclosure by all
barristers and solicitors of any petition for bankruptcy and an explanation, for example,
of whether their tax affairs are related to the bankruptcy.
The Commonwealth has already urged the States and Territories to develop nationally
consistent options for dealing with barristers who flout the tax system. The issue will be
discussed at the next meeting of the Standing Committee of Attorneys-General.
Many circumstances lead people into bankruptcy and many bankrupts work hard to repay
their creditors. However, the Commonwealth is committed to doing what it can to prevent
abuse of the bankruptcy process.
Catherine Fitzpatrick (Mr Williams) 0419 423 965
Paul Edwards (Sen. Kemp) 0412 005 589