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’ taxation affairs.
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.
Media contacts:
Catherine Fitzpatrick (Mr Williams) 0419 423 965
Paul Edwards (Sen. Kemp) 0412 005 589