Illegal deductions

[#1]

One of my client is threatening to leave my practice, if i dont make illegal tax deductions to reduce their tax liability. How do i safeguard myself?

Can i report them to the ATO for forcing us to make illegal claims?

[#2 · Accepted solution]

Anyone can report this type of activity especially when they put you in a very compromising position. 

I personally would report them in order to protect the integrity of my business as I consider the implications of this to be enourmous.  The last thing anyone needs is for the tax office to get the wrong impression and commence a serious of audits and all because of one person whom makes unreasonable demands.

The ATO actually make reference on some of their " Tax Professionals " webpages on how to report " suspicious behaviour to us confidentially " -  https://www.ato.gov.au/Tax-professionals/Prepare-and-lodge/In-detail/Fraudulent-payment-summaries/

[#3]

How do i safeguard myself?

Don't do it.

Can i report them to the ATO for forcing us to make illegal claims?

No -  breach of code unless ATO requires you to repond under S 263.

This was mentioned at the last TPB weinar.

[#4]

You should never be forced to make illegal claims.No client is worth it. Karma will catch up with them...

[#5]

At a more practical level, if you suspect your client is acting illegally, talk to your client about it and explain your obligations as a registered tax practitioner and taking reasonable care to apply taxation laws correctly. If this doesn’t resolve the issue, we suggest you immediately decline the engagement of that client.

If you think your client may be acting illegally you do not have an obligation to notify the ATO, and in fact if you did, you may be disclosing client information in breach of a client confidentiality requirement – which is an obligation under the Code of Professional Conduct (Code item 6).

An exception to this rule is if you have a legal duty to disclose the information to the ATO, for example if you are issued a notice from the ATO. In this regard, it is also noted that any future whistle blower provisions could mean you will be protected in specific situations from sanctions.