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New guidelines announced to help tax agents verify the identity of their clients

New guidelines will strengthen and modernise the practices and controls that registered tax practitioners follow when verifying the identity of their clients, the TPB and ATO have announced.

New guidelines announced to help tax agents verify the identity of their clients
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  • Maja Garaca Djurdjevic
  • April 29, 2021
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The Australian Taxation Office (ATO) and the Tax Practitioners Board (TPB) have announced measures to intercept attempted identity fraud targeted at registered tax practitioners and their clients.

In a joint statement issued on Thursday, the ATO said it has seen an increase in attempts by criminals to commit refund fraud by stealing the identities of taxpayers. This, the ATO said, has coincided with an increased reliance on technology and remote working practices. 

A lack of consistency to verifying the identity of clients has left individual tax practitioners vulnerable to attack, with practices that retain client identity documents insecurely also believed to be at greater risk. 

ATO assistant commissioner Sylvia Gallagher confirmed there is not an expectation that tax practitioners need to go back and verify the identity of their entire client base as part of the transitional approach.

“We’re asking that they perform identity checks from this point on, at the next opportunity in their normal dealings with clients,” Ms Gallagher said.

The ATO’s draft guidance encourages tax practitioners to voluntarily start adopting the new client verification standard immediately, with the view for the standards to become compulsory in the future following an initial transition period and further consultation with the tax profession.

Inviting feedback on the TPB’s draft guidance, the TPB chair Ian Klug AM said, “We value the support of the tax profession in implementing these important controls to better protect the Australian community from tax fraud through identity crime.’’

Mr Klug further said the TPB’s guidance will apply to all registered tax practitioners regardless of whether they use the ATO’s online services or not.

“The Tax Agent Services Act 2009 does not expressly set out minimum requirements for tax practitioners to verify a client’s identity,” he said. 

"However, there are implications under this Act if tax practitioners fail to take reasonable steps to ensure the identity of their clients is established. Our draft guidance provides practical guidance and examples so tax practitioners do not fall foul of their obligations and put their registration and business at risk.”

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