- R&D tax adviser handed down $23M in penalties
- Federal Court ruling is the largest in history
- Guilty party had been claiming $45.5M in claims for various clients!
The R&D tax incentive (R&DTI) scheme has been a lifeblood for many a WA startup. Often, it’s the only income that comes in for a while, especially in those early years.
Be warned though – the ATO is on the look out for fraudsters claiming dubious amounts of R&D, and in a recent ruling, they have come down hard on one perpetrator.
In the largest R&D penalty ruling ever, a federal court has handed down a judgement against Sydney-based Mr Paul Enzo Bogiatto and ordered $22.68 million in penalties be paid.
Last Friday, Mr Bogiatto was ordered to pay $6.51 million, in addition to $6.01 million and $3.65 million penalties for his related entities, Ryusei, Lambda Chase Chartered Accountants and Lambda Chase Service respectively.
Between 2012 and 2015, Mr Bogiatto operated as a Research and Development Tax Incentive (R&DTI) adviser for a range of businesses in his capacity as a registered tax agent and chartered accountant.
Investigations into Mr Bogiatto’s activities began in late 2015 and uncovered Mr Bogiatto’s promotion of arrangements for his clients to lodge overstated and unsubstantiated R&DTI 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 decision builds on several previous successful results under promoter penalty laws that are designed to ensure that promoters are held accountable when they encourage their clients to enter into risky tax schemes.
It also 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.
We expect high standards by tax professionals. As a result of these investigations, Mr Bogiatto was also investigated and de-registered as a tax agent in October 2017, as well as forfeiting his membership of the Institute of Public Accountants. He had his CA membership terminated and his name removed from the Registers in 2018.
“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,” said Mr Khera.
If interested in R&D tax incentive, why not contact Steve Elias from RSM? RSM is a sponsor of Startup News, and we know Steve knows what he’s talking about.