Tax agent: when an agent’s health crisis led to unfair interest charges

An otherwise compliant company was surprised to find itself facing more than $39,000 in interest charges — not because it ignored its obligations, but because its tax agent became seriously unwell.

A tax agent approached us after the ATO imposed general interest charges (GIC) following the late lodgement of five years of company tax returns. Four of those returns were overdue, resulting in GIC totalling $39,334.72. The client had no record of poor compliance and had relied on their agent to manage their ongoing obligations.

The tax agent applied for GIC remission on medical grounds, providing specialist reports outlining significant mental health issues and serious family related problems that affected his capacity to work. However, the remission request was initially declined.

We engaged with the ATO to explain that the agent’s incapacity directly affected his ability to meet lodgement deadlines and that the outstanding returns could not be lodged until his condition stabilised. We also highlighted that the client had no reasonable way of knowing their agent was incapacitated.

After reviewing the circumstances, the ATO agreed to remit GIC for the period during which the tax agent was incapacitated, amounting to $14,942. GIC accrued after that period was not remitted, as the ATO considered the agent had recovered sufficiently to resume work and ultimately lodged the returns.

While the full amount of GIC was not removed, the outcome recognised genuine incapacity and reduced the unfair impact on a client with a strong compliance history.

Jono: restoring trust after identity fraud

Jono’s income tax records were compromised when two returns were lodged by a tax agent he had never engaged. Although the ATO cancelled these unauthorised returns, Jono’s legitimate refund was later diverted to the same unauthorised tax agent after he altered his bank account details.

When Jono contacted the ATO, he was advised to reach out directly to the unauthorised tax agent—a step he understandably refused. This left Jono without his refund and concerned about future dealings with the ATO.

Our investigation revealed that the ATO had been repeatedly notified that the tax agent was unauthorised yet continued to allow access and ultimately paid the refund to them.

We issued an initial view recommending:

  • Immediate remediation of Jono’s account and repayment of the refund with interest.
  • An apology for the client experience.
  • Referral of the unauthorised tax agent to the Tax Practitioners Board.

The ATO agreed to remediate Jono’s account and return the refund. We verified the remediation and confirmed Jono’s concerns were addressed. The complaint was closed with Jono satisfied that fairness and accountability were restored.

Tax consultant: complete removal of two decades’ worth of GIC

A tax consulting firm representing a complainant approached us about a significant amount of General Interest Charges (GIC) imposed by the ATO—spanning over 20 years. The GIC had grown to more than six times the original tax liability.

The taxpayer permanently left Australia in 2004 and relied on a tax agent to lodge his final returns. Unfortunately, those returns were never lodged, and the issue only surfaced in 2023 when he applied for a Foreign Resident Capital Gains Withholding (FRCGW) tax variation on a property transfer. He acted promptly to lodge and pay the outstanding returns, but the ATO imposed GIC from 2005 through to the present day. While the original tax liability was $41,000, the GIC had compounded to over $275,000.

Despite multiple attempts by the tax representative to seek GIC remission, the ATO declined. When the matter came to us, we argued that imposing GIC was unfair given the taxpayer’s circumstances: he had permanently departed Australia, appointed a tax agent to manage compliance, and only discovered the issue decades later. The tax agent had been deregistered in 2013, leaving the taxpayer with no way to correct the oversight earlier.

After reviewing the facts, the ATO agreed to remit the GIC in full. This decision recognised that the taxpayer acted as soon as practicably possible once he was aware of the issue and could not reasonably have mitigated the situation earlier.