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$22.68 million in penalties have been handed down by the Federal Court, the largest amount in Research and Development Tax (R&DT) history.
The Australian Taxation Office (ATO) has reported that a 2015-starting investigation targeted a Paul Enzo Bogiatto, who operated as a Research and Development Tax Incentive (R&DTI) adviser for businesses while registered as a tax agent and chartered accountant. Bogiatto was de-registered as a tax agent in October 2017.
The investigation uncovered Bogiatto made arrangements for his clients to “lodge overstated and unsubstantiated R&DTI claims”. Bogiatto’s clients were paid a total of $45.5 million in research and development tax offset refunds.
The penalty amount of $22.68 million was spread across Bogiatto and his related entities, which included Ryusei, Lambda Chase Chartered Accountants and Lambda Chase Service. Bogiatto himself was ordered to pay $6.51 million.
The ATO says that evidence gathered was indicative of “systemic abuse of the R&DTI”, as claims were put forth that were not reflective of the actual expenditure taxpayers were putting in for R&D services. Furthermore, Bogiatto is said to have shown a history of avoiding regulators and failing to address any loss or damage that scheme participants incurred.
In a statement, Assistant Commissioner Ash Khera said the sizeable penalty handed down reflects the scale of Bogiatto’s actions.
“We want to protect individuals and businesses from being unwittingly caught up in schemes like this one,” Khera said.
“Those who encourage others to do the wrong thing and claim the incentive to which they are not entitled will be caught and held to account for their actions.”
Khera said the ruling was a “strong deterrent” for any other advisors undertaking similar behaviour.
“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,” Khera added.
“If you approach us early, you may be eligible for a reduction in any penalties imposed.”