The new legislation involves significant changes affecting all accountants and lawyers (both inhouse and external), as well as financial planners who provide tax or investment advice. It will also have a significant impact on clients. The line in the sand, between what is acceptable and unacceptable behaviour as an adviser, has now shifted. Unfortunately, the line is also very hazy.
A lawyer, an accountant or other person who advises a client or clients that a particular course of conduct should reduce taxable income falls within the net cast by this legislation. The adviser must then claw his way out of the net by relying on a narrow limitation in the definition or, failing that, by relying on an argument that he took no other action than merely to advise, the so-called defence of acting on instructions. Otherwise he is left to hope that his advice is reasonably arguable.
Those who choose to ignore this quantum shift do so at their own peril. The new legislation carries potential risks of personal civil penalties in excess of $550,000 as well as corporate penalties in excess of $2.75 million.