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Promoter Penalties: Don't be fooled - you are at risk!

Published on 23 Feb 2007 | Took place at The Stamford Plaza, Brisbane , QLD

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.

Individual sessions

Promoter penalties and financial product providers - a legal perspective

Author(s):  David J WILLIAMS

This paper provides practical advice in the following areas:

  • how you can draft engagement letters to make clear your role
  • how you can still obtain the mere advice exception when also drafting documents and preparing accounts
  • when you will be acting as more than an adviser and have a penalty exposure
  • whether you have a problem if the promoter uses your advice letter in the marketing material and, if so, how you can protect yourself.
This paper includes some minor updates made by Mark Robertson for presentation on 15 February 2007 at the 2007 Financial Services Taxation Conference held on the Gold Coast and on 23 February 2007 at the Promoter Penalties seminar held in Brisbane.
Materials from this session: