Directors may face increased liability

A BILL due to be debated next year will, if it becomes law, make WA’s Department of State Revenue the most powerful tax collecting agency in Australia.

The State Government introduced the seemingly harmless Tax Administration Bill into Parliament this month, saying it had been developed in an effort to simplify WA’s tax system.

However, the Bill, which has been under development since 1994, also includes measures to make company directors personally liable for any of their companies’ unpaid taxes and for any tax offences the company commits.

The ATO can only make company directors liable for taxes their company holds on behalf of others, such as employee income tax payments. The Bill also will allow the Government to prosecute those it deems to have abused legal professional privilege.

WA Treasurer Eric Ripper said he believed the provisions in the Bill were fair and reasonable.

“If we tolerate tax avoidance a higher burden will be put on businesses doing the right thing,” Mr Ripper said.

“The director liability provisions have been modelled on those in Federal tax law. The legal professional privilege provisions are designed to address deliberate misuse of those provisions to hinder investigations.”

Mr Ripper said industry groups had been widely consulted and denied the Bill was being rushed through Parliament.

However, industry groups such as the Taxation Institute of Australia, the Australian Institute of Company Directors, the Chamber of Commerce and Industry and the

Law Society of WA are concerned about the implications of the Bill.

Chamber of Commerce and Industry senior economist Dan Engles said any benefits from administrative simplification were lost in the increased enforcement powers afforded to State Revenue.

Mr Engles said the Bill would hurt WA’s tax competitiveness.

Law Society of WA president Ken Martin QC said the society would be fighting the Government’s attempts to erode legal professional privilege.