Compliance
Compliance Essentials: New Penalties for Tax Adviser Misconduct in Australia
Recent legislation introduces tougher penalties for tax advisers and changes in foreign CGT treatment—this article explains what’s required for businesses, advisers, and individuals to stay compliant.
By NomadicTax Research Team • 5-8 min read • July 23, 2026
## What Has Changed
- The **Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and other Measures) Bill 2026**, passed recently, includes:
• criminal penalties for **unregistered tax preparers**,
• civil penalties under the *Code of Professional Conduct*,
• doublings of maximum registration terminations to **10 years**, and
• new powers for the Tax Practitioners Board to issue infringement notices, enforce voluntary undertakings, and suspend registrations. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
- Also strengthens foreign resident CGT rules to align treatment of foreign investments more closely with domestic treatment, while protecting revenue and clarifying exceptions. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
## Who Must Pay Attention
- **Tax Professionals**: preparers, advisers, accountants should ensure registration status, professional conduct alignment, and compliance with Code of Conduct.
- **Businesses and Investors with Foreign Ties**: those receiving capital gains from foreign or foreign-resident causes will be impacted.
- **Charitable and Financial Institutions**: reforms also touch subsidies, exemptions and the scope of reporting and concessions.
## Key Compliance Steps
1. **Check registration status**: If you act as an adviser, make sure you're registered and understand the consequences of being unregistered.
2. **Review internal processes**: Ensure your workplace compliance frameworks reference the new penalty amounts and enforcement powers.
3. **Maintain clear documentation**: all advice given, outcomes, cost base and gain computations—especially where foreign residency or foreign sourced gains are involved.
4. **Stay current with foreign resident CGT rules**: especially exemptions or concessions for foreign investors, new definitions and applications.
5. **undertake regular training**: for advisers and staff about professional standards and obligations under the code.
## Example Enforcement Risks
- An unregistered adviser preparing tax returns for clients could now face **criminal sanctions** if they breach the reforms.
- A tax-preparer giving advice that leads to underpayment of CGT for a trust, especially in foreign-resident contexts, could be subject to civil penalties.
- Registered practitioners may face **registration suspension** or **termination for 10 years** outright for serious misconduct.
## Implications for Individuals & Small Businesses
- If you use a tax adviser, verify their registration and insist upon written advice—this helps in defense if later reviewed.
- For foreign investors or those with foreign sourced income or property, get specialist advice to navigate the converging rules between domestic and foreign CGT.
- Keep watch on legislation for clarifications—especially around exemptions, transitions, and definitions.
With these reforms now law, the compliance bar has been raised. Staying on top isn’t optional—it’s essential to avoid serious risks of civil or criminal exposure.