Compliance
Compliance Update: New Penalties for Tax Agent Misconduct
From July 2026 Australia will introduce tougher sanctions for tax adviser misconduct, increasing oversight and penalties under revamped legislation—find out what this means for tax agents and clients alike.
By NomadicTax Research Team • 5-8 min read • July 12, 2026
## What’s Changing: Sanctions and Liability for Tax Advisers
On **2 July 2026**, the Australian Government announced the *Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and other Measures) Bill 2026*. Key changes include:
- **Criminal penalties for unregistered tax preparers**, meaning those offering advice don’t have to just be fined; some could face criminal prosecution. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
- **New civil penalties** under the *Code of Professional Conduct* enforced by the Tax Practitioners Board (TPB). More rigour in professional responsibilities. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
- **Doubling the maximum suspension of registration** up to **10 years**. Interim suspensions and contingent suspensions empowered. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
- Changes to the foreign resident capital gains tax (CGT) regime aligning more closely with OECD Model Rules. Foreigners investing in Australia will face tightened tax treatment. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/media-releases/stronger-penalties-tax-misconduct?utm_source=openai))
## What Clients Should Expect
- Clients using **unregistered preparers** may have risk—if errors occur, the client may be held responsible and no legitimate registration protections apply.
- **Increased transparency**: Tax agents will need to adhere strictly to professional standards and code of conduct. Clients should expect stricter documentation and justification of advice.
- **Stricter audit risk**: Agents’ misconduct can trigger investigations not just on their conduct but also on clients’ returns, especially where advice was flawed.
## Practical Compliance Steps for Tax Agents and Firms
- Ensure **registration is current** and all professional registrations are intact.
- **Review policies**: Make sure internal compliance, supervision, continuing professional development (CPD) align with new code expectations. Document policies clearly.
- **Update contracts**: Clear scope of advice, liability, record-keeping, indemnities.
- **Educate clients**: Make clients aware you carry insurance, are registered, and abide by the TPB rules.
- **Foreign investor clients**: Advise about new CGT rules applying to foreign residents and whether exemptions or concessions may be available (e.g. renewable energy incentives).
## Example Illustrations
> *1. Tax Agent Case:* Sarah, a sole tax agent, uses a junior unregistered preparer to lodge client returns. Under new law, client claims based on that advice may cause both Sarah and the junior to face civil penalties; if gross misconduct, criminal penalties could be involved.
> *2. Foreign Investor:* A foreign investor holding property in Australia will face the reformed foreign resident CGT regime when disposing of assets. Previously-available discounts may be limited; incentives in renewable infrastructure might still apply.
## Advice for Clients and Agents Before Implementation
- **Register properly** now; don’t risk using unregistered services.
- Agents should **strengthen compliance monitoring** and audit trails for advice given.
- Clients should check whether their agent is registered with TPB and ask about liability and standard of advice.
- Foreign investors should seek specific CGT planning advice—be clear on residency status, types of investments (new builds, renewables), dates of acquisition or disposal.
## Why This Matters
This change isn’t just technical—it impacts trust, professional integrity, and clients’ risk exposure. By raising penalties and aligning foreign investor rules with global norms, Australia is signalling that tax advice must be responsible and transparent.