Home / News / Federal Court Orders Large Promoter Penalty Corresponding to Exploitation of R&D Tax Incentive

Federal Court Orders Large Promoter Penalty Corresponding to Exploitation of R&D Tax Incentive

David McLure SC and Dr Greg O’Mahoney appeared for the Commissioner of Taxation in an important case considering the reach and application of the promoter penalty regime, which resulted in the largest penalty ever imposed on promoters of tax exploitation schemes: Commissioner of Taxation v Bogiatto (No 2) [2021] FCA 98; Commissioner of Taxation v Bogiatto [2020] FCA 1139.

The Federal Court ordered Paul Enzo Bogiatto and entities he controlled to pay penalties of $22.68 million for “systemic abuse” of Australia’s R&D tax incentive scheme (a legislative regime aimed at encouraging companies to engage in research and development in Australia).

Mr Bogiatto operated as a specialist R&D adviser. Between 2012 and 2015, he and his related entities advised 12 clients on 21 different tax exploitation schemes. The Commissioner submitted that they engaged in conduct which was “in the nature of a fraud on the revenue – to the extent such conduct has unifying features they centre on the extent to which it was calculated, dishonest and deceptive.”

Mr Bogiatto and the relevant entities were found to have contravened s 290-50(1) of Sch 1 to the Taxation Administration Act 1953 (Cth) on 68 occasions.

A link to the judgments can be found here:

https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0098

https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca1139

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