Watch out - the ACCC attacks left, right and centre on GST.
Now that the new goods and services tax system is in operation the Australian Competition and Consumer Commission has shown it will show no favour to persons who engage in activities which may breach the GST legislation. This will be particularly so in relation to misrepresenting the position involving the operation of the new GST. The ACCC has already brought proceedings against an accounting firm and now a legal firm in seeking to impose the full force of the law in this area.
The most recent example is the action taken by the ACCC against the DCH Legal Group of partners, lawyers in Western Australia, who allegedly published an article in a Perth newspaper regarding the effect of the new tax system on legal fees. The ACCC has accepted a court enforceable undertaking under section 87B of the Trade Practices Act from that firm over representations that the firm allegedly made about the effect of the new GST legislation on the collection of legal fees. We quote here from a press release issued by the ACCC. "The statements created the impression that consumers could expect the cost of divorce proceedings to increase by ten per cent from 1 July 2000 and that consumers could avoid paying the goods and services tax by acting quickly to seek legal advice," ACCC chairman, Professor Allan Fels, said today. "This impression had the potential to breach the provisions for misleading and deceptive conduct under section 52 and section 53(e) of the Trade Practices Act 1974.
"In fact, the cost to consumers of legal fees for divorce proceedings should not rise by a full 10 percent. "The ACCC expects savings associated with introduction of the new tax system to be passed on by professional advisers to consumers. "The ACCC was also concerned to ensure that consumers were not misled into believing that divorce proceedings would have been completed before 1 July 2000 if commenced as a result of representations made in the article published on 22 April 2000." The ACCC in accepting the undertakings from the Perth firm acknowledged that it co-operated to resolve the matter. It did not wish to fight the particular proceedings in the court. But, the ACCC's action against the Perth firm followed on from the ACCC instituting proceedings against a Melbourne accountant which has yet to go to court. Clearly, the ACCC will have much more difficulty to see whether it can win on the price exploitation legislation. The first case, involving Video Ezy, has yet to go to the court and we will await its result with a great deal of interest.
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