Tax Agents’ Code of Conduct changes apply to all on 1 July

This article was current at the time of publication.

On 1 July, the eight new obligations in the Tax Agents Services (Code of Professional Conduct) Determination 2024 will apply to all registered tax professionals.

That is when the grace period will end for companies with 100 or fewer employees, that were given an extra six months from the 1 January start date for larger practitioners.

The new obligations broadly cover honesty and integrity, independence, confidentiality, competence, quality management systems and keeping clients informed.

CPA Australia Adviser, Regulations and Standards, Neville Birthisel, says many of the obligations are already covered by existing items in the Code of Professional Conduct and the Accounting Professional and Ethical Standards (APES) or relate to matters that will not affect most public practitioners. 

However, there are some key points.

Acting with honesty and integrity

Obligation 1: Upholding and promoting the ethical standards of the tax profession.

Birthisel says the obligation to uphold ethical standards is, like many of the new obligations, already covered by the Code, such as Code item 1, to act with honesty and integrity.

“Just remembering Code item 1 will go a long way toward compliance with this new obligation,” he says.

Obligation 2: False or misleading statements

The obligation says you must not make a statement that is false or misleading on your own behalf, or on behalf of your client. This has concerned practitioners who have raised the issue of clients not telling them of tax matters, whether unintentionally, or deliberately. 

An accountant who was not aware of these undisclosed issues when the statement was made now must determine whether the matter is material and should be reported. This obligation ties into the controversial breach reporting regime that came into effect on 1 July 2024.

“Practitioners are saying this is very problematic because there are so many real-life examples that don’t fit into the black and white examples provided in guidance from the Tax Practitioners Board (TPB),” says Birthisel.

“There is an obligation to report if the false and misleading statement is significant enough,” he says, noting that APES 110 already requires practitioners to consider withdrawing from engagements and notifying regulators.

CPA Australia's engagement letter template discloses these possibilities so clients are informed at the start of the relationship.

Birthisel says members should check their engagement letter templates and if they find themselves with a likely breach situation “regardless of what you actually do, make sure you document your decision-making process and your decision”.

Managing dealings for and with governments

Obligation 3: Conflicts of interest in activities undertaken for government

Obligation 4: Maintaining confidentiality in dealings with government

Birthisel sees these two points as unlikely to affect many practitioners, but members have asked about contacting the Australian Taxation Office (ATO) on behalf of a client and if they can pass on the ATO’s response.

He points out the TPB has issued guidance that when a member contacts the ATO for a client it is considered reasonable for the practitioner to tell the client what the ATO has said.

“Our advice is that on other occasions assume what you are told is confidential until you are told it is not,” says Birthisel.

“For example, if you plan to take advantage of information you have received, you should seek written approval from the government agency first.”

Ensuring tax agent services are provided competently

Obligation 5: Keeping proper client records 

Obligation 6: Ensuring tax agent services provided on your behalf are provided competently

Obligation 7: Quality Management Systems

Birthisel says practitioners should check that record keeping and quality management systems and processes comply with existing requirements, noting that APES 320 already covers this and most practitioners will be familiar and compliant with their obligations.

Practitioners have asked whether they should record conversations, but the TPB has clarified that a file note of verbal advice will be sufficient.

Keeping your clients informed

Obligation 8: The measure on informing clients applies to the last five years and has a list of disclosable events. These include convictions and penalties, mostly relating to bankruptcy, taxation offences, fraud or dishonesty. The list and how to calculate the five-year period are on the TPB website. 

You must also advise clients if your registration is subject to conditions that limit the scope of tax agent or BAS services that you can provide.

New clients must be advised immediately, and all clients must be notified within 30 days. 

“Remember you are only going back five years, so as each year passes, a matter may drop off,” says Birthisel.

Breach reporting to date

By late February, the TPB had received 53 reports from practitioners reporting significant breaches of the code. 

These reports numbered: 38 made against another practitioner and 15 self-reported breaches. “None of the significant breach reports received have been identified as frivolous, vexatious or malicious,” notes the TPB. 

Points to remember about the new Code of Professional Conduct obligations

• There is guidance available on the TPB and CPA Australia websites.
• Review your client engagement letter to ensure you are compliant. CPA Australia has updated its engagement letter template to capture the new obligations.
• Set an annual reminder to review your engagement letter and send re-engagement letters annually. This is a good prompt to maintain compliance and ensure your disclosures are up to date, including any that can be removed.
• If you find yourself in a possible breach, regardless of what you do, remember to document your decision making – outlining your thinking, and why you followed a course of action.