Elinor Kasapidis | February 2021
This article was current at the time of publication
The findings of a two-year review of the Tax Practitioners Board (TPB) have reinforced the body’s statutory independence and the recommendation to establish a Tax Practitioner Governance Forum (the Forum).
With the participation of the tax profession, the Forum has the potential to operate as a collaborative space to achieve consensus outcomes that improve the reputation and standards of the tax profession.
Following extensive consultation throughout 2019, the Review, led by Keith James CPA, made 28 recommendations.
The recommendations cover:
- The objective of the Tax Agent Services Act 2009
- Independence and governance
- Registration and education
- Code of Professional Conduct
- Sanctions and safe harbours
- Tax services and financial advice.
The breadth of the recommendations and their potential impact on tax practitioners make this an important report as it lays out a roadmap for change which we expect Treasury and the TPB to implement over the coming years.
CPA Australia, together with Chartered Accountants Australia & New Zealand (CAANZ), have submitted our initial joint response to the TPB and Treasury in anticipation of forthcoming consultation to discuss the recommendations.
Potential impact on practitioners
While we support many of the recommendations, we see a need for further discussion on others as the potential impacts on practitioners could be significant, depending on the design and implementation of any changes.
We believe the TPB plays an important role in ensuring that consumers have trust in tax practitioners and are supportive of efforts to maintain the integrity of the tax profession.
This includes considering improvements to investigations and sanction powers, as well as the publication of practitioner information to assist consumers.
Concerns over "fit and proper person" test
However, the recommendations related to the application of the “fit and proper person” test to close associates and employees, the modification of the Code of Conduct by the minister, the disclosure of spent convictions, and removal of the five years for certain conduct, raise significant concerns.
When taken together, the potential for overly prescriptive or subjective requirements increases and introduces greater uncertainty for practitioners as rules and expectations can change at any time.
We believe it essential that the principles of proportionality, privacy, natural justice, and the opportunity for rehabilitation are maintained, and that the powers of the minister, TPB and Australian Taxation Office are appropriately contained.
Regulatory burden needs to be tackled
We are also keenly aware of the need to minimise regulatory burden and will therefore seek practical and proportionate solutions in response to recommendations concerning registration, eligibility and education.
For example, Recommendation 4.4 suggests amending eligibility requirements to require company and partnership practitioners have “appropriate governance arrangements in place that demonstrate who is accountable for the delivery for tax agent services”.
Although supporting good governance in firms, we retain concerns about regulatory burden, the impact on smaller practices and the potential for the TPB to cancel practitioner registrations based on governance paperwork.
There is also a lack of clarity around the proposed shift from a three-year to a one-year registration process, especially as there are several recommendations that suggest the addition of further requirements to registration eligibility criteria.
Work needed on education
Significant work remains to be done about education, with the TPB establishing working groups that include members of professional associations and educational institutions.
We support the involvement of these working groups in considering the education-related recommendations as part of their broader work on education requirements.
More time needed for implementation
Finally, we recognise the potential cumulative impact of implementing some or all the recommendations, especially if attempted over a short period.
Our emphasis will not only be on proper consideration of the benefits and impacts of each recommendation before proceeding, but also the establishment of reasonable implementation timelines.
Elinor Kasapidisis is senior manager tax policy, CPA Australia
Tax tips for employees and contractors
We'll show you how to maximise your refund and reduce your tax liability
ATO tightens the screws on international tax
Do you have clients with thorny repatriation tax problems? Here’s how one practitioner handled it.
New ATO PCG mitigates risk for professional firms
ATO steps up efforts to address high-risk profit allocation with its Practical Compliance Guidelinearticle
FBT deadline looms
Are your clients offering increased job perks? Here are the key issues to be aware of at FBT time
Tax tips for new taxpayers
Lodging your first income tax return can be daunting. Let us help you get ready
Finding a tax agent
A tax agent can help you reduce your tax bill. What to consider when choosing a tax agent.