INPRACTICE     TPB roots out bad behaviour with tax compliance  


TPB roots out bad behaviour with tax compliance

Sanctions against tax agents soared this year, according to the Tax Practitioners Board’s (TPB) 2018-2019 annual report.

Jacqueline Blondell | November 2019

A beefed-up TPB compliance operation saw 749 tax agents sanctioned by the oversight body, compared with 287 the previous year, a 161 per cent increase. 74 tax practitioners’ licences were terminated, up 208 per cent from 24 terminations in 2017-2018. Cautions issued by the TPB tripled to 540 during the same year.

Strategy reset sparks compliance activity

TPB chair Ian Klug attributes the dramatic spike in activity to changes in the board’s senior management, including the appointment of new CEO, tax lawyer Michael O’Neill. The button has been pushed on a strategy reset, with the board’s compliance program focused on investigating unregistered agents and tax professionals who pose the most risk to the profession and the tax system. Overall, the TPB is concentrating on three strategic objectives:

  1. Protecting all consumers of tax practitioner services
  2. The maintenance, protection and enhancement of the tax profession
  3. The promotion of the TPB as an efficient and independent regulator

“We expect this compliance strategy will support honest practitioners, address tax system integrity and help reduce the tax gap,” Klug says.

Joining forces with the ATO

Increasing collaboration with other government agencies is another major plank in the TPB’s compliance program. This resulted in a 63 per cent increase in referrals flowing from the Australian Taxation Office (ATO) during the year. At the same time ATO scrutiny of tax agents stepped up, particularly with regard to work-related expenses. The TPB has also been working with the ATO on a strategy to reduce the level of tax agent debt, which has seen 8000 professionals contacted and outstanding debt reduced by A$37 million.

During this period, the TPB also initiated a series of random audits of tax professionals’ continuing professional education responsibilities.

“Most registered tax practitioners take their role seriously in addressing their ongoing professional development, however, over 80 practitioners failed these requirements and were subject to cautions and sanctions,” notes Klug.

TPB under increased scrutiny

In March 2019, the Australian Government announced an independent review, headed by former Board of Taxation deputy chair Keith James FCPA. The review’s report, which has recently been submitted to the government, examines the effectiveness of the TPB and the Tax Agents Services Act 2009 (TASA).

In a discussion paper published in August 2019 James noted: “Tax practitioners play a vital role in ensuring that the system as a whole is efficient and effective. Thus, the overarching purpose of the TPB is to ensure that tax practitioners operate with integrity. However, it is equally important that tax practitioners have confidence in the integrity of the system as it applies to them - especially as it has a bearing upon their conduct.”

CPA Australia and Chartered Accountants Australia and New Zealand have responded to the review with a joint submission, noting that the “review should ensure that principles of agency independence, privacy, market neutrality, competition and freedom of association guide the discussion on potential changes”.

TBP case study* – “Not a fit and proper person”

A registered tax agent’s renewal application was rejected because the TPB considered that he did not meet the requirement of being “a fit and proper person” to hold a licence.

The TPB noted that the agent had substantial outstanding personal tax obligations, including A$1 million in outstanding tax debts, and had no payment arrangement in place with the ATO.

He had also accrued, over a substantial period, outstanding tax debts and had not lodged any objections to the ATO’s assessment of these outstanding debts.

The ATO had also initiated debt recovery proceedings against the agent in the Supreme Court of New South Wales.

TBP case study* – consumer complaints acted on

The TPB launched a joint investigation with the ATO after receiving 19 consumer complaints that two registered tax agents, who offered their services online, had not passed 2017-2018 tax refunds on to their clients.

State police were alerted to the conduct so that further action could be taken. The collaboration between the regulators led to the immediate removal of electronic access to ATO systems and the prompt termination of the registration of the two tax agents.

*Source: Tax Practitioners Board’s 2018-2019 annual report.