Accountants/advisers contradict Jones

Australia’s major accounting and advice groups have directly contradicted suggestions by the Assistant Treasurer and Minister for Financial Services, Stephen Jones, that they were consulted over changes in the Tax Agent Services (Code of Professional) Conduct Determination.

At the same time as the changes risk being disallowed in the Senate, the Joint Associations Working Group, which includes the Financial Advice Association of Australia and the SMSF Association, has made clear their dissatisfaction with Jones’ approach.

Their joint statement said, “it is incorrect for the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, to say ‘Tax Practitioners and their professional associations were consulted throughout the development of the Code as it was proposed, including in the weeks before the Government’s announcement to introduce the new obligations.’ No further consultation or engagement after January was undertaken on the Determination before it was registered on 2 July 2024 (six months later)”.

“Only after the Determination was registered did the Joint Bodies became aware of a new notification obligation in paragraph 15(2)(c) (not previously in the exposure draft or subject to any consultation) which requires registered tax practitioners to report clients to the Commissioner if they do not correct false or misleading statements within a reasonable time.”

The statement said he Joint Bodies’ overarching substantive concerns relate to two obligations in the Determination:

• Paragraph 15(2)(c) which, for the first time in tax law, requires practitioners to ‘dob-in’ their clients to the ATO; and
• Section 45 which requires practitioners to notify current and prospective clients of ‘any’ matter that may significantly influence (as yet undefined and without guidance) a client’s decision to engage or continue to engage the practitioner to provide tax agent services, including an obligation to advise clients of investigations by the Tax Practitioners Board (TPB) before any decision is made, treating the practitioner as guilty until proven innocent.

“We also have concerns about new and significant obligations being imposed during the busiest tax time of the year upon practitioners who are expected to comply with expanded and enhanced concepts including:

• documenting quality management systems (as yet undefined);
• enhanced record keeping requirements (without any guidance); and
• the competent provision of tax agent services (duplicates an existing Code obligation).

“The Assistant Treasurer has acknowledged a transitional period was always intended to ensure the behaviour of practitioners meets the new standards. In response to an open letter from the Joint Bodies to the Assistant Treasurer on 15 July 2024 requesting a deferral of the commencement of the Determination, the Minister recently announced firms would have until either January or July 2025 (depending on their size) to meet their new obligations and enable the TPB to finalise its guidance. However, the transitional period is conditional upon an undefined concept of ‘[continuing] to take genuine steps towards compliance during this period’, adding to the uncertainty,” the statement said.

“Without clarity around the transitional period, every practitioner is facing a commencement date of 1 August 2024.”

The statement said the Joint Bodies support the policy intent to enhance community confidence in the tax profession and ensure high standards of ethical behaviour, “but we continue to have serious concerns about the overreach of some of the new obligations and the unrealistic expectations that practitioners will readily comply”.

“We have repeatedly requested the withdrawal and deferral of the Determination to enable further consultation with key stakeholders so that the changes are appropriately designed and implemented.”

Speaking on behalf of the joint bodies, Matthew Addison, Co-Chair of the TPB’s Tax Practitioner Governance and Standards Forum, said that while the Government consulted on the original exposure draft of the Determination, substantial changes had been made without consultation and some of the concerns raised with the exposure draft had been disregarded.

“These Code changes cannot be described as ‘modest’. They are sweeping, disproportionate to legitimate concerns of misconduct, and have left practitioners uncertain, confused and overwhelmed about their new obligations,” he said.

“The Joint Bodies’ stance is that consultation should be undertaken for all significant changes to the law and should have been followed in this case. Policy development must involve due process to ensure the new rules are subject to proper consultation and scrutiny, and are fairly implemented without unreasonably disrupting the vast majority of practitioners who overwhelmingly conduct themselves with integrity and honesty.”