‘Dob-in’ provisions will erode client trust in tax advisers

The Government has steadfastly refused to agree to the removal of the “dob-in” in provisions of the Tax Agent Services (Code of Conduct) determination even though it fundamentally changes the relationship between tax agents and their clients.

For the first time, tax agents may not be viewed by clients as trusted advisers but as outsourced agents of the Australian Taxation Office (ATO).

The Join Accounting and Advice bodies have told Treasury that while amendments to the determination have gone some way to addressing their concerns, the “dob-in” provisions remain highly problematic.

As a result, they are seeking greater clarity in the legislative instrument about what actually constitutes the level of harm which would warrant requiring practitioners to dob-in their clients.

The groups said that the relevant Section 15 “is about taxpayer integrity, not tax agent integrity” and noted that the requirement for tax agents to ‘dob-in’ taxpayers to the ATO is being consulted upon publicly for the first time.

“Whilst the bar for reporting is set high, it is unlikely that the average taxpayer will hear that message. Based on feedback from our members, what taxpayers will hear is that a tax/BAS agent is no longer a trusted advisor acting in their best interest but is now effectively an outsourced ATO officer,” the joint bodies said.

“There are strongly held concerns within our membership bases that any required reporting of clients to the ATO will undermine the trusted relationship and impact public confidence in the integrity of the tax system.”

“Taxpayers, especially small and medium business clients, rely heavily on tax/BAS agents to ensure that they comply with the tax laws. Requiring tax/BAS agents to dob-in clients, albeit with a higher threshold, may deter clients from having full and frank discussions with their tax/BAS agent, leaving them with inadequate advice and potentially exposed to greater penalties,” the submission said.

“It may drive taxpayers who need guidance to navigate a complex tax system away from registered tax/BAS agents altogether. Section 15 may encourage the use of non-registered practitioners or independent self-assessment by taxpayers and place a much high compliance assurance burden on the ATO to ensure Australia’s revenue base is not eroded,” it said.