The recent changes in Treasury Laws Amendment (2023 Measures No.1) Bill 2023, now recognized as Act 101 of 2023, bring about substantial shifts in Tax Policy, particularly impacting registered tax agents. This legislation has woven intricate disclosure and reporting obligations into the Tax Agents Services Act 2009 (TASA), marking a notable influence on the practices of registered tax agents. These modifications, pivotal in shaping the landscape of Tax Policy, have drawn significant attention and concern from tax practitioners and accounting professionals across the nation.
Understanding the “Community Representative” Requirements:
From 1 October 2024, partners and principals of accounting/professional services firms with over 100 employees will be ineligible for appointment to the Tax Practitioners Board (TPB). This change will effectively exclude partners and principals of Big 4 and mid-tier accounting firms from being appointed to the Board.
Mandatory Notification Requirements: A Closer Look:
A crucial aspect of these changes, effective from 1 July 2024, is the introduction of mandatory notification requirements for registered tax agents. These requirements are twofold: firstly, addressing situations where an agent has breached, or believes they have breached, the TASA Code of Professional Conduct; and secondly, where they become aware of such a breach by another registered agent
Detailed Obligations for Tax Agents:
The legislation specifies that registered tax agents must provide detailed notifications to their clients and the TPB about significant breaches. This includes both self-reporting and an obligation to report other registered tax agents who have committed a significant breach of the code of conduct. The reporting obligations also extend to notifying professional bodies such as CPA Australia or Chartered Accountants Australia and New Zealand (CAANZ) where the offending agent is a member of such an organisation.
Criteria for ‘Significant Breach’:
Defining a ‘significant breach’ is central to these changes. It encompasses a range of scenarios, from indictable offences, offences involving dishonesty, and breaches of the code of conduct which result in clients or other parties suffering a material/substantial loss or breaches indicating inadequate compliance arrangements.
Non-Compliance and Its Consequences:
While the bill does not set specific penalties for non-compliance, the TASA outlines potential administrative sanctions, ranging from cautions to termination of registration. This broad spectrum of consequences reflects the importance of these new reporting obligations.
Professional Concerns and Challenges:
The passage of this bill has not been without criticism. Key professional bodies have expressed reservations about the rushed nature of the legislation and the lack of detailed guidance from the TPB, especially regarding what constitutes a significant breach. These concerns highlight the complexities and challenges in navigating the new disclosure requirements.
Andersen Comment
Practitioners and the various professional bodies which include Chartered Accountants Australia and New Zealand (CAANZ), CPA Australia, the Institute of Public Accountants (IPA), and the Tax Institute have voiced concerns that the legislation was hastily “pushed” through Parliament with no opportunity for feedback or consultation and as a result has not considered issues such as:
- the interaction of the mandatory notification requirements with fundamental legal protections such as legal professional privilege and the privilege against self-incrimination, and
- protections and remedies available to agents who are the subject of false or vexatious allegations of misconduct.
Moreover, there is currently no practical guidance or detail from the TPB as to what constitutes a significant breach of the code of conduct. Moreover, the Senate amendments to the Bill were not accompanied by an Explanatory Memorandum. Accordingly, practitioners are effectively “flying blind” when determining how to comply with this new requirement which applies from 1 July 2024.
Conclusion:
The amendments to the TASA, brought about by Act 101 of 2023, signify a profound change in reporting and disclosure requirements and the regulation of tax agents in Australia. As the industry grapples with these changes, staying informed and vigilant is paramount.
For more insights and updates on navigating the evolving landscape of tax disclosure requirements, Book a Chat or Consult Today
