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Forcing tax practitioners to screen close associates and employees under the fit and proper person test would heap further administrative and compliance burden on the profession, two professional accounting bodies say.
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‘Unreasonable onus’: Accountants push back against proposed registration requirement
28 January 2021
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The recommendation, contained in the final report of the independent review of the Tax Practitioners Board, proposes to require tax practitioners to ensure that close associates and employees have satisfied the fit and proper person requirement under the Tax Agent Services Act.
The review believes the new requirement, included as part of a practitioner’s registration, will help uphold the standards of the profession and alert the TPB to shadow and supervisory agents who are the controlling minds behind egregious firms.
It argues that the regulation of tax practitioners should not be less than those that apply to lawyers, and has recommended that guidance be taken from the Legal Profession Uniform Law in Victoria and NSW which imposes legislative restraints on employing certain persons.
However, Chartered Accountants Australia and New Zealand and CPA Australia have now urged the TPB and the Treasury to refrain from adopting the recommendation, noting that it will create a host of issues for the profession.
“The potential compliance burden, complexity, unfairness, uncertainty and unintended outcomes are of concern with this recommendation,” said the joint submission.
“The eligibility to register should not be unnecessarily hindered.
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“We remain concerned that such a requirement creates an unreasonable onus on the tax practitioner to apply the fit and proper person test for each close associate and/or employee. There may be privacy, employment law and civil liability issues that arise, exposing the practitioner to potential risks.”
The government has already offered its support for the recommendation, noting that “it is important that any employees and associates used by a tax practitioner meet expected standards”.
Further registration changes
A change to registration requirements is likely to also see a move from the current three-year registration cycle to an annual requirement.
The move will replace the current annual declaration process, with fees pro-rated in comparison to the current three-year registration rate.
While the government has agreed to move to an annual registration cycle, it suggests that the final decision around registration fees will come after it determines how to transition the TPB to become financially independent of the ATO.
Both CA ANZ and CPA Australia have urged the TPB to commit to not raising fees, and to ensure the implementation of the disclosure on associates proposal will not burden the profession.
“We note that annual registration fees must be affordable and no more than the equivalent of one-third of the three-yearly registration fee on an ongoing basis,” the bodies said.
“The move to an annual fee should not be an opportunity in subsequent years to hike the registration fee to proportionately more than its current level.
“Caution must be exercised to ensure that the registration process is not made more onerous or potentially unworkable for practitioners. The goal should be to have no unnecessary blockers to registration and no greater regulatory burden on practitioners after this round of reforms.”
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