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The industry has spoken out against a raft of new rules for tax practitioners introduced by the government without notice.
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Blindsided accounting bodies lash ‘unworkable’ code changes
15 July 2024
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The government’s decision to impose new obligations on tax practitioners without notice has sparked a firestorm of criticism from professional bodies who say the “rushed” drafting without their consultation has created “unworkable” obligations.
Professional bodies – including CPA Australia, CA ANZ, the Institute of Certified Bookkeepers and the Institute of Financial Professionals – have united against the new rules that would force practitioners to overhaul their internal processes and go against existing client confidentiality principles, vowing to get their scope narrowed and start date pushed back.
The rules stem from a determination made by Assistant Treasurer Stephen Jones on 1 July under section 30-12 of the Tax Agent Services Act (TASA), which allows him to modify the tax agent code of professional conduct through a legislative instrument.
According to the instrument’s explanatory material, the determination “supplements” the code and “strengthens” the regulatory framework to curb tax practitioner misconduct without creating "any new obligations on tax practitioners that are inconsistent with their obligations under the code".
But CA ANZ said it did create inconsistencies in practice.
"Registered tax and BAS agents will find it difficult to comply with certain aspects of this latest code determination in its current form," Simon Grant, group executive advocacy, said.
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It comes after the IPA warned the instrument’s “prescriptive” obligations would weaken the code’s “principles-based approach”.
“Adding prescriptive obligations using vague or unfamiliar concepts detracts from the breadth, generality and certainty of the existing code,” general manager Tony Greco said last week.
Grant called for the 1 August start date to be deferred by “at least six months” to allow time for TPB guidance to be developed.
“The start date for this code determination is unrealistic and unachievable for many tax practitioners who are already operating under regular heavy workloads and who work very hard every day to assist the country,” he said.
Lack of scrutiny
A coalition of professional bodies, including CA ANZ, opposed section 30-10’s insertion in November. Grant said the government’s lack of consultation and notice before making the determination proved their “concerns were justified”.
“From the outset, CA ANZ and the other professional bodies have consistently opposed the minister being able to unilaterally alter code obligations, as it avoids more robust scrutiny from Parliament,” he said.
Grant pointed to a new reporting obligation to the ATO which “goes against the fundamental confidentiality obligation written in the code” and was never the subject of industry consultation, and a new “far-reaching” disclosure requirement forcing practitioners to disclose “any” matter that could influence clients’ decision to engage them.
“Any matter can include matters of a private nature like health, religion, sexual orientation, political persuasion or even sporting affiliations to name a few,” he said.
‘Continued disregard’ for small practices
CPA Australia's interim head of policy and advocacy, Ram Subramanian, said he was “disappointed” with the government’s failure to take account of professional bodies’ submissions and its “continued disregard” for smaller practitioners.
“The new rules are poorly defined and potentially far too expansive,” Subramanian said, adding that the body would work to make the requirements “as straightforward and palatable to our members as possible”.
The Institute of Certified Bookkeepers (ICB) said it was “very concerned that some elements of the obligations will in fact prohibit effective preparation, lodgement and advice services being provided”.
Executive director Matthew Addison called for “significant clarification” from authorities, particularly around the requirements for a quality management system and client disclosures.
“The onerous ongoing notification to clients is unworkable,” he said.
Echoing criticisms from other professional bodies, Addison said the legislative instrument included matters that were not subject to consultation and said it would be seeking changes to the determination and a deferral of the “unrealistic” start date.
“We will be seeking the government to provide further appropriate consultation and co-design of improvements to the code and the matters in the legislative instrument,” he said. “In ICB’s view, this would require changes to the currently registered legislative instrument.”
The Institute of Financial Professionals (IFPA) criticised the “unduly rushed” code changes for forcing obligations on smaller practitioners within mere weeks.
“Big four firms have got compliance partners and the resources to do that. But it's a bit different from a one- or two-person practice,” head of tax policy Frank Drenth said.
Canberra accountant Gail Freeman also told Accountants Daily last week said the government failed to recognise the impact it was having on smaller firms.
“No one knows [the determination] is there and we’re expected to act on it. How can we do it if we don’t know?” she said. “I don’t think the government grasps how difficult it is for firms to change systems with little notice.”
The IFPA also said there should have been more coordination between the government and the TPB, which released a “belated” and “bland” statement over a week after the determination on 11 July.
“There should have been a media release by the minister at the same time and it should have been coordinated with the TPB,” Drenth said.
The obligations imposed by the legislative instrument come on top of existing breach reporting rules that came into effect on 1 July, as well as the recently announced expansion of anti-money laundering obligations to accountants.
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