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Entities will need to ensure any tax agents they hire have not been precluded from providing advice, according to a bill currently before Parliament.
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Disqualified agents to be ‘weeded out’ if law passes
20 February 2023
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Disqualified agents will be further removed from providing services if a law goes through enacting changes recommended by the TPB review.
The bill is designed to enhance public confidence in the integrity of the tax profession by ensuring services are only provided by those who meet appropriate standards of professional and ethical conduct.
CPA Australia senior manager of tax policy Elinor Kasapidis said the proposed changes were predominantly a reflection of recommendations in the TPB review.
“Accounting professionals and tax agents are trusted advisers and members of the community,” said Ms Kasapidis. “We want to see the few who do the wrong thing weeded out.”
“The community relies on tax agents, we support changes that ensure this strong trust is maintained, including these efforts to bolster the TPB.”
One of the proposed changes in the bill was that organisations “must not employ, or use the services of, an entity to provide tax agent services on your behalf if: you know, or ought to reasonably know, that the entity is a disqualified entity; and the board has not given you approval to employ or use the services of the disqualified entity to provide tax agent services on your behalf.”
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Australian tax leader at CA ANZ Michael Croker said the ruling would see registered agents look to distance themselves from any banned colleagues.
“Registered agents will need to ring fence themselves from agents debarred by the TPB.”
“Sanctions for breach of the code include suspension or termination of registration for an individual or entity agent.”
“Tax practice managers need to update their risk management and employment procedures, unless the TPB gives clearance for employment or contractual relationship, severing the connection becomes important.”
The bill said the risk management would be a two-way process with disqualified entities obligated to notify registered tax or BAS agents when seeking to provide tax agent services on their behalf.
“Disqualified entities also need to notify agents of their disqualified status, with penalties applicable if they fail to do so,” said Mr Croker.
Failure to comply would involve a fine of 250 penalty units for an individual or 1,250 penalty units for a corporate body.
Registered tax or BAS agents could still engage a disqualified entity to provide tax agent services on their behalf but would need to apply for TPB approval first.
According to the bill, a “disqualified entity” would be an individual or corporation that was neither a registered tax agent or BAS agent that within the last five years had been convicted of a serious taxation offence, a serious offence, an offence involving fraud or dishonesty, or been penalised for being a promoter of a tax exploitation scheme.
The bill said a 12-month transitional period would apply for disqualified entities that currently had existing arrangements with tax practitioners.
“The new code of conduct obligation is also deferred for tax agents by 12 months for their existing disqualified entities to allow sufficient time for agents and the TPB to gather the relevant information and implement the required approvals,” said Mr Croker.
The bill also listed changes to be made to the Tax Agent Services Act 2009, lowering the possible registration period from three years to one.
The legislation change could see the TPB move to annual registrations but the wording did oblige it to do so.
The new wording with the change would instead be, “if you are eligible and apply to the Tax Practitioners Board for registration as a registered tax agent or BAS agent, you will be registered for a period of at least 1 year.”
Several associations such as CA ANZ and CPA Australia were pushing back against the move but it was still a possibility, continued Mr Croker.
“Despite representations made in the joint bodies’ submission, the TPB may require annual registration from mid-next year, but has the ability to grant a longer period.”
“To accommodate this shorter renewal period, the TPB will need to process and determine the outcome of an application within four months.”
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