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Governance procedures introduced by the Assistant Treasurer without warning last week have flown under the radar but will overwhelm many firms, practitioners say.
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Shock tax code changes hit industry
10 July 2024
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The tax community has been blindsided by a set of rule changes mandating firms to implement new ethical and governance procedures within mere weeks at the risk of disqualification.
A ministerial determination by Assistant Treasurer Stephen Jones was released last week without warning, leaving practitioners overwhelmed by the “onerous” and broad provisions and scrambling to overhaul their systems before the 1 August deadline.
“This is the scariest and worst thing that I’ve ever seen happen in my 35 years in the accounting industry,” Timothy Munro, founder of Brisbane accounting firm Change Accountants, said.
“There was basically no warning that this was going to happen and there’s been no guidance released to help smaller accounting firms comply,” he said. “This could wipe out the industry.”
Despite opposition from professional bodies, the government inserted a provision in the Tax Agent Services Act in November allowing a minister to modify the code without parliamentary scrutiny.
Jones’ determination last week, the first use of this power, means practitioners will be required to keep client records for five years, implement and document quality management processes, and disclose any personal matters that could influence clients’ decision to engage them to provide services.
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The obligations are also set to apply on top of existing breach reporting rules that came into effect on 1 July, dubbed “dob-in provisions”, mandating practitioners track and report code breaches by themselves or others.
IPA general manager of technical policy Tony Greco said Jones’ determination was inconsistent with existing obligations, creating confusion and uncertainty for practitioners.
He said that under existing rules, practitioners were prohibited from sharing clients’ confidential information with the ATO; however, the determination would force tax practitioners to share information if clients refused.
“This is the opposite outcome,” Greco said. “It means that the minister’s code is inconsistent with the operation and effect of the legislated code under the current law.”
Tax lawyer Arthur Athanasiou, who was one of the first to post about the determination on his LinkedIn profile, said requiring practitioners to “disclose all of their past sins” in such a short time frame would “overwhelm” many smaller practices and threaten their viability.
“No one expected to only be given a month to basically get all of these procedures in place … it’s just bizarre,” Athanasiou said.
Jones’ office did not respond in time to a request for comment.
Canberra accountant Gail Freeman said she only found out about the changes from Athanasiou’s social media post.
“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.
Freeman, who owns the boutique firm Gail Freeman & Co, hoped her practice’s systems would be able to cope with the additional requirements.
“I don’t think the government grasps how difficult it is for firms to change systems with little notice,” she said.
ChangeGPS CEO David Boyar said the way the changes were introduced “doesn’t pass the pub test” and burdened smaller practitioners who wanted to do the right thing but were being “set up to fail”.
“The idea that a small firm needs to publicly declare all its past transgressions, when they’re just trying to deliver basic taxation service and a little bit of advice – it feels onerous,” he said.
“The silence is deafening ... it’s very hard to do the right thing when you don’t know what the right thing is.”
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