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The ministerial determination creates further uncertainty for tax agents and will be challenging for the Tax Practitioners Board to administer, the professional body says.
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Minister Jones’ determination ‘inconsistent’ with current law, warns IPA
12 July 2024
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A legislative instrument recently issued by Assistant Treasurer Stephen Jones has failed to address major concerns previously raised by professional bodies during government consultation, according to the Institute of Public Accountants.
Tax Agent Services (Code of Professional Conduct) Determination 2024 introduces eight additional obligations that supplement existing obligations under the Code. Practitioners will be required to comply with the new obligations from 1 August 2024.
An exposure draft for the proposed instrument was published in December 2023 with professional accounting and tax practitioner bodies providing feedback to the government in the joint submission
IPA general manager, technical policy, Tony Greco, said that many of the major concerns raised by the joint bodies during that process remain within the legislative instrument.
One of the key concerns with the determination is that the prescriptive nature of the new obligations may weaken the principles-based approach of the Code of Professional Conduct.
"The Code of Professional Conduct was written in a principles-based approach as a model of principles and ethics for tax practitioners to embody and implement in their practices to regulate their conduct and how they operate and interact with clients and the tax system more broadly," Greco said.
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"Adding prescriptive obligations using vague or unfamiliar concepts detracts from breadth, generality and certainty of the existing code."
Greco also noted there is a degree of duplication and overlap between the existing code obligations and the proposed items.
"In the Joint Bodies submission all the proposed Code items can be categorised as falling within one of the themes of the existing Code items, being ‘Honesty and integrity’, ‘Independence’, ‘Confidentiality’, ‘Competency’, and ‘Other responsibilities’," he said.
The draft instrument creates a duplicated set of obligations for tax practitioners to not make false or misleading statements to the TPB or ATO.
"The taxation legislation already contains a robust and extensive framework for tax practitioners who make false or misleading statements," Greco said.
More concerningly, Greco said the final form of the false and misleading statements code obligation goes further.
"Currently, a tax practitioner must not disclose confidential information of the client to the ATO without the client’s permission unless they are legally compelled. [For example], by a notice from the Commissioner. Under section 15 of the new Determination, the tax practitioner will have an obligation to disclose confidential information of the client to the ATO if the client does not," he said.
"This is the opposite outcome. It means that the Minister’s Code is inconsistent with the operation and effect of the legislated Code under the current law.
"The TASA states that the Minister’s supplementary Code obligations are of no effect to the extent they are inconsistent with the Code."
The professional body is also concerned that the obligation for practitioners to "report any matter that could significantly influence a decision of a client to engage [them]" has been broadened substantially from the original draft exposure draft.
The determination is the first use of new ministerial powers provided under legislation that was enacted last year in Treasury Laws Amendment (2023 Measures No. 1) Bill 2023.
The legislation enables a Minister to supplement the existing code with additional obligations via a legislative instrument.
Professional bodies previously raised concerns about the powers as they circumvent the normal scrutiny when new bills are introduced into Parliament.
Greco said the determination is the latest set of obligations to be imposed on tax practitioners following a wide raft of other recent changes to the ethical and professional conduct for tax practitioners.
"We have already seen new Code of Professional Conduct additions namely Code 15 and 16 dealing with the employment or use of disqualified entities and then there is the much talked about breach reporting regime," Greco said.
"Despite breach reporting commencing on 1 July 2024, the TPB have yet to finalise their guidance on how to implement these reporting obligations."
Greco said the professional associations have raised concerns and opposed the impact of several of these measures.
The Chair of the Tax Practitioners Board, Peter de Cure said the eight additional obligations align with existing principles of the code, including honesty and integrity, independence, confidentiality and competence.
"Tax practitioners should familiarise themselves with these new requirements and review their practices to ensure they are compliant," said de Cure.
"Many tax practitioners will already meet these new standards required of them. However, for those tax practitioners that do not, they will need to promptly ensure that they have appropriate controls and arrangements in their practices to comply with the new obligations," he said.
The TPB will be consulting on draft guidance relating to the new code obligations progressively, starting in the coming weeks.
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