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New registration criteria to protect consumers could lead to unfair and harsh outcomes for tax practitioners, CA ANZ has warned.
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Proposed TPB reforms ‘weaken due process’
19 August 2024
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Proposed tax agent registration requirements to protect consumers may undermine procedural fairness and pile unnecessary red tape on practitioners, CA ANZ has told Treasury.
Treasury's proposal stems from a 2019 review of the TPB and would allow the board to reject or terminate registrations based on its assessment of an applicant’s governance arrangements, conflicts of interest and personal tax obligations.
But CA ANZ said an administrator should not be able to remove the registration of a tax practitioner without procedural fairness and natural justice.
“The risk of overregulation without appropriate natural justice is much higher than the perceived benefits of consumer protection,” CA ANZ representatives Simon Grant and Susan Franks wrote in a submission last week.
The submission also said the proposed reforms failed to account for the “substantial” regulatory changes that had happened since the 2019 review, such as an expanded code of conduct and new rules around breach reporting and disqualified entities.
“Greater consideration of the interaction between the various new and emerging initiatives is needed … the number of duplicate and overlapping provisions is causing concern,” CA ANZ said.
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Releasing the consultation paper titled Response to PwC – Tax Practitioners Board registration review last month, Assistant Treasurer Stephen Jones said the measures were needed to enhance the TPB’s regulatory framework and rebuild public confidence in the tax profession after the PwC scandal.
“The proposals reflect the government’s commitment to strengthen our regulatory arrangements,” Jones said.
CA ANZ said allowing the TPB to reject registration renewals or terminate registrations based on the new criteria would effectively bypass the current investigation process and lead to “harsh” outcomes as applicants would be immediately disqualified from providing tax services without adequate due process.
“Let us bear firmly in mind that removing registration removes the ability to work in the field of tax. This can be a harsh outcome.”
It added that the new registration requirements were “subjective” and lowered the “significant” threshold used in breach threshold to include minor breaches or omissions.
“Breach reporting provisions apply to ‘significant breaches’, as those are the breaches which could cause harm to consumers and the tax system. The registration requirements do not have such a threshold,” CA ANZ said.
“If these registration changes are implemented, then the self and peer breach reporting mechanism will be rendered redundant.”
Already implemented reforms, including increased TPB funding and new breach reporting requirements, provided sufficient oversight and offered “a lower compliance burden and are better targeted”.
“The consultation posits that greater registration requirements will increase consumer protection,” it said.
“It is not clear how lowering the threshold from significant breach to minor reaches/omissions and increasing red tape on practitioners, especially small practitioners will improve consumer outcomes.”
CA ANZ also opposed the proposal to remove the professional membership pathway as it risked increasing barriers to entry and worsening the current shortage of tax professionals.
“The [pathway] is heavily relied upon by both tax agents and BAS agents across the profession and should not be removed until the considerable issues with the other existing pathways are resolved.”
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