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Tax professionals are being hit with significant and cascading regulatory changes that are leaving them overwhelmed, the SMSF Association has warned the government.
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Constant regulatory change threatens ‘future pipeline of tax profession’: SMSFA
20 August 2024
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The SMSF Association has strongly cautioned the government against “change for change sake” following a roll-out of multiple sets of regulatory changes for tax practitioners in a short period.
As part of its response to the government’s consultation on the eligibility requirements for the TPB, the SMSF Association said it was “deeply concerned” about the impact many of these reform proposals will have on the future pipeline of tax professionals.
The SMSF Association said this was particularly the case given the current pace of regulatory change affecting tax practitioners.
“This includes not only the TPB program of reforms but also other measures such as tranche 2 of the anti-money laundering and counter-terrorism financing regime,” it said.
In its submission, the association said many of the proposals set out in its consultation paper could have a significant regulatory and cost impact on both current and prospective tax practitioners.
“They do not clearly demonstrate the public policy problem that necessitates reform,” said the SMSF Association.
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“They also fail to clearly articulate their objectives and lack consideration for other interrelated issues and measures. This has made it difficult to respond meaningfully to all proposed questions in the consultation paper.”
The association also said it was unsure as to why regulation appears to be the default option, without considering what other non-regulatory options may also be effective, such as new or updated guidance from the regulator.
It also requested that Treasury work with the TPB Governance Standards Forum to see the focus and direction of future potential areas of reform.
The submission said that the implementation of all these recent reforms must be orderly and staged.
“The current environment of multiple, cascading, and significant regulatory changes places the regulator in an untenable position, sees measures operative well in advance of essential guidance materials, and leaves practitioners feeling overwhelmed,” it said.
“We would therefore strongly caution against change for change sake.”
The SMSF Association said it is also concerned about the trend of making the Code of Professional Conduct increasingly prescriptive, such as introducing the quality management system requirement, the disqualified entity provisions, and keeping proper client records as ethical obligations under the code.
“These requirements are not ethical principles or obligations, but rather practice management requirements that can help support compliance with ethical obligations,” it said.
“Consequently, we believe they should form part of the ongoing registration requirements such as maintaining professional indemnity insurance or meeting the continuing professional education requirements, rather than being specifically prescribed in the Code.”
Introducing detailed prescriptive registration requirements in the code also risks diminishing the focus on the fundamental principles of the code, which should be the driver of ethical and professional behaviour, the association said.
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