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The lower risk profile of small practices means they should not face the same scrutiny as larger ones, the NTAA says.
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Government urged to exempt small firms from TPB reforms
21 August 2024
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Small firms should be exempted from the government’s proposed TPB registration requirements as their lower risk profiles do not warrant the additional oversight, the National Tax & Accountants’ Association (NTAA) says.
Treasury’s proposal would allow the board to reject or terminate registrations of companies and partnerships based on more stringent criteria including their compliance with governance requirements.
But the NTAA was concerned the proposed change was “too broad in its application”.
“It is evident that the Treasury has reduced the scope of this proposed change to exclude individual tax agents. However, this exclusion does not go far enough,” it said in a recent submission to Treasury.
“The NTAA suggests reducing the scope of the proposed change to exclude small firms.”
“The lower risk level generally associated with smaller firms that operate as companies and partnerships does not warrant additional TPB oversight at the time of registration.”
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It said the additional oversight of small firms was an unnecessary burden and provided no benefit to consumers.
But these concerns did not apply to large multidisciplinary firms that had a higher risk of encountering complex practice issues and ethical dilemmas.
“It is clear that the proposed change is intended to target large multidisciplinary firms. The NTAA is fully supportive of a reform that provides additional oversight of such firms,” it said.
“The proposed change would provide a safeguard of sorts to consumers, as it provides a level of comfort that registered companies and partnerships have appropriate controls in place.”
The NTAA said obligations imposed under the tax agent code of conduct would be adequate to deal with smaller firms, with a recent ministerial determination mandating a quality management system at the time of registration.
“The consultation paper proposes a change that would overlay an additional requirement that must be satisfied for certain types of firms to register as a tax agent,” it said.
It also echoed concerns of other professional bodies that having the stringent new criteria as a registration requirement raised procedural fairness concerns.
“Having the quality management system as a registration requirement rather than an ethical standard means that the TPB can decline a registration application by a prospective agent without having to do any real investigation, which would be required under an ethical standards breach,” it said.
“This does not provide the applicant with a fair and just outcome.”
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