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While the delay to the controversial code changes may have given some relief to the industry, deeper issues surrounding the government’s approach to consultation and reform continue to leave the accounting profession at risk.
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Profession’s pyrrhic victory
09 August 2024
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The accounting profession breathed a collective sigh of relief and felt the thrill of victory when the Assistant Treasurer, Stephen Jones MP, wrote to the accounting bodies at the end of last month and announced that the implementation of the Legislative Instrument, Tax Agent Services (Code of Professional Conduct) Determination 2024 (LI), was to be delayed.
This LI was to introduce from 1 August 2024 controversial additions to the Code of Professional Conduct of the Tax Agent Services Act 2009 (TASA). Some of the changes are difficult to understand and would have presented accounting firms (particularly small firms) with significant challenges.
But it is a pyrrhic victory. It is a Clayton’s victory – the victory you’re having when you’re not having a victory.
There is a problem that needs stating. The consultation process and influence that the accounting profession has with Government and it administrative arms is not working. Something has to change, or the accounting profession will continue to be ignored by those that enact legislation and have significant control over the ways tax practitioners go about their business.
The pyrrhic victory was a master stroke of political manoeuvring by the Minister and the Treasury. In the dim ‘glow’ of the PwC affair, the Government, along with the Australian Greens, have imposed an unnecessary burden on tax practitioners.
Let’s take the changes to the lives of tax practitioners through the introduction of Code 17 of TASA. This provision enables the Minister, almost at the stroke of a pen, to impose requirements on tax practitioners that determine obligations for them that relate to their professional and ethical conduct.
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On 10 December 2023, Treasury commenced the consultation process on the LI by releasing an exposure draft of the changes. Comments in relation to the exposure draft were required by 24 January 2024. For many people, they are more interested with Christmas, New Year celebrations and having a nice time at the beach during this period that pouring over a Treasury exposure draft.
Nevertheless, commendably, the professional bodies made comment on the draft LI within the required (short) time frame on 23 January 2024. Good points were made in these submissions, but, predictably, most of the issues raised were ignored.
A few months passed and the Minister registered the final LI on 2 July 2024 that was to have effect from 1 August 2024, if not disallowed by either house of parliament. Alarmingly, ‘…the final LI contains previously unseen obligations together with significant additional implications of the provisions that were amended following the public consultation and which have not been subject to public consultation’. [Quoted from the letter from the joint professional bodies to the Minister dated 15 July 2024].
Then ensued a very public outpouring of grief and anger from the professions. Arthur Athanasiou of Thomson Geer and ChangeGPS were key players in highlighting the impending adverse changes. The joint professional bodies wrote to the Minister on 15 July 2024 and called for the LI to be withdrawn.
The Minister wrote back to the Joint Bodies on 31 July 2024 with the concession that ‘I [the Minister] will insert a transitional rule into the [LI] that will provide firms with 100 employees or less until 1 July 2025 and larger firms with 101 employees or more until 1 January 2025 to bring themselves into compliance with these new obligations, so long as they continue to take genuine steps towards compliance during this period’.
In the Minister’s letter, he referred to the proposed changes as ‘modest obligations’. Accordingly, I doubt that we will see any further substantive changes to the LI before it becomes operational.
The accounting profession should understand what has happened. New law, aspects of which are difficult or bad, has been foisted on tax practitioners through a smart political manoeuvre. The new law will proceed without effective consultation and the Minister and Treasury will have achieved their goals. Checkmate.
Recently, Gavan Ord, Policy Adviser with CPA Australia, posted on Linked In concerning the very short time periods that were being given by Treasury in relation to various current issues on which consultative views are sought. All time periods were well less than 30 days. Surely Treasury does not think quality comments can be constructed in such a short period…or is this, in fact, what they want? This is further evidence of the low regard in which the accounting profession is held by government and its executive arm.
The status of the accounting profession has been dealt a serious blow from events in recent years. This has enabled the political class to frame tax practitioners in a derogatory manner and present that to the population. The truth is that the vast majority of tax practitioners are scrupulously honest and are very concerned to provide services to their clients that are within the bounds of the law accompanied by a high level of integrity.
How have we got to the point where the key voices of the accounting profession are, in practice, ignored and legislation that has a profound impact on us gets through the consultation process with ease and little scrutiny?
The consultation process with the government and its administration is not working. It must change. The accounting profession must adopt a different model.
John Jeffreys is a Chartered Accountant, Chartered Tax Adviser and Director of John Jeffreys Tax Pty Ltd
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