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Industry bodies and experts have backed the proposed changes but insist more work is needed to help practitioners comply.
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Reworked tax agent rules get cautious nod of approval
30 September 2024
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Industry bodies and experts have welcomed the government’s rewrite of proposed changes to tax agents’ obligations as a “marked improvement” that addresses their key concerns but believe more tweaks are still needed to ensure the rules can work in practice.
Assistant Treasurer Stephen Jones’ release of draft amendments to the Tax Agent Services (Code of Professional Conduct) determination last week will modify the most contentious parts of the original version registered in July.
The new amendments include a narrowing of the section 15 “dob-in” obligation and a complete rewrite of the section 45 client disclosure obligation.
‘Significant’ changes welcomed
Industry bodies including the Tax Institute, CA ANZ and the Institute of Certified Bookkeepers (ICB) told Accountants Daily the changes were “significant” and transformed previously onerous obligations into “workable” ones.
“The new code obligations are fairer, more readily implementable, and reflect the policy intent, compared to the version registered on 2 July,” according to Tax Institute senior advocate Robyn Jacobson.
Jacobson said section 45 was a “complete rewrite” and made it certain that tax agents would not have to disclose personal matters such as their mental health status to clients.
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An expanded section 15 also featured a “much higher culpability threshold” before forcing agents to report clients to the TPB or ATO.
It makes agents report clients when statements showed a reckless or intentional disregard for tax laws and they have reasonable grounds to believe their “client’s actions have caused, are causing, or may still cause, substantial harm to the interests of others”.
ICB executive director Matthew Addison said it meant “only the most egregious of transgressions would require an agent to notify the ATO”.
“This is a significant change from the previous position,” he said.
“The impact of the original registered determination was devastating for the relationship between all taxpayers and their trusted advisors of tax and BAS agents, as well as to the operation of the business of being an agent.”
CA ANZ’s Simon Grant, group executive advocacy, said the body’s “deep concerns” with section 45 were addressed but that he still wanted to see improvements to section 15, with submissions due on Wednesday.
“The job isn’t done yet,” Grant said.
“Further work is required in relation to section 15, the ‘dob in’ provision, to ensure that it is reflective of the requirements already contained in the Accounting Professional & Ethical Standards Board Code of Ethics.”
“We will continue to work constructively with the Assistant Treasurer, his office and Treasury to ensure sound legislation is delivered as promised for the tax profession.”
Concerns linger
Meanwhile, accountant John Jeffreys, who runs a business providing tax training services, was concerned about the practicalities of complying with the new prescriptive requirements in section 15.
“It's an improvement. There's no doubt about that. But this is still going to present tax agents with some very significant interpretational and practical challenges. Some of them will have to seek legal advice,” Jeffreys said.
“Let’s not pretend that this is going to be easy for tax agents, because it’s just not.”
He said further clarity was needed on newly introduced terms such as “materially false or misleading”, “reasonable period of time”, and the definition of what constituted a “client” or whether “taxation laws” included non-binding ATO guidance.
“It will be a burden, and tax agents will have to spend some time working through the changes and getting their head around it,” Jeffreys said.
Tax lawyer Arthur Athanasiou said that while section 15 appeared complex, the higher notification threshold meant agents would not need to worry about dobbing in clients in the normal course of business.
“It has to be really egregious conduct,” he said.
"If there is something minor, they can just work through the new wording, and they can form the view that there’s nothing to do, or otherwise, they can tell their client, and that just is the extent of their requirements for them not to be in breach of the code.”
He was also satisfied TPB guidance could address the remaining issues with the determination.
“The determination is now here to stay. Everybody just needs to come to grips with it,” he said, advising practitioners to review the rules and procedures to show compliance when they take effect.
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