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Tax and BAS agents have expressed dissatisfaction with the final outcome of the determination and are disappointed the disallowance motion will no longer proceed.
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Accountants ‘disappointed’ by withdrawal of disallowance motion
10 October 2024
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Senators David Pocock and Dean Smith gave notice of their intention to withdraw their motion to disallow the Tax Agent Services (Code of Professional Conduct) Determination late on Tuesday after the joint professional bodies advised that the disallowance motion did not need to proceed.
This followed last-minute adjustments made to the determination by the Assistant Treasurer’s Office on Tuesday. The amending legislative instrument has now been registered with the Federal Register of Legislation.
The registration of the determination follows a short five-day consultation period on the proposed amendments which was undertaken in response to significant industry backlash and outrage towards the changes.
Chartered accountant Joe Kaleb told Accountants Daily that while it’s not surprising, it is disappointing that the second disallowance motion won’t be going ahead.
Kaleb said while the professional bodies have gone “above and beyond” with their advocacy since the determination was registered, “the overwhelming majority of accountants and tax practitioners won’t be satisfied with the final legislation”.
“The current system of advocacy is clearly not working for us as this determination and the recent implementation of client-agent-linking for example has shown,” Kaleb said.
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“Something has to change otherwise this over-regulation of our profession will never end and more accountants will continue to head for the exits.”
Tax training specialist John Jeffreys agreed that most accountants will be disappointed by the withdrawal of the disallowance motion.
“Tax agents and BAS agents must now conduct their businesses in the knowledge that breaching these obligations could result in very significant impacts on their livelihood, including having their livelihood removed,” Jeffreys said.
Jeffreys said the latest obligations are in addition to the other significant regulatory changes already imposed on tax and BAS agents this year including the disqualified entity provisions and the significant breach reporting obligations.
“The vast majority of accountants in public practice and other tax practitioners are asking the question, 'How did we get here?' and 'How have all of these unnecessary rules been foisted on us?”
Jeffreys called on the professional associations, which represent accountants, tax agents and BAS agents, to engage in a full and open-minded review of the methods and effectiveness of advocacy for the accounting profession.
“I think this is something useful the professional associations could do for their members,” Jeffreys said.
Change Accountants chief executive and founder Timothy Munro also expressed disappointment that the professional bodies did not listen to the overwhelming requests from the small and medium size firm members to push for the TASA Code Determination 2024 to be removed entirely.
“This is more red tape that bogs down productivity and will end up costing their clients more – for absolutely no increase in value to them,” said Munro.
“While accountants were thrilled to see their professional bodies take out ads a few weeks ago and state their case like never before – now they’ve backed down and are sending out self-congratulating emails which I’ve heard have made their members angry they didn’t fight to the end.”
Munro said that no-one is discussing the extra cost to clients from the eight new obligations which the government and Treasury likely assumes accountants will simply absorb.
“There is also no discussion of the reality that the bad players in our industry will simply ignore these new obligations and do what they want,” said Munro.
“As usual, only those who have always done the right thing are affected by these new obligations.”
Munro said small and medium sized firms simply don’t have the technical capacity to properly understand and implement many of these new laws and obligations when they are not the ones doing the wrong thing.
“Those of us not in the big four are collateral damage. The government and certain Senators don’t care. Treasury care. The Tax Practitioners Board does what they are told,” said Munro.
Shadow assistant treasurer Luke Howarth said while the rewrite of the most contentious aspects of the regulation may make compliance slightly easier for large firms, small firms and individual practitioners will still be left with “an unnecessary and burdensome compliance nightmare”.
“These smaller tax practitioners remain distraught, disappointed and fed up with how the government has treated them,” he said.
“They do not want this new red tape in any form and do not accept the government’s last-ditch attempt to fix this flawed regulation.”
Howarth also criticised the government’s approach to consultation and stakeholder engagement on the determination as “bizarre and disrespectful”.
“The regulation involved minimal or no consultation and was made without notice, with industry stakeholders only becoming aware of it when the Tax Practitioners Board issued a press release almost two weeks later,” Howarth said.
He also noted that the regulation was originally slated to commence a month after it was made when no regulator guidance was available.
“The government left it until the day of a disallowance motion, six weeks after the regulation was made and when they knew disallowance was imminent, to start consulting with industry and acknowledging their concerns as legitimate,” he said.
“After a mea culpa and backflip on previous comments that changes were not required, the government rushed to rewrite the regulation and release it for a public consultation period of five business days. This means public consultation commenced eleven weeks after these obligations were made law.”
Howarth said tax practitioners are distraught, disappointed and fed up with the government’s treatment of them and in some cases are even considering leaving the profession.
Amendments ‘a pragmatic solution’, professional bodies say
CPA Australia acknowledged that while the amendments to the determination are not perfect, they represent “a pragmatic outcome” and should have a limited impact on tax practitioner members.
“Section 15 has been modified to further address our concerns, while section 45 has been completely revised, providing tax practitioners a clear list of issues that need to be disclosed when applicable,” said CPA Australia regulations and standards lead, Belinda Zohrab-McConnell.
“Large parts of the determination’s obligations should be familiar to our members as they are drawn from the APESB Standards, particularly APES 110. Members are already required to be compliant with the APESB Standards and should be a long way down the track in compliance with these new obligations.”
Zohrab-McConnell also said the prolonged and arduous process to get the determination to its current state highlights the risk of enabling the Code of Professional Conduct to be amended with a legislative instrument.
CA ANZ group executive of advocacy, Simon Grant, said that after significant negotiation, section 45 is now completely revised.
“It lists specific matters for disclosure and is more closely aligned to the policy intent of the provisions and, importantly, investigations and mental health will not have to be disclosed,” said Grant.
“Section 15(2), known as the ‘dob in’ provision, has also been significantly revised. We believe the amended version – which raises the threshold to serious matters and is aligned to members’ existing obligations under the NOCLAR requirements in APES 110 (the Code of Ethics) issued by the Accounting Professional and Ethical Standards Board – is a pragmatic outcome.
“Good policy sometimes involves robust public debate, and we thank the Assistant Treasurer and Treasury for listening to us and taking action,” Grant said.
CA ANZ said it also acknowledges the support of Senator Dean Smith, Luke Howarth MP and Independent Senator David Pocock.
“Their disallowance motions hastened discussions with the government,” Grant said.
“We would also like to thank the Senate crossbenchers who listened to our concerns and stood with CA ANZ, the professional bodies and tax and BAS agents to secure the commitment to these important changes.”
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