The accounting profession grappled with several new tranches of regulations this year as the government continued its crackdown on misconduct matters in relation to its inquiry into the big four firms.
Legislative changes to TASA
The year kicked off with the commencement of changes to the Tax Agent Services Act, which included new code items to prevent tax practitioners from employing or using a disqualified entity without TPB approval or entering into certain arrangements. The new code items have meant that tax practitioners have an ongoing responsibility to ensure that those they associate with in providing tax services have not become disqualified entities. The registration period for registered tax and BAS agents was also changed from three years to 1 year.
While some of the changes stemmed from recommendations from the James Review into the Tax Practitioners Board, there were other more contentious reforms passed in the same legislation, the Treasury Laws Amendment (2023 Measures No.1) Act 2023. These include the breach reporting obligations and amendments giving the minister the power to expand the Code of Professional Conduct for practitioners.
The breach reporting obligations have applied from 1 July this year and require tax practitioners to dob in another agent to the Tax Practitioners Board if they have reasonable grounds to believe that another registered agent has breached the code and that breach is significant.
Industry bodies and accountants raised concerns early on about the potential ramifications of the breach reporting obligations. Speaking earlier this year, senior advocate at the Tax Institute, Robyn Jacobson warned that the rules would create a very challenging environment for agents to operate in.
"We are concerned that in their current form, [these provisions] could have a devastating impact on an agent who was falsely accused of misconduct,” Jacobson said.
Tax specialist and educator John Jeffreys said another challenging aspect of the requirements is that practitioners must form a legal opinion about what constitutes an indictable offence.
“It calls for tax practitioners to form a legal opinion about which they are not qualified. It requires knowledge of all of the various legal jurisdictions in Australia and what those jurisdictions consider to be an indictable offence," Jeffreys said.
Minister Jones' controversial determination
With the industry already grappling with a raft of new requirements, Assistant Treasurer and Minister for Financial Services Stephen Jones then issued a shock legislative instrument containing eight additional obligations.
The Tax Agent Services (Code of Professional Conduct) Determination 2024, was originally set to apply on 1 August, which would have left practitioners with roughly a month to prepare for the raft of additional obligations. Following the outcry from the profession and strong advocacy from the professional bodies, Minister Jones postponed the start date for the new rules, with the new obligations now set to take effect from 1 July 2025 for firms with less than 100 employees. Larger firms with 101 employees or more will need to comply with the new obligations from 1 January next week.
After delaying the start date, the government also agreed to engage in consultation with the industry in response to the profession's major concerns with the notification provisions and disclosure rules. Section 15 and section 45 were two of the most contentious parts of the determination. Under the original drafting of the determination, section 15 would have required tax agents to notify the TPB or ATO when they became aware of a statement that it was false, incorrect or misleading and the maker of the statement did not correct it. While the consultation led to significant improvements for section 15, with the threshold for notification now much higher, difficulties remain with the section according to many in the industry.
"The new subsection 15(2) is a much longer provision that requires tax practitioners to form views about technical terms in the tax law that both the ATO, the AAT/ART and the courts struggle with. Further, the provision continues to use terms that tax practitioners will be in a quandary about," Jeffreys said.
Under the original section 45, tax agents were required to notify all current and prospective clients of "any matter" that could significantly influence a client’s decision to engage them or continue to engage them. Section 45 was rewritten to clarify that matters of a personal nature would not fall within the scope of the provision, one of the main issues raised with the obligation.
The government also began consultation on further consultation in the middle of the year on the registration requirements for tax practitioners regarding education, qualification and experience requirements for new entrants and existing practitioners.
Regulatory changes looming for 2025 and beyond
While many of the bigger regulatory changes still in the pipeline like payday super and the expansion of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime won't commence until 2026, next year will still be an important year for preparing for these changes.
Accurium head of tax education, Lee-Ann Hayes, said payday super was already prompting questions and concerns among the tax practitioners she deals with.
“Even though it is still quite a long way down the track, it is causing some concern for accountants and what it means for their clients,” Hayes said.
"The biggest concern would be cash flow implications. If you’re not a high cash business and you transition into payday super, that will probably be the part with the biggest impact.”
The AML/CTF reforms will commence on 31 March 2026 after the legislation was passed by Parliament last month. The legislation captures new designated services, such as those provided by accountants, under the AML/CTF regime.
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