Exposure draft

TPB Information Sheet

TPB(I) D25/2015


Applying for registration during the transitional period:

Sufficient experience to be able to provide tax (financial) advice services to a competent standard


This exposure draft is also available as a PDF – TPB(I) D25/2015 Applying for registration during the transitional period: Sufficient experience to be able to provide tax (financial) advice services to a competent standard (53 KB)

Tax Practitioners Board exposure draft

The Tax Practitioners Board (TPB) has released this draft Information Sheet as an exposure draft and invites comments and submissions in relation to the information contained in it within 45 days. The closing date for submissions is 26 February 2015. The TPB will then consider any submissions before settling its position, undertaking any further consultation required and finalising the Information Sheet.

Written submissions should be made via email at tpbsubmissions@tpb.gov.au or by mail to:

Tax Practitioners Board
GPO Box 1620
SYDNEY NSW 2001

 

DISCLAIMER

This document is in draft form, and when finalised, will be intended as information only. While it seeks to provide practical assistance and explanation, it does not exhaust, prescribe or limit the scope of the TPB’s powers in the Tax Agent Services Act 2009 (TASA). The principles and examples in this paper do not constitute legal advice. They are also only at a preliminary stage. The TPB’s conclusions and views may change as a result of comments received or as other circumstances change.

Document history

This draft Information Sheet was issued on 12 January 2015 and is based on the TASA as at 1 July 2014.


Sufficient experience to be able to provide tax (financial) advice services to a competent standard

Introduction

  1. Between 1 January 2016 and 30 June 2017 (transitional period), entities[1] seeking registration as a tax (financial) adviser under the ‘transitional option’ will need to satisfy the Tax Practitioners Board (TPB) that, among other things, they have sufficient experience to be able to provide tax (financial) advice services to a competent standard.[2]

  2. This draft TPB Information Sheet (TPB(I)) has been prepared by the TPB to assist entities in understanding the TPB’s approach to this requirement. In particular, this TPB(I) explains the TPB’s view on what is meant by ‘sufficient experience’ and ‘competent standard’ in the context of registering in the transitional period.

  3. Whether an entity satisfies the requirement that they have sufficient experience to be able to provide tax (financial) advice services to a competent standard is a question of fact. This means that each application for registration will need to be considered on a case-by-case basis having regard to the entity’s facts and circumstances.

   

Requirement to have sufficient experience to be able to provide tax (financial) advice services to a competent standard


Legislative background


  1. Entities will be eligible for registration as a tax (financial) adviser under item 50 in Schedule 1, Part 3 of the Tax Laws Amendment (2013 Measures No. 3) Act 2013 (Amendment Act) if:

    • they are an Australian financial services (AFS) licensee or a representative of an AFS licensee[3];

    • they apply for registration as a tax (financial) adviser under section 20-20 of the Tax Agent Services Act 2009 (TASA) during the transitional period;

    • they would be eligible for registration but for:

      -   the qualifications and experience requirement for registration[4]
      -   the requirement for partnership and company applicants to have a sufficient number of individuals, being registered tax agents or registered tax (financial) advisers, to provide tax (financial) advice services to a competent standard and to carry out supervisory arrangements;[5]

    • the TPB is satisfied that the entity has 'sufficient experience' to be able to provide tax (financial) advice services to a 'competent standard'.


Meaning of ‘sufficient experience’


  1. The phrase 'sufficient experience' is not defined in the TASA. As a result it takes on its ordinary meaning. The Macquarie Dictionary provides the following definitions:

    Sufficient

    1. that suffices; enough or adequate.

    Suffice

    1. to be enough or adequate, as for needs, purposes, etc
    2. to be enough or adequate for; satisfy.

  2. The TPB is of the view that the equivalent of 18 months or longer of full-time experience would satisfy the ‘sufficient experience’ requirement and anything less would need to be considered by the TPB on a case-by-case basis. Further, this experience, subject to paragraph 7, must be related to the provision of tax (financial) advice services or tax advice given in the context of financial advice and does not necessarily need to be a continuous period of experience.

  3. For the purpose of sufficient experience, the TPB will count experience accrued by an AFS licensee or their authorised representative prior to 1 July 2014 that would have required the AFS licensee and/or authorised representative to register with the TPB as a tax agent but for the carve out for these entities in sub-regulation 13(2) of the Tax Agent Services Regulations 2009. The TPB will also consider experience gained prior to the commencement of the tax agent services regime in March 2010 where the experience has consisted of the provision of tax advice given in the context of financial advice.

  4. The view in the paragraph above is based on:

    • the dictionary definition of 'sufficient'
    • the eligibility qualification requirements under the standard registration option
    • the TPB’s previous approach to tax agents who applied under the transitional option[6]
    • the Australian Securities and Investments Commission requirements as contained in Regulatory Guide 105: Licensing: organisational competence.
  5. To become registered under the transitional option, applicants will need to provide appropriate verification with their application to demonstrate that they have sufficient experience to be able to provide tax (financial) advice services to a competent standard.

  6. The verification can be a brief letter outlining the experience and including a short description of the types of services the applicant has provided. The letter can be provided by a range of sources, including:

    • an AFS licensee or authorised representative;
    • a registered tax (financial) adviser;
    • a registered tax agent;
    • an employer;
    • a principal; or
    • two separate clients.
  7. If the applicant is unable to obtain appropriate verification, a submission will need to be included with the application for registration, which the TPB will consider on its merits.


Meaning of 'competent standard'


  1. The word 'competent’ is not defined in the TASA. As a result it takes on its ordinary meaning. The Macquarie Dictionary provides the following definition:

    Competent

    1. Properly qualified; capable
    2. Fitting, suitable or sufficient for the purpose; adequate.

  2. Therefore, competence, with respect to tax (financial) advisers, can be defined as a state of being capable, fitting, suitable or sufficient to provide a tax (financial) advice service.

  3. A tax (financial) adviser will be competent if the adviser possesses such skill, ability and knowledge required to perform a tax (financial) advice service that clients may entrust their financial affairs, which includes a component of tax advice, to the adviser’s care.

  4. Further, the Code of Professional Conduct contained in section 30-10 of the TASA provides some guidance in relation to the meaning of competence. In particular, subsections 30-10(7) to (10) of the TASA, which all fall under the key principle of ‘competence’, require that tax (financial) advisers must:

    • ensure the tax (financial) advice services they provide, or are provided on their behalf, are provided competently
    • maintain knowledge and skills relevant to the tax (financial) advice services they provide
    • take reasonable care to ascertain their clients state of affairs
    • take reasonable care to ensure that taxation laws are applied correctly.

[1] An ‘entity’ for the purposes of this draft TPB(I) means an individual (including an individual in the capacity as trustee of a trust), partnership or company (including a company in the capacity as trustee of a trust).

[2]Registration as a tax (financial) adviser under the ‘transitional application option’ means registration under Item 50 in Schedule 1, Part 3 of the Tax Laws Amendment (2013 Measures No. 3) Act 2013.

[3]This does not include entities taken to be registered as tax (financial) advisers under the ‘notification option’ in Item 49 in Schedule 1, Part 3 of the Tax Laws Amendment (2013 Measures No. 3) Act 2013.

[4]Paragraph 20-5(1)(b) of the TASA.

[5]Paragraph 20-5(1)(b) and subparagraphs 20-5(2)(c)(iii) and 20-5(3)(d)(iii) of the TASA.

[6]See item 13 of the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009.