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Application of item 202 in Schedule 2 of the Tax Agent Services Regulations 2009 Exposure Draft TPB(I) D11/2011

Exposure draft
TPB(I) D11/2011 Application of item 202 in Schedule 2 of the Tax Agent Services Regulations 2009

This draft information sheet is also available as a PDF, download link provided at the end of this page.

Tax Practitioners Board Exposure draft

The Tax Practitioners Board (Board) 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 19 December 2011. The Board will then consider any submissions before settling its position, undertaking any further consultation required and finalising the information sheet.

Written submissions should be made by the closing date to the Secretary of the Board via email at tpbsubmissions [at] tpb.gov.au or by mail to:

Tax Practitioners Board
PO Box 9825
PENRITH  NSW  2740 

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 Board’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 Board’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 4 November 2011 and is based on the TASA, the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 and the Tax Agent Services Regulations 2009 as at 29 October 2010. 

Introduction

  1. Item 202 in Schedule 2 of the Tax Agent Services Regulations 2009 (TASR) (Item 202) is one of the six options for meeting qualifications and experience requirements for registration, including renewal of registration, as a tax agent. This item permits applicants who have tertiary qualifications in a discipline other than accountancy to be registered as tax agents, subject to meeting the other requirements of the Item and other registration requirements, such as being a fit and proper person.
  2. This Information sheet (TPB(I)) sets out the preliminary views of the Tax Practitioners Board (Board) in relation to the application of Item 202.
  1. In summary, there are three basic requirements. Applicants must have:
  • a relevant degree or a post-graduate award in a discipline other than accountancy
  • if the Board considers it relevant to the tax agent services to which the application relates, as many of the following Board approved courses as the Board considers necessary
    • a course in basic accountancy principles
    • a course in commercial law
    • a course in Australian taxation law
  • been engaged in the equivalent of 12 months of full-time relevant experience in the past five years.
  1. The purpose of this TPB(I) is to assist existing registered tax agents and new applicants to understand the Board’s approach to the second of these requirements.

Structure and summary of this TPB(I)

  1. In this TPB(I) you will find the following information:
  • background and scope about becoming a registered tax agent (paragraphs 6 to 10)
  • the Board’s proposed approach to Item 202(b) in Schedule 2 of the TASR (Item 202(b)), as it relates to
  • existing tax agents (paragraphs 12 to 14)
  • new applicants from 1 July 2013 (paragraphs 15 to 29).

Background and scope about becoming a registered tax agent

  1. To become a registered tax agent, an individual must meet certain eligibility criteria, including qualifications and experience requirements prescribed in the TASR[1] .
  1. Once registered, individual tax agents must again satisfy these qualifications and experience requirements at renewal of registration. Generally, this will be straightforward for agents who have already demonstrated their qualifications and experience in the past. However, it will be a new exercise for agents who obtained registration after 1 March 2010 by relying on the notification method to become registered[2] or on the transitional registration option[3].
  1. The six options for individuals to meet the prescribed qualifications and experience requirements are contained in Part 2 of Schedule 2 of the TASR.
  1. One of the six options is Item 202, which provides:

    A requirement is that:

    1. the individual has been awarded
      1. a degree or post-graduate award from an Australian tertiary institution in a discipline other than accountancy that is relevant to the tax agent services to which the application relates, or
      2. a degree or award that is approved by the Board from an equivalent institution in a discipline other than accountancy that is relevant to the tax agent services to which the application relates, and
    2. if the Board considers it relevant to the tax agent services to which the application relates – the individual has also successfully completed as many of the following courses as the Board considers necessary
      1. a course in basic accountancy principles that is approved by the Board
      2. a course in commercial law that is approved by the Board
      3. a course in Australian taxation law that is approved by the Board, and
    3. the individual has been engaged in the equivalent of 12 months of full-time, relevant experience in the past five years.
  1. To meet the requirements of Item 202, all individuals are required to satisfy the requirements of Items 202(a) and 202(c). In relation to Item 202(b), the Board’s proposed approach varies depending on whether individuals are existing tax agents, or new applicants seeking registration from 1 July 2013.

Proposed approach to Item 202(b) in Schedule 2 of the TASR

  1. The Board’s proposed approach for individuals to meet the requirements of Item 202(b) is summarised as follows[4]:

    Item 202(b) flowchart 

Existing tax agents – preliminary view

  1. The Board’s preliminary view is that existing tax agents will not be required to have completed any of the Board approved courses referred to in Item 202(b) for the purpose of meeting the requirements of Item 202. This applies to:
  • applications for renewal of registration made by existing tax agents, and
  • applications for new registration made by individuals who are currently not registered, provided they make their application before 1 July 2013[5] .
  1. The Board notes that under the Code of Professional Conduct, registered agents are required to maintain knowledge and skills relevant to the tax agent services they provide[6].
  1. The Board expects that this knowledge and skill will be able to be enhanced through continuing professional education (CPE) in due course[7].

New applicants from 1 July 2013 – preliminary view

  1. From 1 July 2013, new applicants will fall into one of the following broad categories for the purposes of Item 202:
  • individuals who seek to provide tax agent services in relation to Part 2-10 of the Income Tax Assessment Act 1997 (ITAA 1997)  (relating to Capital Allowances)
  • other individuals.
  1. The Board may, over time, develop additional categories of new applicants for the purposes of paragraph 15, particularly when one of the categories of tax agents identified in Schedule 1, or another category that does not currently appear in Schedule 1, becomes significant enough to justify the development of customised Board approved courses.
  1. The Board’s proposed approach regarding the application of Item 202(b) recognises that there is a group of tax agents who have already obtained registration pursuant to Item 202. Some of these agents, and others registered under other eligibility Items have conditions imposed on their registration. Further, the Board understands that a number of tax agents whose registration is subject to a condition may seek to renew their registration pursuant to Item 202.
  1. The Board has considered the various categories of tax agents who may seek to renew their registration under Item 202 (see Schedule 1). The Board is of the preliminary view that although there are a number of different categories, for the present time, only one of these categories is significant enough to justify the development of a customised Board approved course. This category relates to those individuals providing, or seeking to provide, tax agent services in relation to Part 2-10 of the ITAA 1997 (relating to Capital Allowances). These individuals are often referred to as quantity surveyors.
  1. Accordingly, the Board’s preliminary view is that, from 1 July 2013, all new applicants who seek to provide tax agent services in relation to Part 2-10 of the ITAA 1997 (relating to Capital Allowances) must have completed a customised course in Australian taxation law that is approved by the Board to meet the requirements of Item 202(b). More information about the Board’s proposed approach to this group is set out in paragraphs 21 to 26.
  1. All other new applicants from 1 July 2013 will be subject to a principle based approach where the Board will consider the following factors when determining the requirement for any Board approved courses for the purposes of Item 202(b) (refer to paragraphs 27 to 29):
  • the applicant’s qualifications for the purpose of meeting the requirements of Item 202(a)
  • any other qualifications or courses completed by the applicant which are relevant to the tax agent services to which the application relates
  • any work experience undertaken by the applicant which is relevant to the tax agent services to which the application relates, and
  • any other information the Board considers relevant to the tax agent services to which the application relates.

Individuals seeking to provide tax agent services in relation to Part 2-10 of the ITAA 1997 (relating to Capital Allowances)

  1. The Board’s preliminary view is that, from 1 July 2013, new applicants seeking to provide tax agent services in relation to Part 2-10 of the ITAA 1997 (relating to Capital Allowances) must have completed a course in Australian taxation law that is approved by the Board to meet the requirements of Item 202(b).
  1. The Board is of the view that a course in Australian taxation law that is approved by the Board for the purposes of paragraph 21 must cover at least the following areas of taxation law:
  • Part 2-10 of the ITAA 1997, and
  • the Tax Agent Services Act 2009, including the Code of Professional Conduct.
  1. In addition, it is the Board’s view that the appropriate level of knowledge for such a course should be at a Diploma level which is equivalent to a Level 5 as specified in the Australian Qualifications Framework (AQF)[8]. This means that individuals will have specialised knowledge and skills for skilled/paraprofessional work and/or further learning.
  1. The Board is of the view that a hard-and-fast rule on the manner of delivery of the course is not necessary. Provided the manner adopted for the course delivery involves an expectation that students develop knowledge of the topics listed at paragraph 22 at the requisite level (see paragraph 23), it is immaterial whether they are undertaking the course in a face-to-face setting or via an online computer-based learning module or webinar, with an assessment at the end. The outcomes of the course should be discernible by reference to how the course is assessed.
  1. It is the Board’s view that a course in Australian taxation law which covers the topics listed at paragraph 22 at the requisite depth and with an appropriate assessment should be at least one full day in duration.
  1. It is the Board’s view that individuals must have demonstrated their knowledge and skills in the course by some means of independent and objective assessment. Assessment may occur by a variety of modes including being conducted online, provided that suitable quality assurance mechanisms are in place to ensure the integrity of the examination process. For example, it is expected that a course could be run as an online, computer-based module or webinar that applicants could undertake and then complete a form of assessment at the end of the module or webinar.

Other individuals

  1. The Board’s preliminary view is that, from 1 July 2013, applications from new applicants other than those seeking to provide tax agent services in relation to Part 2-10 of the ITAA 1997 (relating to Capital Allowances) will be considered on a case-by-case basis, taking into account the following:
  • the applicant’s qualifications for the purpose of meeting the requirements of Item 202(a)
  • any other qualifications or courses completed by the applicant which are relevant to the tax agent services to which the application relates
  • any work experience undertaken by the applicant which is relevant to the tax agent services to which the application relates, and
  • any other information the Board considers relevant to the tax agent services to which the application relates.
  1. Following consideration of these factors, the Board will determine which of the Board approved courses referred to in Item 202(b), if any, are required for the purpose of meeting the requirements of that provision.
  1. This approach provides flexibility for the Board and the applicant. It means that an applicant will need to demonstrate that they have completed sufficient educational qualifications or courses for the purpose of their particular application for registration as a tax agent.

Schedule 1

Categories of registered tax agents with conditions on registration[9]

               

              Category of registered tax agent

              Number of agents

              Quantity surveyors
              Provide tax agent services in relation to Part 2-10 of the Income Tax Assessment Act 1997 (relating to Capital Allowances)

              491

              Research and development
              Provide tax agent services in relation to Part III, Division 3 of the Income Tax Assessment Act 1936  (relating to research and development activities)

              106

              BAS services
              Provide tax agent services in relation to various BAS provisions as defined in section 995-1 of Income Tax Assessment Act 1997

              20

              Superannuation
              Provide tax agent services in relation to various superannuation laws

              17

              Indirect taxes
              Provide tax agent services in relation to various indirect taxes

              15

              Salary packaging
              Provide tax agent services in relation to salary packaging rules

              11

              Other[10]

              86

               

              [1] During the period 1 March 2010 to 31 August 2010, inclusive, there were transitional arrangements allowing individuals to register as a tax agent without having to meet the qualifications and experience requirements prescribed in the TASR.
              [2] The notification registration option did not require notifying agents to demonstrate qualifications or experience.
              [3] The transitional registration option required applicants to demonstrate only that they had been providing a tax agent service within a particular area of the taxation laws to a competent standard, and for a more limited period than is required for a standard registration application.

              [4] All individuals are required to meet the requirements of Items 202(a) and 202(c) to satisfy the qualifications and experience requirements under Item 202.  

              [5] This only applies if the relevant application is granted.
              [6] Section 30-10(8) of the Tax Agent Services Act 2009.
              [7] For further information regarding the Board’s proposed policy in relation to CPE, refer to Exposure draft TPB (EP) D04/2011 – Continuing professional education available at www.tpb.gov.au
              [8] See Australian Qualifications Framework 2011, available at www.aqf.edu.au
               
              [9] Current as at 30 September 2011.

              [10] This category is made up of a number of smaller categories where the total number of agents in each is less than 10.