Go to top of page

Cost recovery implementation statement

Cost Recovery Implementation Statement (CRIS)

Tax practitioner application fees 2021-22

Contents

Introduction

Description of the regulatory charging activity 

Policy and Statutory Authority to Cost Recovery

Cost Recovery Model

Financial estimates

Non-financial Performance 

Risk assessment

Stakeholder engagement

Key forward dates and events

CRIS approval and Change register

 

Introduction

Purpose of the CRIS 

  1. This CRIS provides information on how the Tax Practitioners Board (TPB) will implement partial cost recovery for the processing of applications for registration and renewal of tax agents, BAS agents and tax (financial) advisers (collectively referred to as tax practitioners).
  2. It should be noted that the Government’s response in November 2020 to the Independent Review of the TPB, led by Keith James, will impact on the TPB’s future costing framework. Further, the introduction of the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 into Parliament on 24 June 2021 proposes to consolidate the regulation of financial advisers into one single disciplinary body will also impact on the TPB’s activities. Therefore, the forecasts from 2022-23 are under immediate and significant review and the CRIS needs to be considered in light of these likely changes.

About the TPB 

  1. The TPB is an independent statutory body created under Tax Agent Services Act 2009 (TASA) and is comprised of Board members appointed by the relevant Minister. The TPB administers the TASA and Tax Agent Services Regulations 2009 and is responsible for regulating entities providing tax agent services in Australia for a fee or reward, which includes the services provided by tax practitioners.
  2. For more information about the TPB, see About the TPB.

Back to contents ↑


Description of the regulatory charging activity

  1. Tax practitioners are charged for the processing of applications for registration, including renewal, as a tax practitioner. The TPB undertakes a range of activities to satisfy this mandate. These activities can broadly be described as follows:
    • engaging with stakeholders – including potential applicants, applicants, registered tax practitioners and professional associations
    • providing policy advice on the registration and renewal eligibility requirements 
    • providing technical and operational guidance on the registration and renewal process and eligibility requirements 
    • developing and maintaining online tools to enable the registration and renewal process (including online forms and a tax practitioner portal ‘MyProfile’) 
    • assessing and processing registration and renewal applications.
  2. However, the TPB will not be charging for its compliance activities, which include: 
    • investigating conduct that may breach the TASA, including non-compliance with the Code
    • ensuring registered tax practitioners continue to meet the ongoing eligibility requirement
    • breaches of the civil penalty provisions 
    • imposing administrative sanctions for non-compliance with the Code
    • applying to the Federal Court in relation to contraventions of the civil penalty provisions in the TASA.


Policy and Statutory Authority to Cost Recovery

  1. The TPB’s ability to charge application fees is established under the following:
    • Tax Agent Services Act 2009
    • Tax Agent Services Regulations 2009
  2. Policy approval for a new fee structure was announced in the 2018-19 Federal Budget. Increased application fees were effective from 1 July 2018, with the application fee amounts being subject to an annual consumer price index (CPI) adjustment from 2019-20 onwards. In July 2021, the corresponding CPI adjustment was applied for 2021-22 application fee amounts.
  3. The amended application fee amounts and structure that apply are as follows:

Table 1: Tax practitioner application fees

Application fees (payable at least once every three years)

FY 2019-20

($)

FY 2020-21

($)

FY 2021-22

($)

Registration as a tax agent 687 700 704
Registration as a tax (financial) adviser 550 560 563
Registration as a BAS agent 137 140 141

Back to contents ↑


Cost Recovery Model

  1. TPB’s regulatory charging activities are outlined in Table 2 below.  
  2. The cost of regulatory activities is based on the staff effort to process the registration applications which is then applied to the three tax practitioner types (tax agent, BAS agent and tax (financial) adviser). 
  3. Staff time which relates to the receipt, checking, assessment and verification of information, making a determination on the application, as well as notification to the applicant, has been worked out through the use of management reports and staff questionnaires.

Table 2: TPB's regulatory activities

Activity Cost driver Activity description
Stakeholder engagement Indirect cost The TPB engages with a range of stakeholders (including tax practitioners, professional associations, education providers and other government entities such as the ATO and Australian Securities and Investments Commission (ASIC)) to guide and inform our decision making and operations. 
Education Indirect cost The TPB uses a variety of communications channels and products to educate tax professionals about the registration and renewal eligibility requirements. 
Guidance Indirect cost Providing policy advice on the registration and renewal eligibility requirements.
Registration tools Indirect cost Developing and maintaining online tools to enable the registration and renewal process.
Application assessment Direct cost Assessing and processing registration and renewal applications.
  1. The nature of the cost drivers are outlined in Table 3 below. 

Table 3: Main cost drivers

Cost driver Description
Direct costs Costs for employees involved in directly processing new and renewal registration applications (for example, staff salaries, superannuation and leave expense) and supplier costs (for example, training and IT costs).
Indirect costs Costs for employees indirectly involved in processing new and renewal registration applications (such as employees involved in policy development, online forms development and communication activities - for example, staff salaries, superannuation and leave expense) and supplier costs (for example, training and IT costs).
Support cost Includes all TPB employee and supplier costs not classified as Direct or Indirect. These costs will have no direct relationship to processing registration forms but are relevant TPB operational costs. The nature of these costs include travel, human resources support, finance support and property operating expenses.
  1. Table 4 illustrates the 2021-22 estimated cost for processing new and renewal applications by cost and tax practitioner type. This table also illustrates the 2021-22 revenue from application fees by tax practitioner type and shortfall from revenue against cost.
  2. Revenue has been estimated using anticipated volume of applications over a three-year period, based on historical trends and known timing of renewal applications.

Table 4: 2021-22 revenue and expense estimates (for the registration process only)

2021-22 Estimate Tax agent BAS agent Tax (financial) adviser Average
Application volumes 14,910 6,262 6,183 27,355
 
Cost $ $ $ $
Direct 148.18

140.49

181.76 154.01
Indirect 174.85 165.38 214.23 181.58
Support costs 229.26 217.09 281.04 238.18
Total cost per application 552.29 522.96 677.03 573.77
Estimated total cost ($'000) 8,234 3,275 4,186 15,696
Application fee revenue
Rate ($) 704.00 141.00 563.00  
Estimated revenue ($'000) 10,496 883 3,481 14,861
Surplus/(Shortfall)($'000) 2,262 -2,392 -705 -835

Back to contents ↑

Financial Estimates

  1. TPB expenses and revenue estimates for processing new and renewal applications are set out in Table 5. The full cost of processing applications is cost recovered by the application fee, across the budget year and three forward years.
  2. Table 5 illustrates the 2020-21 estimated against actual expenditure. The 2019-20 difference between revenue and expenses did not carry though as expected into 2020-21 and both expenses and revenue returned to near pre-COVID expectations.

Table 5: TPB revenue and expenses estimates (for the registration process only)

  Estimates Expenses Revenue Surplus/(deficit) Cumulative balance

2018-19

Actual

$'000 $14,622 $12,703 -$1,919 -$1,919

2019-20

Actual

$'000 $10,615 $13,194 $2,580 $661

2020-21

Estimate

$'000 $13,668 $16,521 $2,853  

2020-21

Actual

$'000 $15,725 $15,983 $258 $918

2021-22

Estimate

$'000 $15,696 $14,861 -$835 $83

2022-23

Estimate

$'000 $14,584 $15,053 $469 $552

2023-24

Estimate

$'000 $14,605 $14,810 $205 $757

2024-25

Estimate

$'000 $14,634 $15,785 $1,150 $1,908
  1. Shortfalls from revenue against expenses are funded by additional government appropriation.


Non-financial performance

  1. The number of tax practitioner applications processed each year is reported in the TPB’s Annual report (see the section regarding performance measures in the TPB Annual Report).
  2. The revenue and expense associated with tax practitioner application fees will vary in accordance with the number of applications received and processed annually. A further review of the application fee amount and structure will be conducted if the difference between estimated and actual applications received over a three-year period exceeds 20 per cent. Whilst projected figures show an overall surplus in estimates in the next three years, this is likely to be significantly revised following anticipated TASA review outcomes and changes to the Costing Framework.
  3. Consistent with Government policy, the charge will be regularly reviewed to confirm that the charge meets the government policy objective of ensuring that tax practitioners rather than the general public bear the costs of regulating tax practitioners and index it for appropriate increases in costs.

Back to contents ↑


Risk assessment 

  1. The risk of the increase in 2021-22 is considered MEDIUM and has been endorsed by the Department of Finance.
  2. Whilst the number of tax practitioners is stable and the application fee process is mature, the ongoing impacts of COVID on the profession, the Bill to largely withdraw tax (financial) advisers from TPB regulation is yet to be passed, the Government’s response to the James Review, and the TPB Charging Framework review are all likely to significantly change projected estimates.


Stakeholder engagement 

  1. TPB will review its CRIS annually and will notify changes to stakeholders through the TPB’s existing stakeholder engagement and communication strategy, which includes the TPB’s website, eNews, consultative forums and social media. 
  2. Stakeholder consultation will take place through the TPB’s primary consultative mechanism – the TPB Consultative Forum. Approximately four forums are held per year and provide the professional associations and the TPB with opportunity to discuss and consult on key matters affecting tax practitioners.


Key forward dates and events

  1. This section sets out an outline of the key events.
Key event Estimated date
TPB publishes the CRIS September 2021
Application fee increases commence July 2021
Review cost recovery arrangement prior to the CRIS being updated As part of TPB Charging Review Q3 2021

 

CRIS approval and Change register

  1. The table below shows approvals and changes pertaining to this CRIS. 
Date Description Approved by
5 July 2021 Endorsement of the CRIS TPB Secretary/CEO
11 August 2021 Certification of the CRIS ATO Commissioner
29 September 2021 Ministerial approval Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing

Back to contents ↑

Last modified: 30 September 2021