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Course in Australian taxation law that is approved by the Board Exposure draft 2010

Exposure Draft

Course in Australian taxation law that is approved by the Board

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

The 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 60 days. The closing date for submissions is 18 June 2010 after which time the Board will consider any submissions made before seeking to finalise the information sheet.

Any written submissions in relation to this exposure draft should be made to the Secretary of the Board via email at tpbwebsite [at] ato.gov.au or by mail to:

Tax Practitioners Board
PO Box 9825
PENRITH NSW 2740

Disclaimer

Please note that 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 provided in the Tax Agent Services Act 2009.

Additionally, the principles, explanations and examples in this paper do not constitute legal advice. They are also at a preliminary stage only. The Board’s conclusions and views may change as a result of the comments the Board receives or as other circumstances change.

Document history

This draft information sheet issued on 14 April 2010 and is based on the Tax Agent Services Act 2009, the Tax Agent Services Regulations 2009 and the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 as at 1 March 2010.

Information regarding ‘a course in Australian taxation law that is approved by the Board’

This information sheet sets out the preliminary views of the Tax Practitioners Board (Board) in relation to the meaning of ‘a course in Australian taxation law that is approved by the Board’ for the purpose of Part 2 of Schedule 2 to the Tax Agent Services Regulations 2009 (TASR).

The information draws on advice given to the Board in February 2010 by Professors Michael Dirkis and Michael Walpole.

The purpose of this information is to assist relevant institutions, professional associations, potential registrants and the wider community to understand the factors that provide the basis for the Board’s approach to the educational eligibility requirements for registration as a tax agent.

All preliminary views expressed in this document are subject to ongoing consultation by the Board with relevant stakeholders. The Board intends to adopt these preliminary views until they are finalised.

The Board will publish a separate information sheet outlining its general approach regarding the approval of courses for the purpose of Schedule 2 to the TASR.

Introduction

  1. As the Tax Agent Services Act 2009 (TASA) is designed to “… ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct” (see section 2-5 of the TASA) it is both necessary and desirable, in certain respects, to increase the expectation of the thoroughness of education and training that a registered tax agent should have when compared with the expectations under the registration rules applying before the commencement of the TASA.
  2. The Board recognises that a balance must be struck between what is reasonably achievable within the modern educational and professional paradigm and assuring the public of high professional standards. In doing so, regard has been had to the educational qualifications, and the types of providers of training and education recognised within the Australian Qualifications Framework (see http://www.aqf.edu.au/).

Course in Australian taxation law

Background

  1. The Board is of the preliminary view that the new registration process is designed to assure the public of a necessary basic standard of tax education on the part of tax advisers. Thus, in the Board’s preliminary view, a “course” in Australian taxation law must be of sufficient breadth to equip a registered tax agent to advise the public on the diverse range of tax issues.
  2. To become a registered tax agent, an entity must meet certain eligibility criteria, including the requirements prescribed by the TASR. One such prescribed requirement is that a tax agent seeking registration must hold certain qualifications. One of these is a course in Australian taxation law that is approved by the Board.
  3. Individuals must have successfully ‘completed a course in Australian taxation law that is approved by the Board’ if they are seeking registration under the following:
    • Tertiary qualification in accounting (Item 201(c) of Part 2 of Schedule 2 to the TASR).
    • Diploma or higher award (Item 203(b) of Part 2 of Schedule 2 to the TASR).
    • Tertiary qualifications in law (Item 204(a)(iii) of Part 2 of Schedule 2 to the TASR).
    • Work experience (Item 205(a)(ii) of Part 2 of Schedule 2 to the TASR).
  1. An individual may, if the Board considers it relevant to the tax agent services to which the application relates, have to have successfully ‘completed a course in Australian taxation law that is approved by the Board’ if they are seeking registration under the following:
    • Tertiary qualifications in another discipline – specialists (Item 202(b)(iii) of Part 2 of Schedule 2 to the TASR).

Topics

  1. The Board is of the preliminary view that applicants who have completed a course in Australian taxation law are required to have passed tertiary level (or equivalent) subjects (i.e. subjects offered as part of a degree, an associate degree, or a postgraduate diploma or degree) covering at least the following key areas of taxation law:
    1. the rules and principles of Australian tax law including an understanding of the legal environment in which these principles operate, including basics of the legal system, constitutional considerations, separation of powers
    2. the key aspects of the income tax law covering concepts of residence and source, related elements (only) of international tax, assessable income, deductions, tax rebates/offsets and tax accounting
    3. the key aspects of taxes that extend the ordinary income tax base including relevant principles and application of the capital gains tax and fringe benefits tax rules
    4. goods and services tax
    5. taxation of individuals and basic entities including partnerships, trusts and companies
    6. taxation aspects of superannuation law
    7. administrative aspects of the taxes identified above including returns, tax collection and withholding mechanisms, assessments, objections, rulings, penalties and audits
    8. rules addressing specific and general anti tax avoidance, and
    9. ethical and professional responsibilities of tax agents including obligations under the TASA and TASR.

Duration of course/s

  1. The Board notes that subjects of sufficient breadth and depth to cover the 9 topics listed at paragraph 7 above are unlikely to fit within a single standard 12 to 14 week university term consisting of lectures, tutorials, seminars and private study and research totalling 100 to 130 hours (see paragraph 11 below) made up of (usually) two hours of lectures and one hour of tutorials per week plus private study and research. In addition to the technical content of such subjects there will be an expectation that students will also learn skills to enable them to find the law and apply it to problems when they are in practice.
  2. Accordingly, the Board takes the preliminary view that an applicant for registration will have completed a course that consists of at least two subjects at the appropriate tertiary (or equivalent) level in order to address the depth and breadth requirements set out here. It is not expected that all the components of the course would necessarily be from the same provider, nor be completed at the same level in the tertiary sector. Many permutations may be possible. At the same time, it is not expected that two subjects studied at different levels or at different institutions but with extensive overlaps in content would satisfy this requirement. For example, an applicant who has completed two similar introductory units covering substantially the same material, but at different institutions, would not satisfy the requirement.
  3. It is worthy of note that the list of topics and parts of topics that the Board prescribes here possibly extends beyond the content of current offerings at most tertiary providers. Therefore, the Board proposes to take a progressive approach to this requirement to ensure that individuals who have already commenced study in a course on the reasonable expectation that the course would be acceptable to fulfil the requirement for a course in Australian income tax law for the purpose of registration under the predecessor regime are not disadvantaged if they apply for registration under the TASA. This also allows providers sufficient time to respond to this new list of prescribed course content.
  4. Many university level subjects are delivered in semester (or term) length periods consisting of a series of lectures and tutorials spaced over a standard 12 to 14 week period. The suggested duration of 100 to 130 hours (mentioned above) is based on an assumption of this type of delivery, as was the former Tax Agents’ Registration Board Guideline of 120 hours’ duration. Because of the need to include components in the course that require students to apply their knowledge and learn research skills, a significant part of the course may consist of private study and research.
  5. Accordingly, the Board is of the preliminary view that the duration of the course in Australian taxation law should not be less than the equivalent of two university level subjects in taxation law together amounting to a total of 200 to 260 hours of study and tuition made up of formal instruction (such as lectures), exercises in applying knowledge (such as tutorials) and private study (such as research, reading, and assignment preparation). It is noted, however that duration alone is not a definitive guide as to the quality of a course and from time to time the Board may have regard to other elements such as technical content, level of difficulty, nature of assessment etc, in order to come to a final view as to whether the requirements for approval of a course have been met.

Manner of delivery

  1. Although the suggested duration of 200 to 260 hours is based on an assumption of a traditional lecture/tutorial/self study model there is a diversity of delivery models available – which diversity has been supplemented by modern technological innovation permitting “distance” or “flexible” study involving engagement with teaching materials and teaching staff via interactive compact disc, video conference, internet etc. In any case, study by correspondence has been widely available for university and professional study for many years. Some courses may not require any attendance at lectures or seminars but may rely upon the students’ performance in assessment tasks such as a single final examination as a measure of the competence of the students.
  2. Accordingly, the Board is of the preliminary view that a hard and fast rule on manner of delivery is not necessary. Provided that whatever manner is adopted in the course of study or its components involves an expectation that students will develop a thorough understanding of the tax law through technical content, its application and appropriate research, it is immaterial whether they are usually present in a room with the teacher or not. The outcomes of the course in Australian taxation law or its components should be discernible by reference to how the course/components of the course are assessed.

Assessment

  1. The Board is of the preliminary view that some means of objective assessment is a key aspect of the approval of courses for registration of applicants as tax agents. The Board takes the preliminary view that applicants must have demonstrated their knowledge and skills in the relevant course or components by some means of independent and objective assessment. Such assessment should be rigorous and have integrity. Various forms of assessment may be employed. Ideally, because of different learning styles and what is appropriate for different aspects of a course, each course or component should employ a mix of assessment practices including:
    • tests
    • examinations (oral and written)
    • problem based assignments
    • essays and reports, and
    • computer based assessment tasks
  1. Not every one of these need be present in an approved course.
  2. The Board proposes not to accept assessments that either lack rigour or that are too narrow in their focus. Such assessment may be seen to be recognised as being one element which is a contributor to overall determination of a student’s performance in a course rather than being treated as the sole measure of their skills and knowledge in taxation law.

The meaning of 'course'

What is a course?

  1. A course consists of a series of components leading to an overall knowledge of an aspect of the law including taxation law or rules. Such components may take the form of small units designed for tuition or training of discrete aspects of the tax law. The Board notes that although coherence between the parts/units of the course is desirable, not all applicants will have completed a single coherent series of units delivered, for example, by one provider. Accordingly, the Board is of the preliminary view that provided the content set out in the list of topics at paragraph 7 is addressed and provided the material addressed is reasonably current the components need not be part of a coherent stream and may include some duplication and overlap with each other provided there is not a substantial duplication of content.

Does a course need a formal assessment component?

  1. The Board is of the preliminary view that there must be a formal assessment component in a course or in the components of a course. This assessment should be sufficient to assure the Board that there has been a test or examination to ensure relevant content and skills expected in a course have been learned/acquired by the applicant and that rigour has been employed in the testing of the knowledge and skills.
  2. The Board does not propose to be prescriptive about the style and content of assessments, provided the assessments employed represent a genuine test of relevant knowledge and skills and subject to integrity to ensure the relevant applicant will have undertaken the assessment task/s in question.
  3. The Board is of the preliminary view that the assessment should, to a significant degree (that is, at least 40%), be done under some form of independent supervision.

Can a course be constituted solely by recognised prior learning?

  1. The Board is of the preliminary view that assessment of knowledge and competence is the best safeguard for the Board to ensure that it admits to registration only applicants who have the necessary technical qualifications to competently deal with taxpayers’ affairs. The Board recognises that prior learning through experience may be regarded as a proxy for content but it does not propose to accept evidence of prior learning in the workplace, which prior learning has not been formally assessed in some way.
  2. In principle, prior learning which has itself been formally assessed would not require further assessment. However, it is unlikely the Board will approve an application if all the education requirements were satisfied by prior learning as the ability to keep up to date with changes requires the acquisition of essential learning skills (interpretative, analytical and cognitive skills) that come from the rigour associated with formal training courses.

How current should a course be?

  1. Taxation law changes rapidly and the introduction of new taxes to replace others can completely transform the knowledge base of the tax professional community. For example, the replacement of Sales Tax with GST and simultaneous modifications to the tax collection rules, stamp duty laws and other state taxes transformed aspects of the taxation law in the early 2000’s. Similar upheavals were encountered when CGT was introduced and when self-assessment was introduced. Some aspects of taxation law change only incrementally as new cases emerge from the courts.
  2. Therefore, a course of study can become out of date quickly. It is for these reasons that many universities do not normally grant credit for units of study completed more than ten years prior to application. The Board considers that this standard should be prima facie adopted in respect of the recognition of units completed to satisfy the requirements of a course in Australian taxation law.
  3. However, the Board notes that the age of the course has to be balanced with the knowledge and experience of the applicant. Well educated professionals will keep their knowledge and skills up to date and will be required to do so through continuing professional development requirements of professional associations. Given such a person’s knowledge, a requirement to repeat their undergraduate studies after 20 years of practice would run counter to the policy of the legislation.
  4. Therefore, the Board proposes to accept as approved courses of study in Australian taxation law:
    • where the component unit of study was completed fewer than 10 years from the date of the application for registration, or
    • where the component unit of study was completed more than 10 years from the date of the application for registration and the applicant can demonstrate an updating of those skills through work experience and continuing professional development.
  1. The Board recognises that there may be applicants that fall outside these two broad guidelines. In these cases, a submission should be included with the application for registration, which the Board will consider on its merits.

Summary and conclusion

  1. The Board is of the preliminary view that a course in Australian taxation law should cover the following topics:
    1. the rules and principles of Australian tax law including an understanding of the legal environment in which these principles operate, including basics of the legal system, constitutional considerations, separation of powers
    2. the key aspects of the income tax law covering concepts of residence and source, related elements (only) of international tax, assessable income, deductions, tax rebates/offsets and tax accounting
    3. the key aspects of taxes that extend the ordinary income tax base including relevant principles and application of the capital gains tax and fringe benefits tax rules
    4. goods and services tax
    5. taxation of individuals and basic entities including partnerships, trusts and companies
    6. taxation aspects of superannuation law
    7. administrative aspects of the taxes identified above including returns, tax collection and withholding mechanisms, assessments, objections, rulings, penalties and audits
    8. rules addressing specific and general anti tax avoidance, and
    9. ethical and professional responsibilities of tax agents including obligations under the TASA and TASR.
  1. Further, the Board is of the preliminary view that a course in Australian taxation law be of 200 to 260 hours duration. This would equate to two university (or equivalent level) subjects.
  2. Finally, the Board takes the view that all courses should be assessed to a significant degree under some form of independent supervision and in a manner demonstrating rigour and integrity.