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Reports or other advice incorporating tax agent services provided by a third party exposure draft 2010

Tax Practitioners Board Exposure Draft

Reports or other advice incorporating tax agent services provided by a third party

This draft information sheet is also available as a PDF, download at the end of this page (PDF, 111KB).

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 17 August 2010 after which time the Board will consider any submissions made and will then publish a final information sheet.

Any written submissions in relation to this exposure draft should be made by the closing date to the Secretary of the Tax Practitioners 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, please note that the principles, explanations and examples in this paper do not constitute legal advice. They are also at a preliminary stage only. The Tax Practitioners Board’s conclusions and views may change as a result of the comments the Board receives or as other circumstances change.

Document history

This paper was issued on 15 June 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.

Background

  1. This draft information sheet deals with the situation where an entity (the issuer), for a fee or other reward, provides a report or other advice containing tax-related information:
  • that is provided by a third party
  • which relates to ascertaining or advising on liabilities, entitlements and obligations of an another entity (the client) as referred to in subparagraphs 90-5(1)(a)(i) and (ii) of the TASA, and
  • the circumstances are such that the client is reasonably likely to rely on the advice of the third party for the purposes set out in subparagraphs 90-5(1)(b)(i) and (ii) of the TASA.
  1. Without limiting the circumstances where this situation might arise, an example of the types of circumstances where this might occur is a due diligence report where tax-related information may be provided by a third party who is a registered tax or BAS agent and has been engaged, as such, to provide the tax-related information to be included in the due diligence report.
  2. References in this information sheet to a tax agent service include a BAS service and references to provisions in section 90-5 (which defines a ‘tax agent service’) include the similar provisions in section 90-10 (which defines a ‘BAS service’) of the Tax Agents Services Act (TASA).

Proposed approach

  1. The issuer of a report or other advice will not contravene section 50-5 (which provides for civil penalties for the provision of tax agent services by unregistered entities) of the TASA in respect of the provision of the tax-related information if the arrangements between the client, the issuer and the tax or BAS agent are such that:
    • the obligations of the issuer are to procure the tax-related advice from a tax or BAS agent, and
    • the tax or BAS agent will be responsible to the client in relation to that advice.
  1. The Board will take this approach where, under the arrangements surrounding the issue of the report or other advice:
    • the information constituting a tax agent service is to be, and is in fact, provided by a separate entity
    • the entity is a registered tax or BAS agent who is clearly identified in the report or other advice as the provider of the tax agent service
    • the tax or BAS agent is responsible to the client for the accuracy of the information that constitutes the tax agent service, and
    • the information that constitutes the tax agent service is clearly identified within the report or other advice.
  1. In these circumstances, the Board considers that the issuer of the report or other advice does not provide the tax agent service (as defined in section 90-5 the TASA) but merely arranges for the provision of a tax agent service to be made by a properly authorised and qualified entity who is responsible to the client for the tax agent service.
  2. It will be a question of degree whether the issuer goes further to include other elements in the report that may constitute the provision of a tax agent service, in which case registration as a tax or BAS agent may be required under the TASA.