Supervision and control - tax (financial) advisers
Under the Code of Professional Conduct (Code) in the Tax Agent Services Act 2009 (TASA), you must ensure that the tax (financial) advice services you provide, or that are provided on your behalf, are provided competently. This will generally require you to maintain adequate supervision and control in your practice to direct, oversee and check that the services provided on your behalf are provided competently.
Additionally, the TASA requires partnerships and companies to have a sufficient number of registered individuals (see further below), being registered tax (financial) advisers or tax agents (tax practitioners), to provide tax (financial) advice services to a competent standard and to carry out supervisory arrangements. This will apply to partnerships and companies when they renew their tax (financial) adviser registration or apply to register as a tax (financial) adviser under the standard registration option.
There is no standard process to determine if you have adequate supervisory arrangements in place. A number of factors may be relevant in determining whether adequate supervisory arrangements are or have been in place, noting that this will vary from entity to entity having regard to the particular circumstances. These factors include:
- the level and depth of oversight over the provision of tax (financial) advice services, noting that this will vary according to the skills and experience of the individuals providing the services and the complexity of the service being provided
- the physical or geographic proximity of the tax practitioner to the person carrying out the work
- whether there is substantial supervision, rather than mere checking of documents, while recognising that the oversight will vary according to the knowledge, skills and experience of the person doing the work and the complexity of the tax matters involved. However, it is recognised that a Statement of Advice (SoA) can be signed off on behalf of a registered tax (financial) adviser. For example, an employee of a registered tax (financial) adviser can sign an SoA on behalf of the employer, because it is the employer who is the actual provider of the SoA
- whether the tax practitioner performs periodic and spot checks of relevant material prepared
- quality assurance mechanisms
- the degree of control exercised by the tax practitioner over the way in which work is carried out on their behalf
- the level of relevant initial and ongoing educational and practical training undertaken by those performing work on behalf of the tax practitioner
- whether there are documented procedures to ensure relevant processes can occur, including escalation of issues that are beyond an individual’s knowledge or experience to an appropriate supervisor.
It is also highlighted that in the event that there are any changes in circumstances relevant to the registration of a registered individual, company or partnership tax practitioner, which may include when ceasing to be a supervising agent for another registered entity, it is imperative that the tax practitioner notifies the Tax Practitioners Board (TPB).
Sufficient number requirements
There is no set formula for determining the number of registered individual tax (financial) advisers or tax agents a partnership or company is required to have to satisfy this requirement, recognising that this is unique and can be wide-ranging having regard to the particular circumstances of the company or partnership. Accordingly, the TPB is unable to specify an exact figure for what constitutes a ‘sufficient number’ of tax practitioners for a given company or partnership. However, the TPB will take into account the requirements of the Corporations Act 2001 (Cth) which relate to:
- having available adequate resources (including financial, technological and human resources) to provide the financial services covered by the license and to carry out supervisory arrangements
- maintaining the competence to provide those financial services
- ensuring representatives are adequately trained, and are competent, to provide those financial services.
To assist you in determining the number of registered individual tax (financial) advisers or tax agents your company or partnership requires, you should take into account factors such as:
- size of the business (for example, turnover, number of clients and number of relevant staff)
- the types of tax (financial) advice services being offered
- number of qualified and experienced staff
- the frequency of appropriate training and development activities for all relevant staff
- the level (and type) of technology or software used
- supervisory arrangements (for example, quality control practices and escalation procedures) in place
- any conditions we may have imposed on the entity’s registration based on the qualifications and experience of its personnel.
The registered individual tax (financial) advisers or tax agents forming the sufficient number can include:
- representatives of an Australian financial services licensee, responsible managers, compliance officers, and regional or line managers
- partners, directors, employees, contractors or staff provided under a service trust arrangement.
Taking into account that there are a number of different business models and structures, as well as numerous combinations in relation to the factors listed above, the TPB is of the view that it is ultimately a matter for the company or partnership to satisfy the TPB, through a process of self-assessment, that it meets the sufficient number requirement. In particular, the TPB is of the view that companies and partnerships are best placed to assess how many registered individual tax practitioners their business requires to ensure that tax (financial) advice services are provided competently and to ensure there are supervisory arrangements in place.
For more information refer to:
- TPB information sheet TPB(I) 23/2014 Sufficient number requirement for partnership and company registered tax (financial) advisers
- Supervisory arrangements and supervision and control
Last modified: 20 April 2017