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TPB Consultative Forum Report 11 October 2012

Report Tax Practitioners Board Consultative Forum – 11 October 2012

On 11 October 2012, the Tax Practitioners Board (Board) held its 11th Consultative Forum (forum) in Canberra with representatives from a number of professional associations.

Board and Secretariat representation at the forum consisted of:

  • Dale Boucher – Chair of the Board
  • Cynthia Coleman – Board member
  • Roger Cotton – Board member
  • Russell Smith – Board member
  • Mark Maskell – Secretary
  • Janette Luu – Senior Adviser to the Chair of the Board
  • Tina Chawner – Communications Director of the Board
  • Neil Pegg – Secretariat

Representation at this forum consisted of:

  • Australian Taxation Office
  • Association of Accounting Technicians Australia
  • Association of Taxation and Management Accountants
  • Australian and New Zealand Association of Chartered Certified Accountants
  • Australian Institute of Quantity Surveyors
  • CPA Australia
  • Financial Planning Association of Australia
  • Institute of Certified Bookkeepers
  • Institute of Chartered Accountants in Australia
  • Institute of Public Accountants
  • Law Council of Australia
  • National Tax Agents' Association Ltd (NTAA+)
  • Royal Institute of Chartered Surveyors
  • Self-Managed Super Fund Professionals’ Association of Australia
  • Tax Institute of Australia
  • Taxpayers Australia

Apologies were noted from the Chartered Institute of Management Accountants, Law Society of New South Wales, and New Zealand Institute of Chartered Accountants.

This draft report summarises the key points discussed at the forum. It is intended only to provide an overview of the issues that were discussed and does not represent the final views of the Board, nor is it intended as minutes of the forum.

1.    Update on issues from previous forum meeting

The Chair welcomed all attendees.

Forum members agreed that the draft report from the previous forum meeting held on 6 July could be adopted without alteration.

The following was highlighted.

  • Work is in progress regarding communication of registration application statistics. It was noted that the Board communicates status report messages and consideration is currently being given to reporting options in regard to processing statistics on the Tax Practitioners Board (TPB) website.
  • The Board intends to provide a summary of conduct cases and civil penalty matters on its website.
  • Further information about the Board’s Continuing professional education (CPE) policy has been published to the TPB website, including a downloadable version of the brochure sent to registered agents in July 2012.
  • The Chair also noted that enquiries the Board has received in regard to whether agents can be exempted from the CPE policy have been accommodated in the policy.

2.    Update from the Chair

The Chair gave a brief overview of key events since the last forum meeting on 6 July 2012, noting the following.

Board appointments

On 31 May 2012 the Assistant Treasurer issued a media release announcing that the Government would be conducting a merit-based selection process for membership for the Board, including the Chair. The process is well under way; however, to ensure a smooth transition, the Minister has put in place acting arrangements for the current Board to continue until 21 January 2013.

Registrations update

  • The continuing trend in reducing the registrations backlog was noted. It was also noted that the remaining applications are less straightforward as they necessitate receipt of further information from applicants. These will be processed as quickly as possible.
  • It was observed that the Board also has a dedicated education enquiry presence to assist applicants to understand the education qualification requirements. If applicants cannot find the requisite information on the TPB website, enquiries regarding whether a course will meet the Board’s requirements should be referred to the TPB with the following information provided:
    • their name
    • contact details, including phone number
    • details of the qualification or course
    • course outline and other relevant course materials
    • academic transcript (if relevant).
  • The Board is facilitating people entering into the registration system, including encouraging use of the BAS transitional registration option where it is appropriate.

Compliance activity

  • The Chair noted the recent civil penalty decisions in the Federal Court, since the previous forum held in July. These relate to people who have provided tax agent services for a fee while not being registered as a tax agent with the Board.
  • It was highlighted that compliance outcomes also arise in the Board Conduct Committee and the Administrative Appeals Tribunal. The Chair provided a summary of conduct cases to the forum and noted this would be published to the TPB website.

Fraudulent tax returns

  • The Chair noted the risk associated with tax agents lodging fraudulent tax returns, including in regard to online activity.
  • The Board has terminated a number of tax agent registrations for failing to take reasonable care and for not being fit and proper in association with lodging fraudulent income tax returns based on false payment summaries.
  • Some indicators of potential fraud were outlined, including:
    • unusually high tax instalments compared to income
    • payment summary is handwritten or appears to have been altered
    • large claims are made for deductions that are unusual for the occupation
    • taxpayer is accompanied by a person who speaks on their behalf
    • large numbers of payment summaries are provided for processing that relate to people that the agent has never met.
  • The Chair also reiterated the following practical steps an agent should take, as advised in a recent Chair’s message:
    • check the identity of new clients
    • check the identify and authority of the person approaching you to lodge returns or statements on behalf of others
    • conduct your own proof of identity checks directly with the taxpayers themselves
    • have strong and robust procedures in place
    • check details of payment summaries with employers.

Financial advisers

The Board is continuing to work with Treasury and Australian Securities and Investments Commission (ASIC) on the regulatory system for financial advisers who provide tax advice in the context of financial planning advice.

Information products

The Board has recently issued the following products on its website:

  • TPB(I) 14/2012 Tertiary qualifications in a discipline other than accountancy for tax agents. This was released on 13 September 2012 and outlines the Board’s position in relation to the application of item 202 in Schedule 2 of the Tax Agent Services Regulations 2009 (TASR).
  • TPB(PG) 02/2010 Course in commercial law that is approved by the Board. This revised proposed guideline was also released on 13 September 2012. The Board has taken the view that from 1 March 2017, the Board expects all new registrants to show they have completed a Board approved course in commercial law by having wholly or substantially studied all of the ‘core commercial law areas’ in three units of study. In this regard, the Board is continuing to work with the Vocational Education and Training (VET) sector to encourage the teaching of these core subjects.

The Board also intends to release the following products in the near future:

  • a final information sheet on holding money or other property on trust in regard to the Code of Professional Conduct (Code), outlining the Board’s position in relation to the application of subsection 30-10(3) of the TASA (one of the obligations of registered agents under the Code)
  • an information sheet discussing circumstances when a valuer will need to register as a tax or BAS agent with the Board
  • a bankruptcy information sheet, which will aim to identify general principles that should be taken into account when considering the effect of bankruptcy upon an individual’s eligibility for registration under the TASA.

The Chair also noted that the Board intends to issue proposed guidelines as Board guidelines, with instructions being given to the Australian Government Office of Parliamentary Counsel (OPC).

BAS agent encouragement strategy

  • The Board continues to encourage people and businesses who provide BAS services for a fee or other reward, but who have not yet registered with the Board and unable to meet the standard registration option, to register before the transitional registration option ends on 28 February 2013.
  • As part of its BAS agent encouragement strategy, the Board has also been in contact with key software providers and small business councils to assist in distributing tailored messages, to alert the public about the need for those providing BAS services to register with it.

A forum member suggested the Board consider taking further steps to encourage BAS agents to register.

3.    Update from the Secretary

Forum members noted a Monthly statistics snapshot report tabled at the meeting, with the following comments made.

  • The Board is encouraging people to enter into the registration system, applying flexibility of the BAS transitional registration option whilst it is available.
  • The Board has received a significant increase in the number of complaints about registered and unregistered agents and continues to encourage agents and the public to lodge complaints using the online Complaints form. It was noted that only a small proportion of complaints eventuate in a formal sanction.
  • The Secretary also provided a brief demonstration of the TPB’s new website, which was launched on 28 September 2012. This was received positively by forum members. The following points were highlighted.
    • The website is the Board’s main communication channel, providing guidance and advice to agents and consumers.
    • Structure and content has been refreshed to improve accessibility and the Board will continue to invest in improving content and accessibility on an ongoing basis.
    • It was noted that feedback is always welcome and will be incorporated into the Board’s work program as appropriate. This feedback can be referred to the TPB Communications team.
    • Work is also progressing on development of a separate new Information and communications technology (ICT) environment for the Board.

4.    Education update

Board approved course in commercial law

The forum noted the revised proposed guideline TPB(PG) 02/2010 Course in commercial law that is approved by the Board which issued on 13 September 2012. The following was highlighted.

  • The Chair noted that a single unit of study could not cover the requirement for three commercial law topics covering most the of the commercial law areas to a significant extent.
  • In regard to the third unit requirement, it was noted that matters will be examined on a case-by-case basis, with appropriate judgment guided by paragraph 12 in the proposed guideline.
  • The Board has taken the view that from 1 March 2017, the Board expects all new applicants to show they have completed a Board approved course in commercial law by having wholly or substantially studied all of the ‘core commercial law areas’ in three units of study. Further, the Board is of the view that a course in commercial law is equivalent to the former requirement of 18 months of commercial law.
  • The Chair confirmed that the Board is continuing to work with the Vocational Education and Training (VET) sector to provide appropriate courses and encourage the teaching of the core subjects.

Board approved course in Australian taxation law for financial advisers

  • It was noted that the Board has finalised a preliminary view on what a course in Australian taxation law should be for this group, and will publish for public comment at an appropriate time.

Tertiary qualifications in a discipline other than accountancy for tax agents

5.    Professional practice work of the Board

Reasonable care

  • On 19 September 2012, the Board released two Exposure drafts on what registered tax and BAS agents need to do to take reasonable care in their work. These papers are open for comment until 13 November 2012.
  • These exposure drafts will assist registered tax and BAS agents to understand their obligations under the Code in regard to:
    • taking reasonable care in ascertaining a client’s state of affairs
    • taking reasonable care to ensure that taxation laws are applied correctly.
  • The Chair invited the submission of further comments, in particular practical examples and relevant background source documentation, which can be sent to tpbsubmissions [at] tpb.gov.au
  • The Chair also noted that further material is expected to be issued by the Board in regard to particular examples of reasonable care for tax and BAS agents, and invited forum members to send questions to the Board to assist its work in this regard.
  • Particular reference was made to example 9 in the Code item 9 paper, specifically in regard to what is seen as the appropriate application of reasonableness. It was noted that the extent of review required to take reasonable care will depend on the registered agent exercising their own professional judgement having regard to the nature and circumstances of their client. For instance, if the registered tax agent has any reason to doubt the accuracy, veracity or completeness of the information in a return, the registered tax agent should:
    • review the client’s process for determining the information contained in the return
    • consider sighting relevant source documentation
    • ask the client appropriate questions to ensure that they have correctly understood their taxation obligations and have included all relevant information in the return.

It was also suggested that a more positive example be provided in the paper, noting a situation where enough has been done to satisfy reasonable care.

  • It was also noted during discussion that;
    • the requirement to take reasonable care relates to the services that are to be provided and is therefore subject to the agreed scope of the engagement with the client
    • engagement letters are important in identifying clients, focussing both parties’ intentions and pinpointing tasks. In this regard, there is an obligation to manage and work out what instructions to accept
    • Code obligations cannot be outsourced.
  • Support was noted for the exposure draft reference to Miscellaneous Taxation Ruling MT 2008/1 (MT). It was suggested that further note be given to consideration of risk factors and the logic in test checking and quality control manuals, with further reference to this MT and Scott’s case, or incorporation of another relevant example in this regard.
  • It was suggested that consideration be given to combining the Code 9 and 10 papers into a singular information sheet.

Current work program topics

  • The Board is currently scoping out information for the creation of information sheets in regard to:
    • conflicts of interest
    • offshoring/outsourcing.

    The forum supported the Board undertaking this work and suggested that the Board could consider the following scenarios regarding conflicts of interest:

    • a client changing agents
    • a partnership dispute/split.

    The Chair invited the provision of material on these topics, in particular practical examples of common situations that arise and the provision of relevant background material.

    • Impact of technology and obligations under the TASA

    The Chair also noted that the Board is considering the development of an exposure draft or other guidance in regard to the impact of technology and the TASA, including considering:

    • fitness and propriety and supervisory arrangements
    • reasonable care, offshoring and signing declarations (including in regard to disclosure, back-up facilities, and civil penalties)

    The forum noted the growing emergence of online service provision and associated risks. In this regard, it was suggested that the Board has appropriate discussions with the ATO in regard to consideration of the online environment.

    • Other future topics

    The Board is also considering the development of other topics on which to issue guidance and invited suggestions. In this regard, the following suggestions were raised by the forum.

    • Confidentiality (Code item 6) - a statement about the current position in regard to what an agent can say to client, having reference to their duty to the client and professional privilege.
    • Competency (Code item 7) – the provision of further guidance on this particular Code item, noting that CPE only partially addresses this subject. In particular, it was noted that taxation law is becoming more stratified and it is important to know limits and boundaries.

    6.    Other items suggested by forum members

    No additional items were suggested by forum members.

    7.    Other business

    No other business was raised.

    8.    Close of meeting

    • CPA Australia thanked the existing Board for its work in establishing a national regulatory regime, including its transparency and consultative approach.
    • The Chair thanked forum members and noted that he would commend to the incoming Board the continuance of the forum and scheduling a meeting early in the new Board’s term.
    • It was confirmed that scheduling of the next meeting is subject to the appointment of Board number 2.

    Modified date: 12 October 2017