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TPB Consultative Forum Report 20 January 2010

Preliminary Tax Practitioners Board consultative forum - 20 January 2010

(This report was amended on 14 April 2010. The section dealing with the Tax Practitioners Board’s preliminary approach to what is a tax agent service or BAS service has been removed for the time being. No other amendments have been made.)

On 20 January 2010, the Tax Practitioners Board (Board) held a preliminary consultative forum (Forum) with representatives from 13 professional associations. This preliminary Forum had been announced by the Chair of the Board, Dale Boucher, on 12 December 2009. The intention of the preliminary Forum was to determine how to establish an ongoing consultative mechanism for the Board.

Board representation at the Forum consisted of:

  • Dale Boucher – Chair of the Board
  • Geoff Robinson – Secretary of the Board
  • Russell Smith – Board member
  • Gordon Cooper – Board member
  • Cynthia Coleman – Board member
  • Janette Luu – Advisor to the Chair of the Board

The Forum was represented by the following professional associations:

  • Australian Association of Professional Bookkeepers
  • Institute of Chartered Accountants in Australia
  • Law Council of Australia
  • Tax Institute of Australia
  • National Institute of Accountants
  • CPA Australia
  • Taxpayers Australia
  • National Tax and Accountants’ Association
  • Association of Accounting Technicians
  • Chartered Institute of Management Accountants
  • Institute of Certified Bookkeepers
  • Association of Taxation and Management Accountants
  • Australian and New Zealand Association of Chartered Certified Accountants

This Report outlines the key points that were discussed at the preliminary meeting on 20 January. It should be noted that this Report is only intended to provide an overview of the issues that were discussed. They do not represent the final views of the Board.  In addition to this Report, the Board issued a media release on 28 January 2010 outlining general details of this preliminary Forum.

In reading the Report, please note that the following abbreviations have been adopted:

  • Tax Agent Services Act 2009 
  • Tax Agent Services Regulations 2009 
  • Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 
TP Act 
  • Income Tax Assessment Act 1936 
ITAA 1936 

1. Overview of the preparatory work being done by the Board and the Secretariat

The Chair and the Secretary provided the Forum with a brief overview of the work undertaken, and to be undertaken, by the Board. The Chair noted his desire to conduct timely one on one consultation with all relevant associations and stakeholders in the future.

The overview of the preparatory work is summarised below:

Work already undertaken by the Board and the Secretariat

Mid 2009  Preparatory work (including website information) for the Board was undertaken by the ATO/Secretary of the Board
23 Oct 2009 The Assistant Treasurer, Senator Nick Sherry, launched the Board, announcing membership and holding an informal meeting with the full Board
2 Nov 2009 Dale Boucher commenced in the role of the Chair of the Board
Nov and Dec 2009 One on one consultations with professional groups and industry bodies
26 Nov 2009  The Assistant Treasurer announced 1 March 2010 start date for the TASA.  The Board issued a media release and announced the start of the new Board and a strategy to consult through a Consultative Forum of stakeholders
8-9 Dec 2009 Board Induction Program
10 Dec 2009 Inaugural Tax Practitioners Board meeting. Agenda items included:
  • Board policy and Charter (including Board member engagement)
  • Secretary briefing matters
  • Engagement with the professions, including the formation of a TPB Consultative Forum
  • Code of Conduct for Board members
  • Draft meeting procedures
  • Role of the Chair of the Board
  • Role of the Secretary of the Board
  • Formation and operation of committees and working groups
17 Dec 2009 The Board issued a Media Release to announce consultation arrangements, including the Consultative Forum, which the Board will introduce in January 2010
23 Dec 2009 The Board issued a Media Release to announce the Board’s consultative approach to preparing guidelines for new Tax Agent Services scheme
23 Dec 2009 Board Committee 2 meets to discuss and scope coverage issues under the new regime
11-12 Jan 2010 Board Committees 3 and 4 meet to discuss:
  • Entry, registration, experience and qualification issues for tax agents and BAS agents; and
  • Professional practice issues for tax agents and BAS agents
18 Jan 2010 Further 1:1 consultations with professional bodies and industry groups
19 Jan 2010 Board Committee 4 met to further discuss professional practice issues for tax agents and BAS agents

Further one on one consultations with Associations
20 Jan 2010 Scoping meeting with the Board’s Consultative Forum and further one on one consultations with Associations

Work since 20 January has included:


28 Jan 2010   Board Committee 5 met to discuss and scope compliance issues, including the compliance function of the Board and initial compliance policy
1 Feb 2010  Board Committee 6 met to discuss and scope professional indemnity insurance issues affecting tax agents and BAS agents
2-3 Feb 2010  Tax Practitioners Board meeting
4-5 Feb 2010  Working group meetings of Committees 3 (Entry and registration requirements) and 4 ( Professional Standards)

2. Modus operandi of the Board’s Consultative Forum

In the longer term, the Board suggested having three Consultative Forum meetings per year. The Board anticipates, however, that meetings may need to be more frequent in this early stage of implementation, and agreed with suggestions that monthly meetings, of some kind, in the first 4 months would be appropriate. This would allow the Board to ensure the communication of consistent messages to tax agents and BAS agents through their relevant professional association. A decision is to be made as to whether these meetings will all be face to face or whether teleconferencing facilities will be adopted in some instances.

To ensure that the Forum has in place a governance plan, a proposed draft Charter will be prepared and distributed to members of the Forum in advance of the first official Forum meeting for out of session comment. The draft Charter will cover purpose, membership, roles and responsibilities, delivery mechanisms (including communication to key stakeholders) and review and assurance.

The first official Consultative Forum has been scheduled for 9 March 2010 in Melbourne. This date will allow the Board to undertake other essential preparatory work before the new regime commences on 1 March 2010.

3. Recognition of recognised tax agent and BAS agent associations under the Tax Agent Services Regulations 2009

For associations seeking recognition, there will be forms available on www.tpb.gov.au as soon as possible. The forms will reflect the content and order of the TASR. Use of this form will not be mandatory, however, if an association chooses not to use it, any application would be expected to follow and address the content, form and order of the TASR. In such a case, the Board will accept this to be a form approved by the Board, provided the matters calling for attention are adequately addressed.

The Board is currently considering the concepts of adequate corporate governance and operational procedures. Until the Board announces further guidance or provides information, applicants under this rule were informed that the ASX’s Corporate Governance Principles and Recommendations Second Edition August 2007 is a good guide in this area. This guide is not the Board’s mandated benchmark but may be of assistance to associations seeking recognition.

In relation to the process for recognition of associations, attendees were informed that the items in the relevant Schedule of the TASR do not require the subject of corporate governance to be addressed in general terms. Rather, specific aspects of corporate governance need to be addressed, for example, in relation to management of the organisation and compliance with rules.

A question was raised at the Forum as to how associations could evidence adequate corporate governance and operational procedures. The preliminary view of the Board was that this could be evidenced through the constitution of an organisation or by reference to other external supporting information. The Board noted that the obligation was on the associations to provide the Board with all the relevant documentation. The Board will provide further information on this issue as soon as possible.

Discussion was also raised about dual recognition for associations, that is, can an association be recognised as both a recognised tax agent association and BAS agent association? The Board is currently considering this issue and will update the Forum as soon as possible.

In the course of discussion, the Board noted that it does not develop the policy that underpins the new regime, rather, the Board’s role to implement the law as enacted. Policy consideration questions are ultimately a question for the Treasury and the Government, although the Board maybe in a position to provide suggestions and advise if desired.

4. Board’s initial approach to entry requirements (including education, experience and qualifications requirements

A Committee has been formed and met on 11 and 12 January 2010. In addition to the Committee members who are Board members, two professors, Michael Dirkis and Michael Walpole have been appointed to the Committee. The Board/Committee foresees the need to engage a person who has adequate accounting credentials in relation to accounting course requirements and a person who has adequate bookkeeping credentials in relation to BAS/GST courses.

The Committee considered the following five issues:

  • the education/qualification and experience requirements that must be met for tax agents and BAS agents to be registered under the new regime;
  • the requirements for the Board to recognise an organisation as a recognised BAS or tax agent association under the TASA;
  • whether the TASA applies to a trustee that is a partner in a partnership in the same way as it applies to a partner;  
  • the registration periods under the TASR and TP Act; and
  • initial consideration of the forms to be used by entities when applying for registration, re registration etc.

In addition to these specific issues, the Committee will also be considering the GST/BAS requirements, including through a consultation process.

An initial report from the two professors was considered at the Board meeting on 2 and 3 February 2010 and further discussions are to be held about this.

Draft guidance will be published on www.tpb.gov.au as soon as possible.

5. Board’s initial approach to Professional Standards (including on the Code of Professional Conduct, fitness and propriety and other requirements)

A Committee of the Board has been formed and met on 11 and 12 January 2010. The Committee considered the following issues:

  • Code of Professional Conduct (including ‘reasonable care’ and ‘reasonable steps’, advising clients of their rights and obligations and third party disclosures); and
  • the ‘sufficient number’ of individuals requirement (including competent standard and supervisory arrangements).

In addition to those issues, the Committee, on 19 January 2010, considered the following issues:

  • safe harbour provisions;
  • concept of reliance;
  • incidental advice by financial planners;
  • meaning of ‘fit and proper’; and
  • other provisions in Code of Professional Conduct.

Draft guidance will be published on www.tpb.gov.au as soon as possible. The Board’s intention is to have exposure draft papers published following consultations at the working group level in February but before 1 March 2010.

6. Proposed communications plan for bookkeepers who are BAS agents and for new tax agent registrants

Some members of the Forum commented about the need for a sufficient media campaign for bookkeepers and BAS agents. The Board are mindful of the need to communicate to the greatest degree possible within available resources and has developed a preliminary communications plan. This plan was presented to the Forum and dealt with the Board’s ongoing communication channels and activities and the current plan through to June 2010.

7. (Section removed)

8. Board’s proposed approach to specialist registration applications

The Board pointed out that these so called ‘specialist registrations’ are simply ordinary registrations with conditions. Although this is a convenient description, there is no formal category of specialist registration.

Categories of specialist registrations would appear to include custodians, in house tax advisers, quantity surveyors, responsible entities providing tax agent services, payroll and superannuation.

The Board has held, and will continue to do so, one on one meeting with various groups. The discussions include whether there is a requirement to register and possible conditions on registration.

The Board asked the Forum whether there were other categories that should be considered as specialist registrations. Forum members suggested other categories that could fall under the category or a specialist registration, these included, GST specialists, payroll, FBT specialists and asset management business. The Board noted that a number of these suggestions were already under consideration by the Board.

Following a question from a Forum member, the Board confirmed that specialist registrations may have specialist education requirements. These will need to be determined over time, having regard to individual applications.

9. Board’s proposed approach to the notification process for tax agents and BAS agents in items 4 and 5 of Schedule 2 of the TP Act

These rules in the TP Act provide special and convenient methods for persons who were providing tax agent and BAS agent services during 3 and 6 month periods (respectively) after commencement to notify the Board and to become registered. There will be a facility on the www.tpb.gov.au for those particular agents to enter their details. By doing so will serve as notification to the Board.

10. Operation (including process for notification) of the special rules for applications for registration as a tax agent and as a BAS agent under items 13 and 14 in Schedule 2 of the TP Act

The Board is currently examining the process for these types of registrations.  There may be a facility on www.tpb.gov.au for applications and potentially a questionnaire.

In notifying the Board on issues of ‘competent standard’ and ‘for a reasonable period’ the Board expects applicants to address the items in the TP Act. The Board recognises that there may be a need to consider applications on an individual basis. The Board will advise on what material will be required to substantiate applications.

11. Interim Board approach to probable future professional indemnity insurance requirements

Under the new regime, the Board can require that professional indemnity insurance be maintained but the Board does not require this from initial registration - see subsection 20-30(3) of the TASA.  If the Board decides that professional indemnity insurance is required, timely and adequate notice will be provided to allow agents to comply.

The Board has yet to fully consider the issue of professional indemnity insurance requirements.  Guidelines, outlining when such insurance will be required, will be prepared if necessary and appropriate, after consultations have been undertaken.

In the meantime, the Board recognises that it would be sensible for anyone that currently has professional indemnity insurance to maintain their policies.

Some Forum members raised concern that the Board’s approach was ‘too soft’.  The Board disagreed with that concern, instead, the Board is of the view that these issues are important and warrant full and proper consideration and consultation by the Board with stakeholders.

12. Possible Board approach to registration periods and applications made to the State Tax Agents’ Boards

The Board is currently considering the viability of staggering registration periods when dealing with pending applications for registration and re-registration under the ITAA 1936 to allow for management of workloads. A proposal on how any staggering process could be implemented will be announced as soon as possible.

The Board will provide professional associations with information dealing with re-registrations in February to allow for incorporation into any educational materials or newsletters.

In relation to registration periods, the preliminary view on the Board is that registrations will at this stage be limited to a period of 3 years, while noting that the TASA provides the Board with a discretion to extend periods of registration The reason for the Board, at this stage, limiting registration to a period of 3 years is to complement the review of the legislative framework in 3 years time and the desirability of operating a regulatory scheme that is in a position to regulate, without there being registration periods that are too long and might detract from this aim.

In relation to applications made to the State Tax Agents’ Boards, application to those Boards can be lodged using the old form until 31 March 2010 and payment of the old (current) fee. Applications will be considered in line with the previous (current) law in force prior to 1 March 2010.

13. Proposed Board approach to the relevant experience eligibility requirements (for example, 1400 hours (in item 101 in Schedule 2 to the TASR) and 1000 hours (in item 102 in Schedule 2 to the TASR) for BAS agents and the relevant experience requirements for tax agents in the TASR

This matter is currently under consideration by the Board. The preliminary view is that a statutory declaration from the agent, along with supporting evidence for employers or other relevant persons (such as clients or business associates) who are in a position to provide reliable information about an applicant would be appropriate. The Board recognises that the more information that can be provided would be of greater assistance to the Board.

The Forum asked the Board for their approach to recognising old qualifications that may have been obtained a number of decades ago. The Board noted that these issues are currently being considered by Committee 3, in particular by the two professors that have been engaged as Committee members.

The Forum also asked the Board for their approach to ensuring that evidence is true and accurate. The Secretary of the Board noted that it is likely that a random audit process will be conducted and that the Board will also have in place an appropriate quality assurance process.

14. Board’s approach to conflicts of interest and procedures for conflict of interest with Board members

The Chair noted that appointment of Board members was a matter for Government, and that full conflict of interest declarations were provided by all applicants in that process.

The Board has also adopted an interim Code of Conduct which incorporates conflict of interest principles. This will be published on the website, www.tpb.gov.au, in February.

Further, the Board is following the usual practice by seeking initial conflict of interest declarations and also declarations at the beginning of any Board or Committee meeting (or as required). In accordance with usual meeting practice conflict of interest declarations are also expected from members whenever an issue of any significance might arise in any meeting.

The Board noted that no Board member who is also a member of a professional association will be involved in consideration of an application for recognition as a recognised professional association if that association is one of which the Board member is a member. Any decision, if it were to be made, to reject an application for recognition by an association would be made by the full Board. At this stage, this approach is limited only to recognising associations and not to individual applicants who may share the same professional membership as a Board member. In that latter scenario, there is unlikely to be any real or apparent conflict of interest.

15. Proposed Board complaint procedures

The Board will develop such complaint procedures in due course. However, there are currently phone, mail and fax facilities (for the current State Tax Agents’ Boards registration system) available to allow tax agents to report instances of unethical or unlawful behaviour. For example, agents can notify the relevant State Tax Agents’ Boards of unregistered preparers, poor or indifferent behaviour of other registered tax practitioners, compliance problems with clients and systemic problems in the industry. The current contact telephone 1300 362 829 and web page www.tabd.gov.au

Once the new system commences, the Board will receive notification of work on hand from the State Tax Agents’ Boards and priority will be to deal with work on hand as well as develop future policy.

If a complaint arises against any Board member, the complaint should be addressed to the Chair. If the complaint involves the Chair, the complaint should be addressed to the Assistant Treasurer.

16. Website

The Board believes that the material on the website is fundamentally sound and has noted that it was developed by the Secretariat staff with input from Treasury. The Board is currently reviewing the material and there are some minor changes that will need to be made.

For example, the Fact Sheets will be re-titled as Information Sheets with content remaining much the same. The reason for a change in title is because Information Sheets provide a better and more accurate description of what they are and should not confuse this material with the Board Guidelines, when issued.

Once the Board is in a position to issue Guidelines they will be published on www.tpb.gov.au with timely and adequate notice provided to those affected by the Guidelines.

If any association or person has constructive suggestions for changes to the website, please contact the Chair via email or through www.tpb.gov.au.

17. Composition of small Working Groups, to work with Board Committees

The Board notes that it is having one on one discussions with groups where it sees this as the most appropriate way to proceed.  The work of some of these has been described above.

In determining membership of working groups, the Board suggested that Forum attendees nominate which working group they would like to be a part of (with the limitation of no more than 4 external members noting that the Board would alternately wish to reserve the right to decide with whom to consult).

The Forum agreed with this approach and there was agreement by all forum attendees that the joint professional accounting bodies would nominate a representative amongst themselves. Further, it was recognised that there was a need to have a bookkeeping association included in the membership of work groups.

The Board intends to send out a list to all Forum attendees to seek their working group preferences. The Board did note that not everyone would be able to be involved in the working groups.

18. Close of preliminary Forum

The Board thanked the professional associations for attending the meeting. The Chair recognised that through this collaborative and consultative approach, the Board will be better placed to support tax agent and BAS agent professions transition into the new regime from 1 March 2010.