Tax Practitioners Board Consultative Forum – 24 August 2010
On 24 August 2010, the Tax Practitioners Board (Board) held its fourth Consultative Forum (Forum), at the Board’s Canberra premises with representatives from a number of professional associations.
Board and Secretariat representation at the Forum consisted of:
- Dale Boucher – Chair of the Board
- Russell Smith – Board member
- Cynthia Coleman – Board member
- Mark Maskell – Secretary of the Board
- Janette Luu – Senior Adviser to the Chair
ATO representation at the Forum consisted of:
- James O’Halloran – Deputy Commissioner
Professional representation at the Forum consisted of:
- Association of Accounting Technicians
- Association of Taxation and Management Accountants
- Australian and New Zealand Association of Chartered Certified Accountants
- CPA Australia
- Institute of Certified Bookkeepers
- Institute of Chartered Accountants in Australia
- Law Council of Australia
- National Institute of Accountants
- Tax Institute of Australia
- Taxpayers Australia
The following Board member and professional associations sent their apologies:
- Professor Gordon Cooper – Board member
- Australian Association of Professional Bookkeepers
- Chartered Institute of Management Accountants
This report outlines the key points that were discussed at the Forum and is only intended to provide an overview of the issues that were discussed. They do not represent the final views of the Board and are not intended as detailed minutes of the Forum meeting.
1. Report from the Chair and overview of the work done by the Board
The Chair announced the appointment of an additional 12th Board member – Yvonne Sneddon by the then Assistant Treasurer, Senator the Hon Nick Sherry. Ms Sneddon is based in Adelaide and was a registered tax agent for more than 10 years. Ms Sneddon has significant experience in providing financial services and business advice to public and private sector clients and is a fellow of the Institute of Company Directors and of the Institute of Chartered Accountants.
The Chair provided the Forum with a brief overview of the work undertaken by the Board since the Forum meeting on 18 May 2010. The Board’s key areas of focus are:
- Registrations – with significant numbers of new registrations received, the Board are working through the backlogs with progress being made. The Board has been focussed on promoting the transitional registration option, as most of these options will be unavailable after 31 August 2010.
- Education requirements – the Board are considering the comments received on the Australian taxation law, commercial law, basic accountancy principles and basic GST/BAS taxation principles course exposure drafts.
- Professional practice matters – the Board are considering the comments received on the Code of Professional Conduct and fit and proper person exposure drafts.
- Professional indemnity insurance (PII) – the Board are working on articulating the Board’s requirement for PII coverage from 1 July 2011.
The Chair thanked and acknowledged the assistance of the associations in promoting the special transitional registration options for BAS and tax agents.
2. Report from the Secretary
Between 1 March 2010 and 31 July 2010, the Board had received approximately 7,000 tax agent applications and 9,500 BAS agent applications (with approximately 8,000 of these being received as BAS agent notifications). The Board have processed all pre-1 March 2010 applications received.
The Board is aware that there is a current backlog in registration work and steps are being taken to address the issue, including the implementation of the online registration system, a risk assessed approach to re-registration and the additional resources that have been engaged.
The Chair also highlighted that delays are often caused by applicants who apply for registration using an incorrect option or the application is not incomplete. Where applications are incomplete or where additional information is required, a member of staff will need to contact the applicant.
The Board have undertaken a number of communication activities to promote the transitional registration options. These include the preparation of media kits for tax and BAS agents, advertising in a key regional, suburban and non-English speaking background newspapers and ATO channels (such as the ATO’s website, elink and portal communication).
As part of the communication strategy, Forum members suggested the following communication tools and approaches:
- use of webinars to communicate to the regulated community, in particular, to those in the regional areas;
- engaging with software providers, such as MYOB and Quicken;
- engage BAS agents indirectly through their associations, the BAS agents tax agent, ATO and employers;
- engaging schools and community groups; and
- use case studies and practical examples on the website;
3. Update on education exposure drafts
The Chair made the following points in relation to the basic GST/BAS taxation principles course:
- The current and interim approach of the Board is that an individual who has completed the FNSBKPG404A (Carry out business activity and instalment activity statement tasks) within the Certificate IV Financial Services (Bookkeeping) or (Accounting) will be taken to have completed a course in basic GST/BAS taxation principles. This interim approach applies until 29 February 2012.
- The Board are working with Innovation and Business Skills Australia (IBSA) to develop the specifications for a standalone course that will satisfy the longer term requirements for a GST/BAS course. This involves making minor modifications to existing units with the relevant Certificate IVs – FNSBKPG404A (Carry out business activity and instalment activity statement tasks) and FNSBKPG405A (Establish and maintain a payroll system).
- Once these modifications have been made, it is anticipated that completion of these two updated units will satisfy the requirements for a GST/BAS course. Further, it is expected that the two updated units (FNSBKPG404A and FNSBKPG405A) will form part of the enhanced Certificate IV and therefore, individuals who complete the enhanced Certificate IV Financial Services (Bookkeeping) or (Accounting) will satisfy the requirements for the primary education qualifications and the GST/BAS course.
- The modifications are expected to be finalised and uploaded onto the National Training and Information Service (NTIS) by the end of the 2010 calendar year.
- The Board will consult with relevant stakeholders regarding the proposed amendments to the Certificate IVs and the FNSBKPG404A and FNSBKPG405A units.
- A Forum member asked for clarification of the Board’s approach to recognised prior learning (RPL). The Board is of the view that prior learning through experience may be regarded as a proxy for content, but this would only be accepted if there was evidence of prior learning being objectively and formally assessed in some way. A challenge test may be one option for conducting a formal assessment. The Chair stated that the Board will be articulating a more detailed approach to RPL in coming months.
- Another Forum member asked whether the Board would allow non-RTO and Tertiary course providers, such as private providers, to deliver a GST/BAS course. This is currently under consideration by the Board; however, the Board is developing course provider criteria and is of the view that all course providers must be capable to provide quality education outcomes.
- A Forum member asked the Chair for clarification on the Board’s approach to how current a course must be to be accepted by the Board. The Board have not settled their view on course currency, however the Chair noted that for the purposes of commercial law, Australian taxation law and basic accountancy principles, the Board have adopted a preliminary view of 10 years for the purposes of determining if a course is current or not if there has been no relevant work experience or study which might otherwise keep the course knowledge alive The Chair also noted that the currency of a GST/BAS course will necessarily be limited by the introduction of GST in 2000.
The Chair made the following points in relation to the commercial law and Australian taxation law course:
- The Board are considering the comments received on these two exposure drafts. One key area of consideration is whether there is an imbalance between the requirements for a course in commercial law compared to a course in Australian taxation law. The suggestion has been that there needs to be greater emphasis on taxation law than commercial law.
- The Board’s preliminary view is that the approach taken in the exposure draft (3 units of commercial law and 2 units of Australian taxation law) is consistent with the previous regime and recognises that commercial law underpins the legal framework, including taxation law, which tax agents need to have an understanding of. The education committee of the Board will be considering this point in further detail at an upcoming committee meeting.
- Another comment made was that further guidance is required on when a course in commercial law will be required for a specialist registration. The Board are settling their approach regarding specialists, but in many cases, the requirement to complete a course in commercial law will need to be considered on a case by case basis.
- A Forum member also commented that the Board should give consideration to applicants who have significant work experience but who are not members of professional associations. The Chair noted that no such eligibility option exists in the regulations and therefore the Board is not in a position to consider those applicants that fall into this category, unless they meet another registration eligibility item.
4. Professional practice exposure drafts
The Board have reviewed the comments made on the Code of Professional Conduct and fit and proper person exposure drafts and circulated a revised track marked version for Forum members to provide comment within the next two weeks.
One concern raised was that the material was too detailed and a more ‘agent friendly’ version needs to be created. The Chair agreed with this comment and said he would be look at developing such products; however, it was necessary that the more detailed product be developed to explain the Board’s views. The Chair did note that a more simplified Code of Professional Conduct and fit and proper information sheet had already been published in early 2010 and was available on the Board’s website.
The Chair also stated that the Board were intending on publishing an exposure draft dealing with letters of engagement, noting however that it is unlikely that the Board can require them legally. The Board is of the view that we will strongly encourage the use of such letters by agents.
A Forum member suggested that it would be useful to have two separate Code of Professional Conduct and fit and proper information sheets for BAS agents and tax agents. The Chair said he would raise this with the relevant committee; however, it was necessary to recognised that the same Code and fit and proper person requirements apply to both tax and BAS agents.
5. Professional indemnity insurance coverage requirement
The Chair circulated a preliminary draft document that outlined the Board’s preliminary view on professional indemnity insurance (PII), including adequacy of cover, amount of cover, scope of cover and exclusions. Forum members were asked to provide comment within 2 weeks.
A Forum member asked the Chair how the Board would deal with agents who have a low turnover, for example $10,000, as some professional associations exempt their members who do have a low turnover from being required to have PII. The Board are currently considering this scenario, however the Chair noted that legislative framework does not recognise low turnover for the purposes of requirement an entity to register. Rather, any entity that provides a tax agent service and receives a fee or other reward for that service must be registered.
A Forum member asked how the Board would require agents to certify that they have a current PII policy given that PII is renewed annually whereas registration with the Board is occurs every 3 years. The Chair advised that the administrative arrangements are being considered by the Board and the Board are seeking to find an option that is feasible for agents yet also achieves consumer protection.
6. Specialists and conditional registrations
The Chair circulated a draft paper dealing with specialist categories of tax and BAS agents that have come to the Board’s attention and sought comments from Forum members within the next two weeks. The Board have so far identified a number of specialist categories. These include FBT, GST, indirect taxes, quantity surveyors, R&D, salary packaging and transfer pricing and software developer specialists.
The Board will consider further categories of specialist categories as more applications are received. It is important to note that the Board is not granting registration as a specialist, rather the Board is granting agent registration with conditions.
7. Coverage issues
Forum members asked for the Board’s approach in relation to a number of groups and whether they fell within the tax agent services regime.
- Financial planners – the Chair stated that this was a matter for Government and therefore could not respond. However, the Board would consider applications by financial planners who sought to register with the Board. The Chair also noted the proposed amendments as contained in the exposure draft Regulations.
- Contractors, service trusts and labour hire firms – whether registration is required and what is the appropriate entity to be registered will require consideration of the specific facts and circumstances of each case. Further, any consideration of this group would be also subject to the proposed amendments as contained in the exposure draft Regulations.
- Software providers - the view of the Board is that a software developer who writes and sells accounting software is not providing a tax agent service; rather they are providing a tool which assists users to meet their own accounting and other process requirements.
8. Other matters
(a) Registration fees
A number of Forum members raised concerns about the registration fees and asked whether the Board had an opportunity to consider the cost implications of the new fees to certain tax practice structures. In particular, the Chair was asked whether the Board would consider a ‘pooling’ arrangement for firms in relation to their individual registered agents who need to be in place to support the operation agent entity’s registration.
The Chair advised that the increase in fees was a direct decision of the Minister and contained in the Regulations. This then limits the extent to which the Board may consider a revised fee structure. The Chair also pointed out that the existing tax agent fees had not been increased for some time and the creation of a new regime provided an opportunity for fee structure to be updated. Importantly the fees being charged are not charged on a cost recovery basis and are competitive by other professional standards.
(b) Access to the BSP Portal
A Forum member asked about ongoing access to the BSP Portal and the Chair referred the question to the ATO's Deputy Commissioner Representative. The Deputy Commissioner said that only registered BAS agents will continue to have access to the BSP Portal or the BSP functionality in the Electronic Commerce Interface. Where an agent has not applied to be registered as a BAS agent by 31 August 2010, their access to the BSP Portal and ECI will be affected.
(c) Tax invoices
A Forum member asked the Chair why members of their associations were receiving tax invoices from the ATO rather than the Board. The Chair advised that under the previous laws, registration fees did not attract GST. From 1 July 2010 a Division 81 Determination had been made to exempt agent registration fees from GST. However, between 1 March 2010 and 30 June 2010 GST was applicable to them.
The ATO is responsible for the receipt of all fees on behalf of the Commonwealth and when the Board receives a fee, the Board must give the amount to the Commissioner, who receives it on behalf of the Commonwealth.
9. Close of Meeting
The Chair thanked everyone for attending the meeting. The Forum agreed to meet again on Tuesday, 7 December 2010, in the Board’s Canberra premises.