TPB Consultative Forum report — 24 August 2020
Thank you for joining Ian Klug (TPB Chair), Michael O’Neill (TPB CEO/Secretary), Janette Luu (TPB Director of Policy and Legislation) and Nadja Harris (TPB Senior Policy and Legislation Adviser) at the TPB joint Consultative Forum held on Monday 24 August 2020. We appreciate your valuable input and have produced a summary below to assist your association with communicating key messages to your members.
Update from the Chair and the Board
- The TPB Chair provided the Forum with an update in relation to areas of strategic focus for the Board.
- It was noted that matters considered at the most recent Board meetings have been in relation to:
- policy reforms
- compliance change program.
Items raised by Forum members
Disclosing client information for litigation purposes
The disclosure of client information by a tax practitioner for litigation purposes was raised as a matter for discussion at the Forum.
- The TPB advised that subsection 30‐10(6) of the Code of Professional Conduct (Code) in the Tax Agent Services Act 2009 (TASA)requires a legal duty to disclose or client consent for a disclosure about client information to be lawfully made to a third party.
- The TPB advised that tax practitioners could contact the TPB should they wish to discuss their particular circumstances.
Content of TPB webinars
- The Forum considered an issue raised in relation to a webinar advertised on the TPB’s website about work related expenses. Further details were sought from the TPB as to whether the TPB will be providing information or guidance relating to the interpretation of taxation laws that are administered by the Australian Taxation Office (ATO).
- The TPB confirmed that the webinar focusses on the application of the Code and the TASA to tax practitioners when making work related expense claims on behalf of clients. The TPB confirmed that it would review future webinar content and website material to ensure that it is clear that the TPB is only providing advice and guidance on the legislation that the TPB administers.
- The TPB provided an update in relation to the measures it has implemented to support tax practitioners through the COVID‐19 pandemic.
Messaging to Victorian tax practitioners
- The Forum was advised that the TPB issued a message in support of tax practitioners, in particular, those based in Victoria, noting that that there are significant competing priorities for Victorian practitioners in particular at the moment, and the TPB is especially aware of the impacts of the restrictions that have been implemented.
- The TPB advised that it considers the health and safety of all tax practitioners as being paramount, and it continues to have measures in place to provide additional support for practitioners, including in relation to registration renewals.
- Tax practitioners are encouraged to contact the TPB if their ability to meet their obligations is affected.
- The TPB advised that it has also received a number of requests from tax practitioners seeking the TPB to lobby Government for tax practitioner services to be declared essential services or to have these services exempt from the Stage 4 lockdown.
- The TPB noted that as the definition of what is an essential service is a matter for the relevant state or territory Government, it is not a matter for the TPB. The TPB advised that this is an important question that needs to be considered together with appropriate medical advice. If tax practitioners want to raise this issue further, it is best that they direct their enquiry to Business Victoria via their contact us form or by calling their hotline on 13 22 15.
TPB’s COVID‐19 concessions
- The TPB noted that at the upcoming September Board meeting, recommendations will be put to the Board to extend nearly all of the TPB’s current COVID‐19 concessions.
- The TPB will communicate the decision made by the Board in relation to the extension of the current COVID‐19 concessions, and continue to assess the appropriateness of our concessions as the COVID‐19 situation evolves.
BAS services legislative instrument
- The Forum noted that on 15 April the TPB registered a legislative instrument, which took effect on 16 April to extend the services that BAS agents can legally provide to include advice in relation to the JobKeeper Payment and the cash flow boost initiative.
- The TPB advised that the recent changes announced by the Australian Government in relation to the JobKeeper Payment will have no impact on the continued operation of the TPB’s legislative instrument and the ability for BAS agents to advice in relation to the JobKeeper Payment.
- The Forum noted that the TPB’s Board Conduct Committee recently made its first decision in relation to a COVID‐19 stimulus measure.
- The TPB advised that in the case in question, the TPB had commenced an investigation against a company tax agent for breaches of the TASA related to Cash Flow Boost claims. The company tax agent sought to surrender their registration, but this was rejected by the TPB as there was a formal investigation on foot.
- The TPB’s Board Conduct Committee found a breach of Code items 1 (honesty and integrity) and 7 (competency) and that the director was not fit and proper and the company tax agent’s registration was terminated with a 2‐year exclusionary period before they could seek to apply for registration.
- The ATO advised that over the last few months the ATO has operated pre‐payment review programs for the Cash Flow Boost and the JobKeeper Payment measures to address certain emerging risks and behaviours.
- Where the ATO has seen a concentration of risk or patterns in its data with any particular agent, the ATO has undertaken discussions with some of those agents. For some of the agents exhibiting higher levels of risk in their client base the ATO has recently:
- concentrated the pre‐payment review work with the same teams in the ATO so the ATO can better understand the risks and behaviours for that practice
- issued communications through the ATO’s Online services for agents, outlining risks and concerns in an agent’s practice
- undertaken engagement calls for practitioners with higher levels of risk. This is a tailored phone call to highlight the specific areas of risk and is supplemented with a 'Stimulus Summary' which included some statistics and data about their practice.
- The ATO advised that there are agents who the ATO has identified in a higher risk group and the ATO has concerns about the agents’ behaviour.
- These concerns and behaviours are not limited to an agent’s client base, and the ATO is seeing higher levels of risk in the Cash Flow Boost and JobKeeper Payment claims being made by agents for their own businesses.
- The ATO advised that the risks and behaviours that it continues to see which are concerning include:
- reviving dormant entities
- employee growth (adding employees or business participants who are not really employees or business participants, including family members)
- amending prior period BAS to meet eligibility requirements for turnover for JobKeeper Payment purposes (increasing sales or reporting sales when sales were previously reported as nil)
- out‐of‐pattern increases in amounts withheld from salaries, wages and other payments
- claiming the same employee twice in different entities
- claiming JobKeeper Payments when turnover has not decreased by the required amount or appears to have in fact increased (notwithstanding that there are alternate turnover tests that can be applied).
- The TPB advised that new and renewal application numbers remain steady.
- The TPB advised, at the request of a Forum member, the following statistics regarding individuals who have advised the TPB that they are members of recognised professional associations (noting that this is not a mandatory reporting requirement for registered practitioners and as such the following figures are indicative only):
- BAS agents: 8,180 of 12,766 registered BAS agents (64%)
- Tax agents: 26,383 of 30,402 registered tax agents (87%)
- Tax (financial) advisers: 9,757 of 11,820 registered tax (financial) advisers (83%)
- The TPB advised that it received and resolved over 2,000 complaints and investigations in the 2019‐20 year, of which about 250 (around 10%) were referred to the TPB from the ATO.
- The TPB noted that when a tax practitioner’s conduct is investigated, all potential breaches of the Code and TASA are taken into account. The result of this is that if the TPB investigates a tax practitioner for failing to take reasonable care to ascertain a client’s affairs (Code 9), the TPB may also become aware that the tax practitioner has failed to comply with the tax laws in their personal affairs as well (Code 2). It is incumbent on the TPB to consider all potential breaches of the Code and the TASA when conducting an investigation.
- The TPB advised that in 2019‐20, the Board Conduct Committee considered 211 matters in which a breach of Code item 2 (in many cases, amongst other breaches) was found, which resulted in:
- 137 terminations
- 8 suspensions
- 62 given cautions or orders.
- During the TPB’s preliminary enquiry and investigation process, there are opportunities for practitioners to voluntarily comply and address outstanding tax obligations, prior to the Board Conduct Committee considering the matter and making a decision.
Tax time 2020 so far
- The ATO advised that it has received over 6.01 million lodgements so far which is a 2% decrease compared with the same time last year, and it has received 5.16 million individual lodgements for 2019‐20), a 2% decrease compared with the same time last year. Of these:
- over 5.15 million were electronic lodgements
- less than 6,000 were paper lodgements
- over 2.87 million were lodged by self‐preparers
- over 2.28 million were lodged by tax professionals.
- The ATO advised that:
- more than 3.9 million individual refunds for 2019‐20 have been issued so far, totalling refunds of more than $9.9 billion being issued, with an average refund of $2,481
- last year at this time, the ATO had issued more than 4 million individual refunds, totalling more than $10.2 billion with an average refund of $2,542.
Single Touch Payroll
- In relation to Single Touch Payroll, the ATO advised the Forum that:
- more than 600,000 small employers are now using single touch payroll
- as of 8 July, over 133,000 employers fully finalised their employee income statements
- the ATO is writing to employers and nominated tax representatives about Single Touch Payroll finalisation and the changes to payment summaries
- for small employers with 19 or fewer employees who have closely held (related) payees, the ATO has extended the Single Touch Payroll reporting exemption for a further 12 months, so these employers will not have to report through Single Touch Payroll for closely held payees until 1 July 2021.
Results from the TPB Biannual Tax Practitioner Survey
- The TPB advised that the results of the latest TPB Biannual Tax Practitioner Survey from May/June 2020 were similar to that of the first survey in 2019:
- response rates were nearly double the first survey
- 43% of tax practitioners had recently heard, seen or experienced something that impacted how they felt about the TPB, with the majority being positively impacted
- among the tax practitioner respondents, a majority remain content with the TPB's efforts, but among them tax (financial) advisers are less positive about the TPB compared to tax and BAS agents. This replicates the last survey and is an area for significant improvement
- 86% of practitioners agreed the TPB was effective at ensuring tax practitioners are registered
- 85% agreed that the TPB was effective at assisting them to understand their obligations
- 80% agreed the TPB was effective at ensuring compliance
- over half of practitioners responded that the TPB was effective at communicating with consumers about the importance of using a registered agent
- about two thirds agreed that the TPB provides the right type, amount, frequency of information and communication via appropriate channels.
- The TPB advised it will continue to share relevant results with stakeholders and through reporting such as the Annual Report.
Tax Practitioner Research Cooperative
- The TPB proposed establishing a research relationship with other organisations and including other research methods from 2021 to form a Tax Practitioner Research Cooperative, if there is expressed interest.
- The TPB suggested that the Tax Practitioner Research Cooperative would seek to pool resources and work together to better understand the tax profession, consumers, and tax practitioner behaviour. Activities could include analysing, adjusting, amending and expanding the current TPB Biannual Tax Practitioner Survey, commissioning focussed qualitative and quantitative research, as well as providing funds for academic studies into topics of meaning to the Cooperative. There is also potential to partner with a research institution such as tertiary education provider.
- The TPB stressed that details such as mutual commitments of Cooperative members, formal agreements, and the funding model will be determined at a later date and if there was interest, that they would be prepared to facilitate a separate discussion with interested parties.
Review of the TPB and the TASA
- The Forum noted that the TPB continues to await a Government response in relation to the Review of the TPB and the TASA.
BAS services legislative instrument
- The TPB advised that it released for a 28‐day public comment period the draft Tax Agent Services (Specified BAS Services No.2) Instrument 2020 and accompanying Explanatory Statement, about which a total of ten submissions were received, including six from individual practitioners.
- The TPB also consulted with the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and the Office of Best Practice Regulation.
- The TPB advised that the key issues raised in the feedback were as follows:
- The proposed Legislative Instrument will provide certainty and allow for the effective operation of the community operating in the superannuation guarantee (SG) and superannuation guarantee charge (SGC) advice and assistance space.
- The proposed expansion of services strays into a complex and administratively challenging area of law that is more appropriately dealt with by tax agents.
- The education and qualification requirements for registration as a BAS agent are not commensurate to the range of services that BAS agents will be permitted to provide under the proposed Legislative Instrument.
- There are practical considerations in relation to accesses and authorisations that need to be considered.
- The feedback received from all submissions was considered by the TPB’s Professional Practice Committee and the Committee endorsed the proposed Legislative Instrument and Explanatory Statement.
- Approval to register and table the Legislative Instrument in both houses of Parliament is now being sought from the Minister.
- The TPB noted that all but two of the submissions received during the public consultation process expressed overwhelming support for the proposed Legislative Instrument. One of the two submissions that raised concerns regarding the adequacy of the knowledge, skills and competency of BAS agents to provide the services under the proposed Legislative Instrument, did express in principle support for the proposed Instrument.
- The TPB noted that to address the concerns raised, the draft Explanatory Statement highlights that BAS agents are bound by the Code of Professional Conduct and must not provide the services if they do not have the requisite skills, knowledge and competency. The draft Explanatory Statement also provides that the TPB will repeal, rescind, revoke, amend, or vary the proposed Instrument should any significant compliance concerns be identified.
- In addition to the update provided by the TPB, the ATO provided an update in relation to the ATO’s online services, in particular that:
- currently the process for lodging superannuation guarantee charge (SGC) is manual, requiring practitioners to download a PDF and emailing it to the ATO for processing. The ATO advised that this same process will apply to BAS agents when the legislative instrument becomes effective
- the ATO has been working on a BETA for Online services for business which will hopefully be delivered next year which will automate the SGC process. This could also be used by BAS agents providing services pursuant to the legislative instrument
- the solution for BAS agent systems access is more complicated due to the fact that BAS agents are engaged on particular aspects of the clients, and the framework around that together with the secrecy and privacy laws require that only the information required to undertake that task be made available by the ATO to the BAS agent
- the ATO advised that it is exploring what solutions can viably be delivered in the current context, and delivery of that solution is to be prioritised with other commitments, including those to Government.
Review of the TPB’s CPE requirements
- The Forum noted that the feedback received from the public consultation regarding the TPB’s review of its CPE requirements was considered by the TPB’s Professional Practice Committee.
- The TPB advised that the key issues raised in the submissions were:
- a range of views were expressed in relation to the TPB’s hours requirements, with most suggesting that the TPB should maintain the flexibility of the triennium approach (with a minimum number of hours in a year) in conjunction with any increase in hours
- the TPB should continue to be pragmatic and focus on reducing inconsistencies with other regulatory requirements wherever possible
- submissions from professional associations and entities representing tax (financial) advisers expressed the view that the TPB should accept compliance with FASEA CPE requirements as automatically satisfying the TPB’s CPE requirements (without any conditions).
- The TPB advised that a wider public consultation in relation to the review will be delayed until the end of the calendar year at the earliest, noting the ongoing COVID‐19 pandemic.
Board approved course legislative instruments
- The Forum noted that consultation regarding draft legislative instruments in relation to the following education requirements for registration has now closed:
- a course in basic accountancy principles that is approved by the Board
- a course in commercial law that is approved by the Board (for tax agents)
- a course in Australian taxation law that is approved by the Board (for tax agents)
- a course in basic GST/BAS taxation principles that is approved by the Board.
- The TPB advised that it received submissions from nine recognised professional associations, the ATO, the ASBFEO and one tax practitioner.
- After considering the feedback received the TPB has decided not to convert the requirements into legislative instruments at this stage, pending a comprehensive review of the requirements, which will include the establishment of an education working group consisting of representatives from recognised professional associations and stakeholders in the education sector.
Draft Practice Note: Use and Disclosure of TFNs and TFN information in email communications
- The TPB advised that the feedback received from the Forum (out‐of‐session) on the Draft Practice Note was considered by the TPB’s Professional Practice Committee.
- The TPB advised that the Professional Practice Committee considered all comments received and endorsed some amendments to the Draft Practice Note:
- to further clarify the operation of the Privacy Act, TFN Rule and Australian Privacy Principles
- to clarify that the Practice Note is not intended to be prescriptive or exhaustive, and the practical steps listed in the Practice Note are provided as examples for practitioners to consider if they choose to use and disclose TFNs in emails
- to provide links to relevant reference materials of other agencies (for example, the Australian Cyber Security Centre)
- to briefly explain the ATO’s policy on how it electronically communicates with external entities.
- The TPB noted that it will commence public consultation on the Exposure Draft Practice Note in the coming weeks.
Draft Practice Note: Verifying a client’s identity
- The Forum was advised that in response to fraudulent activity that has been identified in relation to the Government’s COVID‐19 economic stimulus measures, the TPB is in the process of drafting a Practice Note setting out requirements for tax practitioners in relation to verifying clients’ identities.
- The TPB advised that a draft Practice Note will be provided to Forum members under embargo for feedback in the coming weeks, before being released for broader public consultation.
Draft Information Sheet: TPB’s discretion when recognising professional associations
- The TPB noted that the consultation period for Forum Members in relation to the Draft Information Sheet closed on 24 June 2020. The TPB received a total of nine submissions.
- The TPB advised that it is in the process of considering all submissions received from Forum members. This feedback will put to the TPB’s Recognised Professional Associations Committee for consideration.
- The TPB was asked whether the TPB intended on progressing the previously drafted legislative instrument that expanded the services, including the ability to apply for an Australian Business Number on behalf of a client, that can be provided by tax (financial) advisers.
- The TPB advised that it had not progressed the draft legislative instrument in light of the pending implementation of the recommendations from Royal Commission into Misconduct in the Financial Services Industry, and the (then) impending Independent Review of the TPB and the TASA.
- However, the TPB noted that it would consider re‐enlivening its consideration of the legislative instrument, in the first instance by reviewing the submissions made in relation to the draft legislative instrument.
The next meeting is scheduled to be held in late November or early December.
Last modified: 2 September 2020