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TPB Consultative forum report - 29 March 2017

TPB Consultative forum report - 29 March 2017

On Wednesday 29 March 2017, Ian Taylor (Chair), Greg Lewis (Board member) and Tax Practitioners Board (TPB) colleagues held a TPB consultative forum with representatives predominantly from a number of TPB recognised professional tax and BAS agent associations.

The key points that were discussed at the forum are summarised below. In accordance with past practice, this report provides an overview of the issues that were discussed and does not represent the final views of the TPB, nor is it intended as minutes of the forum.

Update from the TPB

Registrations

  • As at the end of February 2017, there were 76,519 registered practitioners (compared with 75,877 registered practitioners as at end-October 2016) – comprising 41,117 tax agents, 15,136 BAS agents and 20,266 tax (financial) advisers. The overall number of registered tax and BAS agents continues to remain steady, with the TPB continuing to receive a steady stream of approximately 400 new tax and BAS agent applications (and a similar number of resignations) each month.
  • As expected, there has been a steady increase in the number of tax (financial) adviser registration applications received since the transitional and standard registration options commenced on 1 January 2016. The TPB is expecting further applications under the transitional option prior to it no longer being available after 30 June 2017.
  • As at end-February 2017, individual tax and BAS agents (that is, excluding company and partnership tax ad BAS agents) were represented in the following age groups:

Age groups

Individual tax agents

Individual BAS agents

Totals

Under 30 years old

429

193

622

30-40 years old

5,844

1,969

7,813

41-50 years old

7,546

4,015

11,561

51-60 years old

7,547

3,847

11,394

61-70 years old

5,993

1,651

7,644

71 years and older

2,306

185

2,491

Grand Total

29,665

11,860

41,525

  • The known percentage of registered individual tax and BAS agents who are members of a TPB accredited recognised professional association has remained steady, with more current information being provided pursuant to the annual declaration process. As at end-February 2017, the proportion was:
    • 90% of individual tax agents
    • 62% of individual BAS agents.
  • The TPB acknowledged that average processing times for new applications are currently outside of the 30-day service standard. The TPB is also mindful that the ability to meet service standards is expected to be impacted due to the TPB having to assess and process around 19,000 tax (financial) adviser renewal applications expected between July and December 2017 (for those tax (financial) advisers that were registered under the previous notification process).
  • The TPB has taken a number of mitigating steps in seeking to address this issue, including, among other things:
    • various outreach and communications activities to educate applicants on application and supporting documentation requirements
    • automation of tax and BAS agent renewal processes and diversion of relevant resourcing to processing new applications
    • the use of overtime and more non-ongoing staff
    • continuous review of processes, streamlined vetting of applications and earlier follow-up (where further information is sought)
    • having a dedicated team to handle enquiries from tax (financial) advisers, development of renewal kits for individual and corporate and partnership authorised representatives, and implementation of a bulk renewal process initiative for Australian financial service licensees (with 10 or more authorised representatives) where appropriate.

The TPB is also reiterating the message that practitioners who lodge registration renewal applications on time (at least 30 days before registration expires) will remain registered until the TPB notifies them of the outcome of their renewal application.

  • While the TPB aims not to unnecessarily impede the operation of regulated entities, the TPB is concerned that the percentage of applications not meeting service standards will increase in conjunction with further resourcing constraints from 1 July 2017. In particular the following points were noted by the TPB and forum members:
    • The regulation of over 20,000 tax (financial) advisers, in addition to the regulatory responsibility for over 56,000 registered tax and BAS agents, has considerably increased the TPB’s workload since 2013.
    • The TPB’s workload will effectively double  with the large influx of tax (financial) adviser renewal applications that will be received from 1 July to 31 December 2017; however, the TPB is scheduled to experience a reduction in its forward operational budget from 1 July 2017, as well as not having a guaranteed capital budget to invest in technology process improvements.
    • Delays in processing new registration applications (reflected in the TPB not meeting service standards) may impact on entity’s ability to start generating an income. 
    • Relevant capital investment in the TPB’s processing system is required to facilitate process improvements (such as improvements to online forms), reduce registration workload backlogs and minimise the risk of service standards not being met. Further, there is a risk of engendering unnecessary practitioner interaction and increasing disengagement with the taxation system if the TPB is unable to effectively meet its objective, including its important consumer protection role.

Tax (financial) advisers

  • The TPB is continuing to undertake activity to ensure registered tax (financial) advisers understand requirements for renewing their registration. To assist in managing the large influx of tax (financial) adviser renewal applications expected between July and December 2017, the TPB has undertaken a number of initiatives and preparatory activities. This has included a bulk renewal process initiative for Australian financial service (AFS) licensees (with 10 or more authorised representatives) and development of renewal kits (one for individuals and one for company and partnership tax (financial) advisers).
  • In addition, the TPB is continuing to focus on raising awareness of the need to register, including:
    • further promoting availability of the transitional registration option until 30 June 2017
    • highlighting the key message that if an entity provides tax advice or advises on tax consequences as part of their financial advice to clients for a fee or other reward, they must be registered with the TPB to provide those services legally
    • continuing to provide a number of outreach activities, including a rolling schedule of webinars, a live webcast and special eNews editions
    • corresponding with a number of AFS licensees who are not registered with the TPB to ensure they understand the TPB registration requirements
    • reaching out to registered AFS licensees who have individual and corporate authorised representatives that are not registered with the TPB, to ensure their representatives register with the TPB if they are providing a tax (financial) advice service for fee or other reward.

Compliance

  • The number of complaints and referrals received year-to-date (1,072 from 1 July 2016 to 28 February 2017) is slightly lower than in the corresponding period for the previous year (1,123 in the period 1 July 2015 to 28 February 2016). 20 practitioners have had their registration terminated and two practitioners have had their registration suspended in the period 1 July 2016 to 28 February 2017 (recognising that some matters are still subject to appeal).
  • The number of cases on hand has increased slightly (785 at end-February 2017, compared with 659 as at end-October 2016), with many cases related to the annual declaration process.
  • Overall, there continues to be a very small proportion of registered practitioners on which sanctions are applied, with an increased number of written cautions, orders and surrenders (compared to previous years) arising pursuant to annual declaration activity.
  • It was also observed that there continues to be a number of Administrative Appeals Tribunal (AAT) appeals on hand (14 active as at end-February 2017) and that the AAT continues to affirm most of the TPB’s decisions.

Unregistered BAS service provider project

  • As at end-February 2017, the dedicated national project targeting unregistered entities advertising BAS services  has resulted in the following outcomes since the project commenced in April 2016:
    • 2,974 advertisements were identified through various search criteria as a pool for further analysis (these channels including Gumtree, Yellow Pages, and other online service provider sites) and after considering information in advertisements, 439 were recognised as warranting further TPB scrutiny (in relation to a potential breach of the Tax Agent Services Act 2009 (TASA)).
    • Pursuant to TPB involvement, 246 advertisements have now been removed or amended to ensure that the advertisement meets the requirements of the TASA. Of the other 193 advertisements, approximately 90 were considered to be compliant with the TASA after further consideration and the TPB is continuing to work through the remaining advertisements with the advertisers concerned to see whether they require amendment or removal.
    • A number of non-compliant entities have also now become compliant through registration with the TPB (20 applications for registration lodged pursuant to direct project intervention).
    • The number of referrals to a specific TPB mailbox that was set up and marketed to practitioners as an avenue for providing intelligence to the TPB resulted in 51 referrals, with 26 advertisements being removed or amended following relevant consideration of these referrals.
    • The majority of service providers have been co-operative with the TPB’s requests, with a number of matters involving a misunderstanding of the TASA (such as mistakenly noting another associated entity that was not registered).
    • The TPB will continue to invest in compliance monitoring on relevant matters as appropriate, noting that the project work has provided a platform for the TPB to take escalated compliance action against any relevant entities that continue to advertise in breach of the TASA.
  • While the dedicated unregistered BAS service provider project phase ends on 31 March 2017, relevant issues will be carried over into the TPB’s general compliance area. The TPB will continue to always remain open to receiving referrals of identified unregistered service provider behaviour through the simple online complaints form on the TPB website.
  • The TPB has been appreciative of association support with this project, including in relation to providing the TPB with intelligence on unregistered entity behaviour and supporting key messages.

Annual declaration for registered tax and BAS agents

  • It was reiterated that this initiative, which commenced in January 2016, provides an important assurance that registered practitioners are meeting their ongoing obligations, with benefits of the process including:
    • improved integrity of information (including the public register of tax practitioners)
    • timelier notification of changes in circumstances and ability to promptly address ongoing registration concerns of some practitioners
    • currency of professional indemnity insurance information.
  • The general trend is, on average, about 97-98% of those practitioners required to lodge an annual declaration each month do so by the due date.
  • An annual declaration process is also expected to be implemented for tax (financial) advisers, who register under the standard or transitional application process, from the second-half of the 2017 calendar year (noting that the first declaration is due one year after renewal of registration).

Communication activity

  • The TPB is continuing with a broad based approach to Outreach involving a combination of webinars, face-to-face events, speaking engagements and involvement in ATO Open Forums as appropriate. It was also observed that the TPB continues to regularly publish eNews and that the TPB continues to welcome any opportunities to speak at national and state conferences of associations.
  • In the March 2017 quarter, the TPB presented at:
    • 17 external engagements (association events and ATO Open Forums)
    • two Outreach sessions in Canberra – one session targeted to tax and BAS agents (224 attendees), and another session for tax (financial) advisers which involved a livestreaming option (over 700 attendees)
    • five webinars reaching 1,600 tax professionals.
  • Webinars continue to be well received, with a good level of attendance and interaction. The TPB continues to have a rolling schedule and ongoing development having regard to feedback received, with a further six webinars currently scheduled before end-June 2017. Details about upcoming events available from the Home page of the TPB's website.
  • Small business awareness campaign:
    • It was noted that the online and social media advertising campaign, which ran from 16 October to 5 November 2016, was targeted at small businesses and used a creative traffic light design and online advertisements shown on targeted websites. In particular, the TPB sought to raise awareness and encourage those businesses who use an agent (for their tax or business activity statement matters) to check that the agent is registered by checking the TPB Register or looking for the registered tax practitioner symbol.
    • The campaign delivered 13,000 clicks from 14 million total impressions (how many times advertising was ‘served’) and resulted in a 156% increase in traffic to the TPB homepage compared to the tax time campaign in 2015. There were also 3,066 visits to the TPB’s How to download the symbol web page.
  • TPB website improvement: The TPB has received generally positive feedback regarding its new website, which was launched in December 2016 and employs a segmented pathway structure with differentiated landing page access for tax agents, BAS agents, and tax (financial) advisers. Subject to resourcing constraints, further work will also be undertaken this calendar year to redevelop the TPB Register search function.

Policy matters

  • Outsourcing, offshoring and the Code of Professional Conduct (Code): The forum provided feedback on an initial draft paper, prepared for the intent of providing future practical educative guidance to registered tax practitioners in understanding obligations under the Code in relation to the use of outsourcing and offshoring. It was confirmed that this feedback, along with any further written comments provided by forum members (by end-April 2017), will be considered by the TPB prior to determining next steps.
  • Explanatory papers on the ‘Code of Professional Conduct’ and ‘Fit and proper person’: It was noted that the TPB has undertaken a review of these papers for the purpose of:
    • incorporating updated case references
    • incorporating reference to tax (financial) advisers and making a reference to registered tax practitioners (which includes tax agents, BAS agents and tax (financial) advisers)
    • cross-referencing to other information products as appropriate, including finalised information sheets on particular Code items for tax (financial) advisers.

The forum suggested minor edits for further clarity and it was confirmed that this feedback, along with any further written comments provided by forum members (by end-April 2017), will be considered by the TPB.

  • Proposal for a legislative instrument for tax (financial) advisers:
    • It was noted that the TPB is scoping out development of a relevant legislative instrument to note certain activities as being an extension of a tax (financial) advice service (to allow making some representations by tax (financial) advisers to the Commissioner of Taxation).
    • The TPB has received a number of submissions from the Financial Adviser Forum, with a range of views expressed. The TPB is also seeking Consultative Forum member feedback and it was confirmed that the TPB will be considering all submissions received before determining next steps.
  • Exemption from providing financial product advice: The forum noted that further clarification is being sought in relation to a Corporations Act exemption (in paragraph 766(5)(c)) that advice given by a registered tax agent or BAS agent (within the meaning of the TASA), that is given in the ordinary course of activities as an agent and that is reasonably regarded as a necessary part of the those activities, would not constitute financial product advice. It was confirmed that the TPB has scheduled discussions with the Australian Securities and Investments Commission (ASIC), with consideration to be given to the possibility of providing joint advice.
  • Mental health: The Board is cognisant of the impact of issues associated with mental health, including where it is associated with complaints that are raised with the TPB about competency. The TPB is working with the ATO to raise awareness of the issue and to highlight that practitioners are encouraged to report any relevant concerns sooner rather than later.
  • Cyber Security insurance: The TPB recognises the risk associated with cyber-attacks and is also aware that a number of insurance providers are now providing options to extend professional indemnity insurance packages to include cyber security insurance. In this regard, feedback is sought from forum members in relation to what is a notifiable event and whether the TPB’s professional indemnity insurance requirements for tax practitioners should be extended to include cyber security insurance, with further discussion to be carried over to the next forum meeting.
  • BAS agent educational qualifications review by PwC (Skills Australia): It was briefly noted that the TPB has been involved in working group discussions relating to the review of Certificate IV in Bookkeeping, Certificate IV in Accounting and payroll courses. Discussions are ongoing and still in their early stages, with the TPB clearly highlighting relevant TPB registration requirements.

Next meeting

  • It was noted that the TPB is seeking forum member feedback regarding future operation of the forum, with the TPB to provide a relevant short survey to forum members.
  • The Chair thanked forum members for their attendance and continuing feedback. The next meeting is scheduled to be held on 9 August 2017.

 

Last modified: 20 June 2017