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TPB Consultative forum report – 7 November 2018

TPB Consultative forum report - 7 November 2018

Thank you for joining Ian Taylor (Chair), Greg Lewis (Board member), Michael O’Neill (Secretary) and fellow Tax Practitioners Board (TPB) colleagues at the TPB consultative forum held on Wednesday 7 November 2018. We appreciate your valuable input and have produced a summary below to assist your association with communicating key messages to your members.

Items raised by the Forum members

Reasonable care obligations regarding cash sales

  • The Forum suggested that further guidance be developed in relation to meeting ‘Reasonable care’ requirements in the Code of Professional Conduct in the context of work related expenses and cash sales.
  • It was also noted that the ATO has guidance in relation to expectations on its website, including taxation ruling TR 96/7  which explains the general application of section 262A of the Income Tax Assessment Act 1936 (recordkeeping), as well as general information about the cash economy (including how the ATO uses data matching and benchmarks). Further, the ATO will seek to progress developing an integrated picture about activity across the ATO space, with relevant information to be provided to the Forum.
  • It was also confirmed that the TPB and ATO will work together to develop additional guidance on this topic and refer to the Forum for consideration.
  • It was further suggested that the ATO, TPB and recognised professional associations issue relevant communications messaging regarding relevant compliance outcomes in due course.

Business addresses on the TPB Register

It was reiterated that current TPB policy allows registered practitioners to have an alternative address (such as a PO Box) from their business address on the TPB register, if the registered practitioner makes a request to the TPB, including a reason as to why an alternative address is required.  The TPB will review current messaging and provide further clarity in relation to the circumstances when an alternative address can be utilised where a practitioner considers their personal safety or security is at risk as a result of them previously providing only a private residential address, for publication on the TPB register.


TPB raised matters

Cost recovery implementation statement

It was noted that the Cost Recovery Implementation Statement (CRIS) is published on the TPB website, providing information on how the TPB will implement partial cost recovery for the processing of registration and renewal applications of tax practitioners. The TPB will maintain the CRIS until the activity or cost recovery for the activity has been discontinued.


TPB Operations update

Process improvements

  • Changes were recently made to the online security measures and Proof of identity process requirements (aligned with Australian Government standards, using the Document Verification Service), with further information outlined in the September eNews edition.
  • Changes were also made to the online complaint form to facilitate better interaction between the TPB and people who wish to make a complaint.
  • It was also confirmed that the current TPB work program includes review of the TPB’s Public register search functionality. Further, the TPB is seeking to change the Public Register information to provide more detailed information, eventually including related entity linking.

Registrations

  • The Forum noted that the processing times are currently well within service standards in relation to most registration applications, and that registrations processing is now in a business-as-usual phase except for a small residual number of tax (financial) adviser renewal applications (with the TPB currently awaiting further information).
  • The TPB is undertaking relevant preparatory activity for a forthcoming tranche of approximately 2,300 tax (financial) adviser renewal applications (who registered under the transitional registration option) due to be lodged with the TPB in January / February 2019.

Compliance

  • There has been an increase in the number of complaints received across all tax practitioner types (934 as at financial year-to-date to end-October 2018, compared to 546 for the corresponding period in the previous year), with these complaints arising from a range of sources (including the public, ATO referrals and other practitioners). There has also been an increase in proactive compliance cases, including continuing professional education (CPE) review cases and annual declaration activity.
  • CPE reviews
    • The TPB is progressing its review in relation to tax practitioner compliance with the TPB’s CPE policy requirements. Preliminary CPE audit results were noted in the September eNews edition and updated results are expected to be published in the December eNews edition. Having regard to initial data analysis, it is expected that there will be a more rigorous focus on practitioners in relation to their CPE/CPD responsibilities.
    • In accordance with a risk-based approach, initial focus is on those tax practitioners who are not subject to another regulatory requirement or who are not members of a recognised professional association, and therefore are unlikely to be subject to other CPE/CPD review activity. Cases are selected at random from individual tax and BAS practitioners who renewed in the previous month.
    • As at end-September 2018, 110 CPE reviews had been completed – in particular, 85 were found to be compliant, 21 education letters were sent, and 4 practitioners had surrendered their registration. A further 115 reviews were in progress, with three referred for formal investigation as no CPE activities had been undertaken.
    • The review program is expected to be expanded to tax (financial) advisers and members of some recognised associations in future rounds. Further, the TPB intends to review the TPB’s CPE policy requirements to ensure the requirements remain appropriate.
    • The TPB is appreciative of Association support in relation to extending key messages, including the importance of ensuring there is contemporary relevant knowledge.
  • Annual declaration activity
    • The general compliance trend has continued, with 97-98% of those required to lodge each month do so by the due date, a number of surrendered registrations being received (252 year-to-date at 30 September 2018), and a key exception issue is personal tax obligations. It was also noted that the TPB will be focusing on tax (financial) advisers over the next year, with many annual declarations due in December 2018 / January 2019.
  • The TPB is currently looking at a more systemic program to facilitate ensuring practitioners are up-to-date with taxation obligations, and to support a level-playing field and community expectation of people who are in a trusted position. In this regard, initial observations (using ATO debt and lodgement data) indicate thousands of registered practitioners have one or more outstanding income tax lodgements and/or one or more outstanding activity statements. The TPB asked Associations for their support in reiterating the message that registered tax practitioners ensure they keep up-to-date with their obligations.
  • Review of compliance process and program
    • To support an increased compliance focus, the TPB has undertaken a strategic review of its operations. In addition, the TPB is undertaking a comprehensive review of its complaint handling process (including giving consideration to other models such as the Australian Financial Complaints Authority), and an update in relation to findings and outcomes of this review will be provided at the next Forum.

Communications update

  • The TPB is continuing its commitment to communication and awareness activity, including a broad-based approach to Outreach that involves a rolling schedule of webinars, speaking engagements, eNews, social media and media releases.
  • It was noted that the June advertising campaign to drive consumers to the TPB register (to check their practitioner is registered) appeared to be successful, with searches of the TPB Register increasing by 15% compared to the same period in 2017 and the advertisement viewed more than 1.1 million times during the campaign.
  • The TPB is shifting its focus to a firmer regulatory tone across our communication channels, recognising a need to continue to tell the story about how the TPB is working as an effective regulator and where we are identifying people that are operating outside of the realm of the trusted relationship. To further its efforts to protect consumers, the TPB is working with the ATO and revisiting the parameters of information we can make public, and will be ‘naming and shaming’ tax practitioners found to be failing to comply with their obligations where appropriate.
  • A media release has issued in relation to the recent Federal Court of Australia case of Ham v Tax Practitioners Board [2018] FCA 1652, helping support the message that the TPB is identifying and taking action against tax practitioners who do not meet the requisite standard of fit and proper conduct.
  • The TPB intends to amplify messaging and use appropriate narrative to tell the story of the TPB’s approach to compliance at a high level, coordinating with associations to facilitate expanded communication reach to the registered tax practitioner community. Further, the TPB will seek to review its communication strategy in conjunction with stakeholder feedback, with an updated strategy to be referred to the Forum in due course.

Annual declarations for Recognised professional associations

  • The TPB has considered learnings from previous annual declaration rounds and sought feedback on a new (draft) proposed annual declaration form and accompanying Guide document as part of its commitment to streamlined processes and continuous improvement. The TPB is seeking to employ an exceptions-based approach for future annual declaration rounds, with targeted information (about any relevant changes since their previous annual declaration round) to be sought from associations. The Forum was supportive of the proposed approach and suggested minor edits to the proposed form and accompanying Guide for further clarity. It was confirmed that this feedback will be considered by the TPB prior to finalising the documents.

Policy matters

Transfer of business and confidentiality

  • The Forum noted a pre-Exposure Draft Practice note and it was confirmed the TPB will consider any comments provided by Forum members before the TPB determines next steps.

Review of TPB information products

  • It was noted that the TPB has published a number of information products on its website, including a range of policy and guidance material (explanatory papers, guidelines, information sheets and practice notes) that was developed in conjunction with stakeholder feedback. The TPB is now seeking to undertake a dedicated review of its material as part of general stocktake business as usual activity.
  • Comment was sought on whether the TPB has appropriate product types and topics, the readability of information products and what current products should be prioritised for review. It was confirmed that relevant feedback could be provided to the TPB out of session, which will then be considered by the TPB as appropriate when reviewing its forward work program.

Next meeting

The Chair thanked forum members for their attendance and continuing feedback. The next meeting is scheduled to be held on 5 March 2019 in Sydney. A ‘save the date’ notification will be forwarded to participants shortly, pending final details.


Last modified: 29 November 2018