TPB Consultative forum report – 9 November 2016
On Wednesday 9 November 2016, Ian Taylor (Chair) 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 discussed at the forum are summarised below. In accordance with past practice, this report is intended only to provide an overview of the issues that were discussed and does not represent the final views of the Board, nor is it intended as minutes of the forum.
Update from the TPB
- As at the end of October 2016, there were 75,877 registered practitioners – comprising of 40,996 tax agents, 14,940 BAS agents and 19,941 tax (financial) advisers. As expected, the number of registered practitioners has remained relatively steady since the last consultative forum (where reported that there were 75,436 registered practitioners as at end-June 2016), with the TPB continuing to receive approximately 400 applications each month.
- There has been a small but steady number of tax (financial) adviser registration applications received since the transitional and standard registration options commenced on 1 January 2016, noting that the transitional option is available until 30 June 2017. As at end-October 2016, 797 tax (financial) advisers had registered under these options (432 transitional and 365 standard), with a further 142 new applications on hand. A major focus has been on ensuring registered tax (financial) advisers understand the requirements for renewing their registration and their obligations under the Tax Agent Services Act 2009 (TASA).
- The TPB is continuing to meet service standards as outlined in the TPB’s Corporate Plan; however, it was noted that the weighted average processing time for registration applications has increased slightly (26 days for the 3 months to October, compared with 22 days for the September quarter).
- The TPB is mindful that processing times for future applications may be impacted by current resourcing constraints and the large influx of tax (financial) adviser registration renewal applications (almost 19,000) expected in the second half of 2017. The renewal applications for these tax (financial) adviser notifiers will need to be assessed (in relation to required qualifications and/or experience as appropriate) before a decision can be made on whether the renewal is granted. The TPB is aiming not to unnecessarily impede the operation of regulated entities – in this regard, the TPB is:
- continuing to focus on improving the processing times for new applications and reducing aged cases
- highlighting 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
- reiterating the message that practitioners ensure their contact details are up to date.
- The known percentage of registered individual tax and BAS agents who are members of a TPB accredited recognised professional association has increased slightly since the last consultative forum. As at end-October 2016 the proportion was:
- 90% of individual tax agents (compared to 88% at end-June 2016)
- 62% of individual BAS agents (compared to 61% at end-June 2016).
- It was noted that the TPB recently published the fifth edition of its Summary of penalties, sanctions and terminations publication, which provides a summary of some of TPB’s recent compliance outcomes (including Federal Court, Administrative Appeals Tribunal (AAT) and Board Conduct Committee matters).
- The number of complaints and referrals received year-to-date (521 from 1 July to 31 October 2016) is lower than in the corresponding period for the previous year (630 in the period 1 July to 31 October 2015). It was also noted that the proportion of complaints and referrals from public (315 out of the 521), other registered practitioners (55) and the ATO (25) is consistent with previous reporting periods.
- The number of cases on hand has remained steady (659 at end-October, compared with 649 as at end-June), with many cases related to the Annual Declaration process.
- The introduction of the Annual Declaration process in 2016 has also resulted in some additional compliance work in relation to those practitioners who have not lodged their Annual Declaration as required.
- 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 observed that there continues to be a number of AAT appeals on hand (11 active as at end-October 2016) and that the AAT continues to affirm most of the TPB’s decisions.
- It was also noted that the AAT had modified sanctions imposed in 2 cases (restricting tax agent registration) pursuant to new information being presented to the AAT that was unavailable to the TPB at the time it made its decisions. The TPB issued a relevant media release (in August) highlighting that as each case will be assessed on its particular facts, tax practitioners are encouraged to provide all relevant information to the TPB as early as possible to avoid heavy sanctions and any unnecessary litigation.
- The following AAT decisions were also briefly highlighted:
- Juneja & Three Wickets Pty Ltd: It was noted that the AAT affirmed the TPB’s decision to terminate the individual applicant’s registration as a tax agent (as he was not a fit and proper person) and to reject the application for renewal of company tax agent registration as the director was not a fit and proper person (pursuant to non-compliance with taxation laws).
- GJ Brown & Co Pty Ltd & Gregory Brown: It was observed that while the AAT recognised the individual applicant’s misfortunes and personal stresses and strains, it considered that the more fundamental concern was the ‘preservation of the general community’s confidence in tax agents and the protection of the public’. In particular, the AAT was not satisfied that the individual applicant was a fit and proper person having regard to:
- multiple acts of non-compliance/breaches of the taxation laws in both his personal and director’s capacities over a lengthy period of time
- the delay in addressing many of the non-compliance issues
- the fact that some of the non-compliance issues still remained unresolved
- the absence of not only a satisfactory explanation for the non-compliance, but also of the substantiation/corroboration of some of the causative/contributing factors claimed by the applicants.
Unregistered BAS service provider project
- It was reiterated that this specific compliance project commenced in April 2016 and is targeting those who are advertising BAS services and are not TPB registered practitioners. In doing so, the TPB is keen to promote the importance of compliance with the registration requirements of the TASA and to ensure a level playing field for registered practitioners who do the right thing. To achieve this, the project is focused on delivering the following objectives:
- identifying unregistered BAS service providers who are advertising BAS services and immediately issuing relevant cease and desist notices to them
- directly engaging with these providers to educate them as to their responsibilities under the TASA and encouraging them to become registered if appropriate
- ensuring corrective action is taken by removing inappropriate advertisements
- monitoring future behaviour to ensure ongoing compliance
- taking corrective Federal Court action where necessary and appropriate.
- It was highlighted that the compliance project has progressed significantly since it commenced – in particular:
Phase 1 of the project
- Initial profiling identified 1,050 online advertisements for BAS like services and 134 entities that warranted further scrutiny by the TPB, providing for a suitably sized initial sample for assessing the extent of the risk. Direct engagement has occurred with all entities associated with these 134 entities to understand their registration status and/or modify their advertisements.
- Of the 134 entity advertisements, 106 were recognised as being in breach of section 50-10 of the TASA (advertising tax agent services if unregistered) and the following actions have occurred:
- 101 advertisements were removed or amended as appropriate
- there was appropriate change of behaviour in two cases
- three relevant matters have been escalated for further compliance action.
- This represents a strike rate of 10.1% based on the initial pool. Further, while no breach was found due to registration confirmation in 28 other matters, a number of advertisements were amended by the registered entities to include further relevant identifying information as appropriate.
- The TPB also encouraged informal anonymous complaints from registered practitioners and members of TPB recognised professional associations by providing an additional TPB Compliance Referral mailbox. This avenue, which is not limited to unregistered BAS service provider advertising and intelligence, was established as a separate mechanism to the formal complaints process so as to facilitate providing the TPB with a sufficient information lead in regard to compliance matters. 17 referrals of information or intelligence have been received and followed up, which has led to two further advertisements being removed or amended.
Phase 2 of the project
- The Board endorsed extension of the project to include a second phase of expanded searches and deliver broader national coverage (cases being developed for each state and each state split by separate regional areas). The searches under phase 2 are also targeted at identifying advertisements which may be undertaken by unregistered BAS service providers who were previously registered with the Board under BAS transitional arrangements but did not renew their registration, in many cases because they did not have the appropriate skills and/or qualifications for standard registration.
- The compliance referral mailbox will also continue to be made available for the receipt of informal referrals.
- At this stage, in excess of 1,388 advertisements have been identified for BAS like services and 231 entities recognised as warranting further follow-up enquiry, suggesting that the targeted approach under phase 2 will provide for a greater strike rate. The TPB will further pursue follow-up work once the full national population has been completed.
- Once the second phase of searches has been completed, it is expected that the TPB searches will have covered post codes which make up a combined national population of at least 14.5 million people.
- It was reiterated that formal complaints of unregistered entity behaviour can also still be made through the TPB’s usual complaint referral process.
- The TPB is 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
- Since January 2016, over 28,000 annual declarations have been lodged (due on the anniversary of the practitioner’s date of registration, except for the year that registration is required to be renewed) to demonstrate that registered practitioners are meeting their ongoing obligations, with benefits of the process including:
- improved integrity of information (including the TPB Register)
- timelier notification of changes in circumstances and ability to promptly address ongoing registration concerns of some practitioners
- currency of professional indemnity insurance information and disclosure in regard to meeting personal tax obligations.
- It was reiterated that those tax practitioners whose annual declaration is due are sent reminders to lodge their annual declaration and that there has been a good response rate, with approximately 95% lodging by the due date. Feedback has noted that it takes most practitioners approximately five minutes to complete and lodge their annual declaration.
- The TPB is appreciative of the support provided by associations in highlighting key messages in relation to the annual declaration process, including reinforcing that annual declarations are a formal request from the Board and that it is important to keep contact details with the TPB up-to-date.
- It was also noted that a number of investigations have been commenced and a number of written cautions and orders made pursuant to finding that there has been a breach of the Code of Professional Conduct (Code) in the TASA. In particular, as at 14 October 2016, there had been 349 written cautions and 46 tax practitioners had received sanctions of an order. In this regard, it was highlighted that Code item 14 (subsection 30-10(14) of the TASA) requires that practitioners must respond to requests and directions from the Board in a timely, responsible and reasonable manner.
- 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 highlighted that over 1,500 people attended the 12 face-to-face events (for tax agents, BAS agents and tax (financial) advisers) that were recently held in Sydney and Melbourne in October. The TPB also continues to welcome any opportunities to speak at national and state conferences of associations.
- Webinars continue to be well received, with a good level of attendance and interaction. The TPB will continue to have a rolling schedule and ongoing development having regard to feedback, with details about upcoming events available from the TPB’s home page at www.tpb.gov.au
- It was also observed that the TPB continues to regularly publish eNews editions and that the TPB 2015-16 Annual Report was also recently published.
- Small business awareness campaign: From 16 October to 5 November, the TPB ran an online and social media advertising campaign targeted at small businesses to raise awareness and encourage those who use an agent (for their tax or business activity statement matters) to check that the agent is registered. The creative from the 2015 Tax time campaign was reused, with small businesses encouraged to look for the registered tax practitioner symbol or check the TPB Register. It was noted that there had been increased traffic to the TPB Register and that an update on the outcomes of the campaign will be provided at the next forum meeting.
- TPB website improvement: It was noted that the TPB has continued to progress work on website improvement activity, with the new website to be made available in early to mid December 2016 and further promoted in the December edition of TPB eNews. It was also noted that the TPB appreciated the assistance received from associations in promoting the beta test website to their tax practitioner members and that there is also a separate future project planned in relation to Register functionality (search function), with further relevant consultation to occur in due course.
Regulator Performance Framework
- It was reiterated that the Regulator Performance Framework (RPF) assesses one aspect of regulatory performance, concerning the administration of regulation, with regulators to report on performance against six outcomes-based key performance indicators (KPIs) covering a range of issues. The first reporting period for the annual self-assessment metrics is for the year ended 30 June 2016.
- It was observed that the forum considered and provided feedback on a draft self-assessment report (including metrics information) at the previous forum and that information and evidence to support the metrics is contained in the TPB 2015-16 Annual Report and the associated Annual Performance Statement.
- It was noted that the updated report, provided for further forum feedback and validation (including whether the assessment and conclusions are reasonable and objective), has incorporated minor amendments pursuant to previous forum feedback and also up-front narrative based on the evidence (introduction, overview and summary against the KPIs).
- The overall assessment is that the TPB is on track to show continuous improvement in enhancing the regulatory environment for registered tax practitioners across Australia – including through a continuing drive to be consultative and interactive with key stakeholders and registered practitioners – and has made it a priority to better communicate and help practitioners comply with their obligations. It is also recognised that the large increase in registered practitioners (tax (financial) advisers) and the external budgetary constraints provides a challenging environment for the TPB to operate in and meet its statutory obligations.
- Following relevant consideration of feedback received (including any further out-of-session feedback received by 23 November), the report will be provided to the Commissioner of Taxation and then the relevant Minister, prior to subsequent publication to the TPB website by 31 December.
- Cloud computing and the Code of Professional Conduct: It was reiterated that the Exposure Draft Practice Note closes on 28 November 2016. It was reiterated that the Practice Note provides educative guidance raising awareness of relevant considerations when entering into Cloud arrangements (instead of being a technical information sheet) and that the TPB will consider all submissions received before finalising the document.
- Payroll service providers: It was confirmed that submissions on the Exposure Draft Information Sheet (setting out the TPB’s preliminary views on the registration requirements for entities providing payroll related services) are being considered and that the TPB has been in discussion with PwC’s Skills for Australia in relation to determining and facilitating an acceptable qualification.
- Tax Agent Services (Specified BAS Services) Instrument 2016: It was observed that the disallowance period (instrument subject to disallowance by Parliament for the first 15 sitting days after registration) was due to end on 10 November 2016. It was also noted that the instrument, which expanded the definition of a ‘BAS service’ and commenced on the day after it was registered (was registered on 1 June 2016), had been well received.
- Proposal for a legislative instrument for tax (financial) advisers: It was briefly noted that the TPB is scoping out the 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 to the Commissioner of Taxation). It was noted that further information is currently being sought from the Financial Adviser Forum prior to developing a draft discussion paper, which will be provided to the Consultative forum for comment.
- It was also briefly noted that there is an extensive forward work program, including a continued focus on the development of guidance for tax (financial) advisers. In this regard, the TPB is currently reviewing its explanatory papers on the ‘Code of Professional Conduct’ and on ‘Fit and proper person’ for currency, including incorporating update case references, a reference to tax (financial) advisers and cross-referencing to other information products (including the recently finalised information sheets on the Code for tax (financial) advisers) as appropriate.
The Chair thanked forum members for their attendance and continuing feedback. It was confirmed that the next meetings are proposed to be held in March, July and November 2017, with further information in relation to specific dates to be provided in due course. It was also noted that videoconferencing will continue to be used, having regard to the agenda as appropriate.
Last modified: 19 December 2016