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TPB Financial advisers forum report - 10 August 2017

TPB Financial advisers forum report - 10 August 2017

On 10 August 2017, Ian Taylor (Chair), Julie Berry (Board member) and fellow Tax Practitioners Board (TPB) colleagues held a TPB Financial adviser forum with representatives from associations that represent the financial planning profession.

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

Update from the TPB

Board appointments and Charter

  • It was noted that the Minister for Revenue and Financial Services (The Hon Kelly O’Dwyer MP) reappointed Julie Berry (a registered tax (financial) adviser) and appointed two new Board members (commenced on 22 July) – Ria Sotiropoulos (a tax barrister at the Victorian Bar for nine years and brings extensive tax and law experience) and Peter de Cure (a previously registered tax agent who has had an extensive career with KPMG and brings an expert understanding of the Australian taxation system, the work of taxation practitioners and corporate governance experience). The contribution of former Board members Russell Smith and Yvonne Sneddon over the past seven years was also formally acknowledged.
  • Pursuant to a suggestion raised in forum member survey feedback, the forum noted and endorsed an updated Charter (single Charter for both the Consultative and Financial adviser forums) for the purpose of providing clarity regarding purpose and roles.

Operational matters

Registrations and compliance update

  • The forum noted a summary snapshot of registrations and compliance activity and observed that, as expected, current resourcing constraints are impacting on the TPB’s ability to meet operational service standards (including the overall weighted average processing time for processing new registration applications, which was 35 days in June). In particular, it was observed that the inclusion of tax (financial) advisers into the TPB’s regulatory framework has resulted in an increase of approximately 35% to the registered practitioner population, that a large influx of approximately 17,000 tax (financial) adviser renewal applications will be received during the period 1 July to 31 December 2017, and that the TPB has a reduced operational budget for 2017-18 (compared to 2016-17).
  • As expected, there has been an increase in the number of tax (financial) adviser registration applications received, with 1,847 new applications (including approximately 1,300 transitional registration applications) and 1,300 renewal applications in the month of June 2017. This followed further outreach activity to unregistered entities to ensure understanding of registration requirements, as well as reiteration of the message that the TPB encourages tax (financial) advisers to renew their registration as soon as they are ready and not wait until 30 days prior to their registration expiry date (with the renewal period still dated from the expiry date even when lodging early).
  • The TPB is continuing to focus on processing new applications, noting that registered tax 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 even if it is after the expiry of the registration date.
  • The TPB recognises the importance of continuing communications to facilitate greater awareness of the need to register and of the registration requirements, noting that a large number of tax (financial) advisers failed to renew in July and that failure to renew letters will issue accordingly. In this regard, the forum supported a proposal for the TPB to issue a media release and provision of relevant information to associations to highlight the consequences of failing to renew. This includes 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. It was observed that it is important to appropriately highlight this message in readiness for the next tranches of tax (financial) adviser renewal applications, and it was noted that a separate media release will issue shortly.
  • It was also confirmed that work is being undertaken for the purpose of facilitating greater uptake of the bulk renewal process initiative for Australian financial service (AFS) licensees (with 10 or more authorised representatives), with the TPB to rekindle its efforts and to act quickly in ascertaining blockers and solutions to enable greater participation. It was also observed that the TPB is intending to develop a focused webinar to assist AFS licensees with the bulk renewal process.
  • Other process improvements:
    • The TPB is continuing to progress work on reviewing form design and letters (clarity of instructions, interaction and process), including the Statement of relevant experience, to facilitate improved understanding and provision of information.
    • The TPB is also continuing to work on the Qualifications Advice Service to improve the way tax practitioners can determine whether either a specific course is Board approved or the applicant’s qualifications meet with regulatory requirements. It is currently planned that this service will be made available externally on the TPB website in September, dependent upon resourcing availability.
    • The TPB is also working on making some changes to the ‘Contact Us’ page on the TPB website to enhance and expedite the enquiry experience. It is hoped that the new Contact Us page, which will provide direct links to topics frequently requested by tax practitioners, will be released shortly.
  • The number of complaints and referrals for the full year to 30 June 2017 was less than in the previous year (1,525 compared to 1,654) and there continues to be a very small proportion of registered tax (financial) advisers on which sanctions are applied. Most action is around those subject to Australian Securities and Investments Commission (ASIC) banning orders, with a streamlined process in place for information sharing in regard to these orders.
  • Annual declarations: It was confirmed that the TPB has implemented the annual declaration process for tax (financial) advisers (who register under the standard or transitional application process), commencing from August 2017.

Communications update

  • The TPB has continued to increase its communication and awareness activity 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. In particular, the TPB delivered 23 webinars in the 2016-17 year (reaching an audience of 6,510 participants, compared to under 3,000 in 2015-16), and also presented at 61 face-to-face and four video presentations at external engagements. The TPB continues to welcome any opportunities to speak at national and state conferences of associations.
  • It was observed that 503,256 unique users visited the TPB website in 2016-17 (20.1% increase compared to 2015-16), and that there was more than 3.9 million webpage views (31.3% increase) and that there were 1.29 million searches conducted on the TPB Register (42% increase).

Policy matters

Professional associations – annual declaration process and governance related arrangements

  • It was observed that the TPB issued a statement on 13 July (published on the TPB website) to clarify the role of the TPB in the recognition of professional associations (does not give a professional association the ability to actually provide tax agent services for a fee). In particular, it was noted that the TPB accredits a number of recognised professional associations and by doing so provides their voting members with an additional avenue to seek registration with the TPB.
  • It was reiterated that the TPB implemented an annual declaration process to require all recognised associations to confirm and demonstrate that they continue to meet the ongoing eligibility requirements. The TPB is continuing to consider annual declaration submissions from a number of recognised associations, with the TPB to refer back to TPB recognised associations in due course where further information is required. Learnings are also being considered for the purpose of further refining the process for the next annual declaration implementation round.
  • It was also noted that the TPB is drafting guidance in regard to corporate governance and accountability to member requirements for professional associations that are, or are seeking to be, recognised with the TPB (Items 102, 107, 202, 207, 302 and 307 of Schedule 1 to the Tax Agent Services Regulations 2009 (TAS Regulations)).
  • This guidance is intended to be a high-level and evolving principle based information sheet, recognising the contemporary nature of what corporate governance means and that community expectations on what is good governance will change over time, and is expected to be released as a public exposure draft (with a 45-day public submission period) in the near future. It is also intended that the guidance will be a reference point in assessing corporate governance and accountability to member requirements for professional associations when considering future rounds of annual declaration responses.
  • The TPB will consult with associations, other key stakeholders and the general public.

Outsourcing, offshoring and the Code of Professional Conduct

The forum noted the updated pre-Exposure Draft Practice Note on outsourcing, offshoring and the Code of Professional Conduct, which provides practical educative guidance that raises awareness of relevant considerations. It was observed that previous feedback had been considered and the document updated for clarity. The forum supported release of the document as a public Exposure Draft, noting that any further feedback can be provided during the 45-day submission period.

Legislative instrument for tax (financial) advisers

  • The forum noted proposed content of a legislative instrument to include 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), which was updated after consideration of previous Consultative forum and Financial Adviser forum feedback including submissions (containing a range of views) received on a previous discussion paper.
  • Further feedback was provided for the purpose of providing further clarity regarding scope of items, and it was confirmed that the TPB will develop a draft legislative instrument and prepare a draft explanatory statement for wider public consultation (providing opportunity for any further comment). It was also noted that the TPB will need to undergo the required legislative process, including the undertaking of a preliminary assessment by the Office of Best Practice Regulation.

ATO interaction with financial advisers

The ATO Client experience lead for financial advisers provided a brief introduction, noting that the ATO has identified that financial advisers are an important intermediary in the taxation system and has been acknowledged as an emerging client experience in the ATO Reinvention program. Accordingly, the ATO has developed a Reinventing the ATO blueprint addendum for financial advisers and the ATO is seeking to increase engagement with relevant stakeholders to discuss relevant issues as appropriate. The forum supported circulating contact details for the purpose of continuing discussions and noted that the ATO will circulate and seek input on the ATO’s blueprint addendum.

Cyber security insurance

 It was noted that the TPB recognises the emerging threat of cyber-attacks and the importance of tax practitioners considering potential consequences and proactively protecting themselves, their practice and their clients. In this regard, the TPB recently updated the TPB Explanatory Papers on continuing professional education (to recognise cyber security training) and professional indemnity insurance (to incorporate an appropriate reference to first and third party coverage, and include a recommendation that tax practitioners assess their cyber risk and consider taking steps to ensure that there is appropriate coverage in the context of first party costs).

Whole of practice transfers

The TPB is addressing this as a current issue, raising relevant awareness in webinars and suggesting that practitioners give due consideration to due diligence arrangements (such as de-identifying client information). It was noted that the TPB is giving further consideration to the issue, having due regard to the ATO and Office of the Australian Information Commissioner (OAIC) approach as appropriate. The TPB will advise of any further updates as they arise.

TPB submissions

It was confirmed that the TPB made a submission to the Inspector-General of Taxation in relation to their review of the Future of the Tax Profession, and will also make a submission in relation to the Black Economy Taskforce. It was observed that the Taskforce released a consultation paper outlining 54 additional policy ideas (developed since an Interim Report was completed), drawing on recent public and stakeholder consultations. It was highlighted that the TPB has an important role to play and that it is important that there is appropriate resourcing for implementing any significant change process.

Next meeting

The Chair thanked forum members for their attendance and continuing feedback. The next meeting is scheduled to be held in early November 2017 (date to be confirmed but tentatively scheduled for 2 November).

Last modified: 28 August 2017