TPB Financial advisers forum report – 10 November 2016
On Thursday 10 November 2016, Ian Taylor (Chair) and Tax Practitioners Board (TPB) colleagues held a TPB Financial adviser forum in Sydney with representatives from associations that represent the financial planning profession.
The key points discussed at the forum are summarised below. This brief report is intended only to provide 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 October 2016, there were 75,877 registered practitioners comprising 40,996 tax agents, 14,940 BAS agents and 19,941 tax (financial) advisers (including 1,082 Australian financial services licensees (AFS licensees), 18,601 authorised representatives (ARs) and 258 Other representatives (ORs)).
- As expected, the number of registered practitioners has remained relatively steady (there were 75,436 registered practitioners as at end-June 2016), with the TPB continuing to receive approximately 400 applications each month.
- 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).
- 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 (comprising 24 AFS licensees, 524 ARs and 249 ORs) had registered under these options (432 transitional and 365 standard), with a further 142 new applications on hand (including 7 AFS licensees, 81 ARs and 54 ORs). It was also noted that the TPB is expecting a spike in OR applications (employee representatives) for the purposes of satisfying the sufficient number requirement, noting that, from 1 January 2016, this requirement applies to partnership and company registered tax (financial) advisers seeking registration or renewal of registration as a tax (financial) adviser.
- It was reiterated that while the sufficient number requirement is a self-assessment process and that there is no set formula (recognising that each business is different), TPB Information sheet TPB (I) 23/2014: Sufficient number requirement for partnership and company registered tax (financial) advisers sets out the relevant factors that the TPB takes into account to assist entities in understanding the TPB’s approach to this requirement.
- 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, recognising that each application is to be assessed (in relation to required qualifications and/or experience as appropriate) on a case-by-case basis before a decision can be made on whether the registration is granted. Further, 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 continue to 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
- seeking to streamline arrangements in relation to management of the upcoming renewal process for tax (financial) advisers.
- It was also noted that the TPB has a qualifications advice service, where relevant queries can be sent to the TPB and that there are specific information sheets providing guidance on the TPB’s approach to ‘sufficient experience’ and ‘relevant experience’. In relation to the qualifications advice service, the TPB seeks relevant information to facilitate a streamlined process, including a course description, assessment method and academic transcript.
- It was noted that over 28,000 annual declarations had been lodged since the annual declaration process commenced for registered tax and BAS agents in January 2016. These declarations are 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 (requirements in relation to professional indemnity (PI) insurance, continuing professional education (also known as CPD), meeting own personal tax obligations, and being fit and proper).
- 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.
- It was noted that from the second half of 2017, the annual declaration process will become operative for tax (financial) advisers who have registered under the transitional option or registered or renewed under the standard option. Further information will be provided in due course as appropriate.
Registered tax practitioner symbol
- It was reiterated that the symbol is available to tax (financial) advisers who have registered or renewed under the standard registration option and that the TPB appreciates stakeholder support in highlighting its availability. It was also observed that another brief mention of the symbol’s availability was included in the October tax (financial) adviser eNews edition and that further information is available from the TPB website.
- There have been 521 complaints and referrals received year-to-date (from 1 July to 31 October 2016) against all tax practitioners (tax agents, BAS agents and tax (financial) advisers, which 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 the 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 the introduction of the annual declaration process in 2016 resulting 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 also 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 observed that the number of complaints and referral cases for tax (financial) advisers continues to be very minimal. As at 31 October 2016, outcomes in relation to finalised tax (financial) adviser complaints have included:
- termination of registration - 2 cases
- education – 4 cases
- change in behaviour – 2 cases.
- The forum noted a brief presentation providing an overview of the TPB’s compliance process, including the regulatory framework, the compliance triangle, noting that each complaint is risk assessed, and the available sanctions where a breach has been found. It was also observed that information in relation to the TPB’s compliance approach and outcomes can be found in the recently published Annual Report 2015-16 and the latest edition of the TPB’s Summary of penalties, sanctions and terminations publication.
- The TPB is continuing with a broad based approach to Outreach involving a combination of webinars, face-to-face events and speaking engagements. It was noted that a major focus has been on trying to connect with tax (financial) advisers to ensure they understand the requirements for renewing their registration and their obligations under the Tax Agent Services Act 2009 (TASA), including through face-to-face Outreach activity, a rolling schedule of dedicated webinars, and meetings with AFS licensees.
- Webinars continue to be well received, with a good level of attendance and interaction. Since 1 July 2016 (to end-October) the TPB has presented 12 Webinars (covering renewal requirements, the renewal process and maintaining registration) reaching over 2,000 participants. 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 noted that almost 700 people attended face-to-face events held specifically for tax (financial) advisers in September (Brisbane and Perth) and October (Sydney and Melbourne), and that another edition of eNews (including the separate tax (financial) adviser edition) was distributed to subscribers on 31 October. The next edition of eNews is due to issue in December.
- The TPB appreciates association and AFS licensee support in communicating key messages (including the importance of timely consideration of registration requirements and awareness of the consequences when ceasing to meet requirements) and also continues to welcome opportunities to participate in association conferences and speaking events on relevant topics.
- 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-mid December 2016 and further promoted in the December edition of TPB’s eNews.
Management of upcoming renewal process
- It was highlighted that the TPB has been focused on raising awareness of renewal requirements and on facilitating tax (financial) advisers to determine which registration pathway is appropriate, with the TPB’s online decision tree tool designed to assist with this process accordingly. In this regard, it was reiterated that it is important for tax (financial) advisers to identify suitable registration pathways and associated requirements as soon as possible.
- It was noted that all renewal applications will need to be assessed on a case-by-case basis but that tax (financial) advisers who lodge renewal applications on time will remain registered until the TPB notifies them of the outcome of their renewal application. A critical requirement is that TPB has the most up-to-date email address for each tax (financial) adviser, as this will be the primary channel for communication. The TPB will continue to encourage all tax (financial) advisers to check their contact details through My Profile access on the TPB website.
- Feedback from large AFS licensee meetings: It was observed that as part of the TPB’s Outreach strategy to assist with registration renewals, the TPB has engaged in meetings with large and mid-tier AFS licensees in relation to streamlining the process for tax (financial) advisers. It was noted that these AFS licensees were receptive to assisting the TPB with making the renewal process as efficient as possible, including taking a leading role in assisting their ARs with the provision of a bulk upload of relevant information on behalf of their ARs as appropriate.
Bulk upload process via AFS licensees
- Following stakeholder feedback, the TPB has further investigated the possibility of implementing a bulk upload facility for AFS licensees with 10 or more ARs (as a starting point), noting that the TPB’s preliminary view is that only the following individual ARs will be able to participate in this process:
- ARs that have an AFS licensee that can verify their entire period of relevant experience
- ARs who have completed Board approved courses listed on the TPB website or who have participated in the TPB’s qualifications advice service (if relevant)
- ARs who are covered by their AFS licensee’s PI insurance policy
- ARs who have no fitness and propriety issues, and
- ARs who have provided consent to their AFS licensee.
- The process will involve the AFS licensee providing information on behalf of their ARs and it was noted that the TPB is intending to proceed with a further round of contact with AFS licensees in December to provide feedback and finalise the process as appropriate.
Development of renewal kit
- It was also noted that the TPB has been developing a tax (financial) adviser renewal kit, so as to provide a practical tool to assist entities (and also those who assist entities) renewing their registration. This kit is to be used by individual ARs, or their AFS licensees, to help determine whether or not the individual AR meets the standard registration renewal requirements.
- In particular, this kit will be a step-by-step walk through of the key requirements that will need to be satisfied to have registration renewed and it will make clear when evidence will need to be provided to support an application and what that evidence should be.
- Cloud computing and the Code of Professional Conduct: It was noted that the submission period is to close on 28 November 2016. It was reiterated that the Practice Note document provides educative guidance that raises awareness of relevant considerations when entering into Cloud arrangements (instead of being a technical information sheet) and that the TPB will consider all the submissions received before finalising the document.
- Code item 6 (Confidentiality):
- It was noted that feedback was received on Exposure Draft Information Sheet – TPB(I) D31/2015 Code of Professional Conduct: Confidentiality of client information for tax (financial) advisers (Code item 6) – at the April and July 2016 Financial Adviser Forums and that the Australian Securities and Investments Commission (ASIC) also recently clarified record-keeping obligations for AFS licensees by way of an amendment to Class Order 14/923: Record-keeping obligations for Australian financial services licensees when giving personal advice.
- It was confirmed that the TPB will amend its Exposure Draft Information Sheet to incorporate a relevant reference to the ASIC Class Order (to reflect this legal obligation) and then refer to ASIC for review as appropriate, prior to finalising the information sheet. It was also confirmed that other amendments to the information sheet will be made to provide further clarity pursuant to previous Financial Adviser Forum feedback, with any additional feedback from the Forum to be provided by 28 November in order for the TPB’s Professional practice committee to consider the information in mid-December accordingly.
- 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). Further information is currently being sought from the Financial Adviser Forum, prior to developing a draft discussion paper that will be provided to both the Consultative Forum and Financial Adviser Forum for comment.
The Chair thanked forum members for their attendance and continuing feedback. It was confirmed that the next meeting will be held in March and that subsequent meetings are currently proposed to be held in July and November 2017 (having regard to the level of interest), with further information in relation to specific dates to be provided in due course.
Last modified: 12 October 2017