TPB Financial advisers forum report – 14 March 2018
On 14 March 2018, 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.
Registrations and compliance update
- The forum noted a summary snapshot of registrations and compliance activity and observed that, as expected, the spike in tax (financial) adviser renewal applications received (including for the final end-January 2018 tranche) has had an impact on weighted average registration processing times. In conjunction with streamlined processes, the TPB is continuing to make inroads towards having a minimal number of applications on hand by end-June 2018.
- The TPB continues to focus on processing new applications, noting that registered tax practitioners who lodge registration renewal applications on time will remain registered until the TPB notifies them of the outcome of their renewal application. It was observed that the weighted average for processing new applications continues to remain within the 30-day service standard.
- Significant time was spent on communications activity prior to 31 January and a tranche of failure to renew letters issued to almost 4,000 notifiers in early February, with a small spike in new applications being received thereafter.
- It was emphasised that tax (financial) advisers who did not renew their registration must cease providing tax advice related to the financial services they provide for a few or reward, and that they must lodge a new application and await a decision on their application before they can provide these services for a fee or reward in the future.
- Follow-up letters will issue, noting that significant civil penalties can apply for unregistered entities (providing or advertising tax (financial) advice services or representing themselves as a tax (financial) adviser) and that the TPB will conduct compliance audits.
- It was also noted that there have been various reasons identified by entities who have chosen to not renew registration, including that they should never have notified, being already registered as a tax agent, no longer working in the industry, or that they are not providing tax (financial) advice.
- TPB communications activity also noted the requirement to register both individual authorised representatives and corporate authorised representatives who provide tax (financial) advice services for a fee or reward in their own right (part or all of which is payable via a third party). This included, among other channels, an update to the Frequently asked questions document on the website, messages in webinars and news articles/media releases. It was also noted that further information on who needs to register is included in Who needs to register as a tax (financial) adviser?
- The TPB continues to look for ways to streamline processes, and has now released a qualifications advice service and implemented changes to the Contact Us page (to facilitate resolution of most enquiries online).
- There continues to be a very small proportion of registered tax (financial) advisers on which sanctions are applied, with most action around those subject to ASIC banning orders.
Annual declaration compliance
- It was noted that the Annual Declaration process commenced for tax (financial) advisers on 1 August 2017 and that while there have been small numbers due to this point, this is expected to change from next year on the anniversary of the renewal applications being processed. There will be relevant communications activity in due course, including for those who were registered under bulk renewal processes.
- It was highlighted that it is important for registered practitioners to keep their contact details (including email addresses) up to date and to respond to requests in a timely manner.
- It was also noted that there has been an increase in surrenders since the Annual Declaration process was established for registered tax and BAS agents, and that the Board is taking a graduated compliance approach to appropriately address the small number of instances where there is recurring late lodgement of annual declarations.
The TPB is continuing its commitment to communication and awareness activity, including a broad-based approach to Outreach that involves a rolling schedule of monthly webinars, speaking engagements, eNews, social media and media releases. The TPB also undertakes specific face-to-face Outreach activities as appropriate.
Professional associations – annual declaration process and governance related arrangements
- The first annual declaration round has been completed and the TPB is currently reviewing its forward work program scheduling to provide for a more staggered routine for subsequent rounds.
- It was noted that Information sheet TPB(I) 33/2018: Recognised professional associations - Corporate governance related requirements for recognition under the Tax Agent Services Regulations 2009, which employs a principles-based approach, was finalised on 27 February 2018. It was also noted that this guidance will be a reference point for considering new applications for recognition and for considering annual declaration responses from currently recognised professional associations.
- It was reiterated that the TPB will take a pragmatic approach in regard to associations implementing relevant changes to meet any particular undertakings and to align with requirements in the information sheet.
Outsourcing, offshoring and the Code of Professional Conduct
- It was noted that the TPB published the finalised Practice Note and accompanying media release on 27 February 2018 to assist registered tax practitioners to better understand their obligations under the Code in relation to the use of outsourcing and offshoring, including noting factors to consider and provision of a useful listing of further reference information.
- Pursuant to Board consideration of feedback received on the Exposure Draft, minor changes were made to the document for clarity, including additional content confirming that the TPB will take a pragmatic implementation approach.
Legislative instrument for tax (financial) advisers
The TPB is continuing to progress work on preparing a draft legislative instrument and accompanying draft explanatory statement, which will be distributed to members of the Consultative Forum and Financial Adviser Forum for further comment. The TPB is also liaising with the Office of Best Practice Regulation.
Australian Financial Complaints Authority (AFCA)
- It was noted that the Australian Securities and Investments Commission (ASIC) issued a consultation paper (a draft updated version of Regulatory Guide 139: Oversight of AFCA) and that the TPB is reviewing the paper. In particular, it was noted that the TPB will highlight the importance of information sharing as appropriate.
Financial Adviser Standards and Ethics Authority (FASEA)
- The TPB recognises the importance of ensuring an effective liaison with FASEA (standards body under the Corporations Act) and it was confirmed that the TPB has been in discussions with the CEO to discuss FASEA’s recent proposed guidance on education qualification requirements.
- It was also noted that the TPB’s forward work program will include a review of relevant website material to provide a snapshot comparison between the FASEA Code of Ethics and the TASA Code of Professional Conduct.
Black Economy Taskforce
- It was noted that the Taskforce highlighted key areas of concern regarding compliance with the tax system and that the Government is currently considering the Taskforce’s report. It was reiterated that effective consultation and stakeholder engagement will be required.
Inspector-General of Taxation review of the Future of the Tax Profession
- It was observed that the Inspector-General of Taxation gave a closing address to a Future of the Tax Profession symposium in November 2017 (hosted by La Trobe University and Edith Cowan University), outlining four clear themes (technological, social, policy and regulatory).
- It was highlighted that the tax practitioner profession currently faces a number of opportunities and challenges and that a focus on effective consultation and stakeholder engagement will be required.
- It was noted that stakeholders are awaiting the outcome of the review, including any relevant recommendations when a report is released.
Sufficient number requirement for partnership and company registered tax (financial) advisers
- The Forum noted minor edits and examples that were proposed to TPB Information sheet TPB(I) 23/2014: Sufficient number requirement for partnership and company registered tax (financial) advisers, for the purpose of providing additional guidance to Australian financial services (AFS) licensees. The Forum suggested additional edits for clarity and it was observed that further feedback is also being sought from large AFS licensees.
Whole of practice transfers
- It was noted that the TPB is giving further consideration to this issue in relation to tax (financial) advisers, including liaising with the Office of Australian Information Commissioner (OAIC) to better understand their approach to dealer groups. It was confirmed that draft guidance will be presented to the Forum for consideration in the first instance.
- It was also reiterated that the Code of Professional Conduct in the Tax Agents Services Act 2009 states that unless you have a legal obligation to do so, you must not disclose information relating to a client’s affairs to a third party unless you have obtained their permission.
Notifiable Data Breach regime
- It was observed that the mandatory Notifiable Data Breaches (NDB) scheme commenced on 22 February 2018. It was reiterated that the Office of the Australian Information Commissioner (OAIC) has relevant jurisdiction of the Privacy Act, is responsible for administration of the NDB scheme and has continued to release useful guidance on its website.
- The TPB has continued to raise awareness about the scheme (including in eNews, on the website, in webinars and other outreach activity) and has recommended that all tax practitioners review their practices, procedures and systems for securing personal information for adequacy. It was also noted that a failure to comply with the scheme may be considered in determining whether a practitioner has breached the Tax Agent Services Act 2009 (with consideration given to the particular circumstances on a case-by-case basis) and that practitioners should consider for themselves and their business:
- taking steps to ensure all security software and controls are up to date, and to remove accesses from people who no longer require these accesses
- preparing / updating a data breach plan to ensure the ability to respond quickly to suspected data breaches
- providing training to relevant staff as to any role they may have in responding to data breaches.
The Chair thanked forum members for their attendance and continuing feedback. The next meetings are scheduled to be held on 11 July and 8 November (in Sydney).
Last modified: 23 May 2018