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Tax advisers' loyalties should never be divided, says Institute

Publication date: 12 Sep 97 | Source: THE TAX INSTITUTE

Despite comments by a senior officer of the Australian Tax Office which have brought into question how the ATO views the 'scope of duty of tax advisers', tax advisers must never lose sight of their primary responsibility to serve the needs of their clients, according to Taxation Institute President, Mr Richard Gelski.

Speaking at the Taxation Institute of Australia's State Convention in Tasmania, Institute President, Mr Richard Gelski said it was outrageous of the ATO to even suggest that the tax adviser should have any duty which would put the interests of government revenue into conflict with the interests of their clients.

"The primary duty of responsibility of the tax adviser must remain with his or her client," Mr Gelski said.

The issue of the role and duty of the tax adviser was brought to a head when the Government released the Draft Regulatory Framework for Tax Services in May of this year. A survey of 10,000 tax professionals conducted by the Taxation Institute revealed one of the key concerns with the first draft of the document was that it appeared to sanction the role of the tax agent as an agent of the ATO, causing a conflict of interest between a tax agent and his/her client.

Tax professionals also expressed concern that the Draft Regulatory Framework suggested that the responsibility and liability for decisions which a client should make were shifted from the client to the tax adviser.

"There is a clear need for the ATO to acknowledge that a tax advisers' responsibility is solely to his/her client when advising that client. Failure to act in accordance with that responsibility could provide the foundation for an action against the tax adviser for acting negligently and in breach of contract with his or her client," Mr Gelski said.

"The ATO also needs to clarify where the responsibility lies for decisions made regarding a taxpayers affairs. Although a tax adviser's role is to present their client with sound advice, options available and the benefits and cost of those options, the responsibility and liability for the ultimate decision rests with the taxpayer, not the tax adviser."

"While there is clear support among tax professionals for a Regulatory Framework for Tax Services and a Code of Practice, the roles and responsibilities of the government, the tax adviser and the client must be clearly stated by the ATO in order to promote the continuing professional and responsible practices within the tax services industry."