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19 Aug 11 Preamble - Friday 19 August 2011

The Tax Institute recently provided a submission in response to The Treasury’s Discussion Paper entitled “Privilege in relation to tax advice”.  Our submission considers the current operation of the Commissioner of Taxation’s “accountants’ concession” and the potential advantages and disadvantages of implementing a statutory protection for tax advice.  You can access the submission here.

We set out the reasons for which the accountants’ concession does not provide sufficient protection and recommend the implementation of a statutory protection for tax advice. We also set out the broad parameters along which the proposed statutory protection should be constructed, as well as the manner in which this protection should interact with legal professional privilege.

Our view is that:

  • The accountants’ concession does not represent the optimal balance of competing interests, and should be replaced by a statutory protection for tax advice;
  • Only a statutory tax advice protection will resolve the current problems with the accountants’ concession;
  • The resolution of current problems with the accountants’ concession via introduction of a statutory tax advice protection will result in better implementation of the policy underlying the current accountants’ concession and therefore a fuller realisation of the benefits that were intended to flow from that administrative guideline i.e. the better equipment of taxpayers with relevant information in relation to their tax obligations;
  • The introduction of a tax advice protection will aid in preventing distortions in the tax advice market and encourage competitive neutrality;
  • a statutory tax advice protection should:
    •  
      • be created and applied separately from legal professional privilege and only apply in circumstances where legal professional privilege would not apply;
      •  apply to advice provided by (and communications for the dominant purpose of giving or obtaining tax advice with or between) tax agents registered by the Tax Practitioners Board; and
      • protect the advice and communications only from the Commissioner’s coercive information gathering powers.

In formulating this submission, we consulted widely with our membership and we are grateful for the feedback received from our interested and engaged members.

Should you have any comments or queries in relation to this submission, please do not hesitate to contact us at Tax Policy.

Please see below for details of other activities this week.

Regards

Robert Jeremenko