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06 Jun 14 Tax Practitioners Board Consultative Forum

On Tuesday 20 May 2014, Tax Counsel Stephanie Caredes CTA attended a meeting of the Tax Practitioners Board Consultation Forum. The Board issued these key messages following the meeting:

Registrations 

The TPB continues to meet service standards, as outlined in the TPB’s Strategic plan, in relation to Registrations processing results. As at the end of March 2014, the current year-to-date overall weighted average for processing registration applications is approximately 21 days. 

The TPB’s ability to sustain these service standards may be impacted by budgetary constraints and increased workload. However, the TPB will continue to identify opportunities that enable streamlined processing and improve end-user experience with the registration process, including form design and reviewing instructions.

It was highlighted that it is important that registered agents contact the TPB in a timely manner, including when lodging renewal applications (which must be submitted at least 30 days before the registration expiry date) and restructuring practices, and for complete information to be provided with applications (particularly in relation to qualifications). 

The following was also noted during the overview provided: 

• The number of registered agents has stabilised around 55,000 for the last 12 months. 

• Approximately 72% of registered individual agents are a member of a TPB recognised professional association. 

• There was an increase in the number of applications received in March 2014 (compared to February) in association with tax agent transitional renewals on 1 March and the number of BAS notifier renewals due on 1 April. 

• In relation to the distribution of educational qualifications for tax agent registration applications, there has been a continued upward trend in the percentage approved under Item 201 in the Tax Agent Services Regulations (TASR) – currently trending at 40% of the total approved registrations in the 2013-14 year compared with 19.4% in the 2011-12 financial year. At the same time, there has been a continuing downward trend in relation to those applications approved under Item 203 in the TASR (currently trending at 26.7%, compared with 57.5% in 2011-12), illustrating the impact of transitional arrangements. 

• Further, it was observed that Item 206 in the TASR continues to be a popular registration application pathway (currently trending at 20.1% of the total approved, which represents the same proportion as that approved for this Item in the 2012-13 year). 

Compliance  

In conjunction with the maturity of the TPB’s proactive work program, there has been a slight decrease in the number of complaints and referrals in comparison to the previous year.  As at 31 March 2014 there were 474 cases on hand, of which 216 were sourced from the TPB’s projects in relation to: 

• compliance with personal tax obligations (subsection 30-10(2) of the TASA;  and 

• having appropriate professional indemnity insurance (PII) cover (subsection 30-10(13) of the TASA). 

There has been a total of 222 sanctions applied year-to-date as at 31 March 2014 (noting that an agent may have two or more sanctions imposed in particular cases), demonstrating generally good compliance with the TASA when having regard to the total population of registered agents. Complaints from the public continue to represent a major source of complaints (almost 40% of the total number of complaints and referrals), with many finalised without requiring further action by the TPB (determining that there has been no breach of the TASA). The main issues raised concern acting in the best interest of the client and competency of services (subsections 30-10(4) and 30-10(7) of the TASA), with the TPB keen to see these figures reduce. 

Communication activities 

The Forum noted the listing of recently issued TPB information products including, among other things: 

• the TPB tax practitioner service charter (published in February and available on the TPB website), giving definition to expectations in relation to the interaction between the TPB and registered tax practitioners; 

• TPB eNews, published in late February and on 8 May 2014, with open rates for this newsletter still well above the industry average;

• an Exposure draft information sheet in relation to Code of Professional Conduct – confidentiality of client information (released in March); and 

• recent website material in relation to the Brisbane Outreach sessions being held on 10 to 12 June 2014 as part of the TPB’s continued activities to proactively engage with registered agents and comment on topical issues, with the TPB overwhelmed with interest received from tax practitioners wishing to attend. 

It was also noted that the most recent Outreach events held in Canberra in March 2014 were a success, with a significant number of registered agents in Canberra (and surrounds) attending and the TPB receiving favourable feedback. 

Regulation of tax (financial) advisers 

• The TPB has been focused on relevant preparations to ensure readiness from 1 July 2014, including continued consultation with relevant stakeholders. 

• Numerous submissions were received on TPB’s three exposure draft (ED) policy papers concerning professional indemnity insurance (PII), continuing professional education (CPE), and what is a tax (financial) advice service. 

• A number of changes have been made to the EDs on PII and CPE, however these are not substantive and it is anticipated that the documents will be released in final format in the near future. Further, the TPB is intending to issue a joint press release with the Insurance Council of Australia to highlight it is not envisaged that the Board’s PII requirements will have a significant impact on insurance premiums. 

• In relation to the ED on what is a tax (financial) advice service, the TPB is continuing to work through the numerous submissions. 

• The TPB also intends to develop documents in relation to the sufficient number requirement, disclaimer requirements, and what is a fee or other reward. 

• Significant operational work is also being undertaken, including development of further videos (on when and how to notify), form design, planned release of a second letter to AFSLs in June to explain how to notify (including on behalf of authorised representatives), and development of a separate communication in relation to those financial advisers who are already registered as tax agents. 

Deregulation 

In addition to streamlining online information where possible, the Board is currently considering other various options to reduce the time needed for registered tax practitioners to interact with the TPB, where appropriate, for the purpose of assisting the Australian Government in meeting its objective to cut $1 billion in red tape costs every year. 

Professional practice issues 

It was noted that an issue which has captured the Board’s attention is the use of powers of attorney, embedded loan agreements and online tax returns. The TPB is seeking to issue a message and release guidance as to what is the minimum required for correct practice and what is unacceptable (including in relation to obtaining authorities and true and correct declarations) and is also working with the ATO to provide a collective response in relation to this complicated issue. The TPB’s work program has also been updated to note that the Board plans to provide further guidance in relation to what constitutes satisfactory supervision arrangements, with this question to be considered when providing guidance on the sufficient number requirement for tax (financial) advisers. 

Members who require further information in relation to the above should contact us at Tax Policy