On Tuesday 25 November 2014, Senior Tax Counsel Robert Jeremenko attended a meeting of the Tax Practitioners Board Consultative Forum. The Board issued these key messages following the meeting:
Update from the TPB
- The TPB continues to meet service standards, as outlined in the TPB’s Strategic plan, with the overall weighted average for processing registration applications currently tracking at 25 days (for the current financial year as at the end of October).
- The following was also noted during the overview provided:
o The number of registered tax and BAS agents remains stable at around 55,000.
o Approximately 75 per cent of registered individual agents are a member of a TPB recognised professional association.
o The TPB is receiving a small but steadily increasing number of applications from Australian Financial Service Licensees and Authorised Representatives, with the notification process generally working well.
- 428 cases were finalised as at end of October 2014 (financial year to date), with most finalised within service standards. There have been 71 sanctions applied financial year to date (including 20 terminations, 2 suspensions, 31 orders, and 18 written cautions), representing a very small proportion of registered agents.
- The number of complaints received from the public is similar to the number received as at the same time last year. There has also been a slight increase in the number of compliance monitoring cases for the purpose of ensuring compliance with relevant undertakings. However, the overall number of complaints and referrals has decreased in conjunction with a refined ATO referral process and that maturation of internal projects into business as usual activity.
- The TPB is still on track to meet its $2 million annual (calendar year) target by December 2014 and continues to look at opportunities to streamline processes and interaction.
- Consideration is currently being given to the development of a simple online annual declaration form (incorporating a reference to professional indemnity insurance, continuing professional education, being fit and proper, and updating profile information) and a possible extension of the registration period.
- The TPB will also be subject to the Regulator Performance Framework (RPF), recently released by the Government, which is expected to commence in July 2015. This will incorporate an annual self-assessment, complemented by a program of external review. In particular, the RPF contains a set of outcomes-based performance measures pertaining to the assessment of regulatory performance and engagement with stakeholders, namely:
(i) regulators do not unnecessarily impede the efficient operation of the regulated entities;
(ii) communication with regulated entities is clear, targeted and effective;
(iii) actions undertaken by regulators are proportionate to the regulatory risk being managed;
(iv) compliance and monitoring approaches are streamlined and coordinated;
(v) regulators are open and transparent in their dealings with entities; and
(vi) regulators actively contribute to the continuous improvement of regulatory frameworks.
- The TPB is reviewing its overall performance reporting framework to ensure appropriate encapsulation of RPF requirements.
- The Forum noted the listing of recently issued TPB information products, including the Explanatory paper on Professional indemnity (PI) insurance requirements for registered tax and BAS agents which was updated to include retroactive cover as a minimum requirement of PI insurance policies from 1 July 2015.
- It was mentioned that the 2013-14 Annual report was tabled in Parliament on 29 October and that the third edition of the Summary of penalties, sanctions and terminations (providing a summary of some recent compliance outcomes) is now available on the TPB website.
- It was highlighted that the registered agent symbol has been very successful, with over 6,600 symbol download requests so far and the TPB receiving positive feedback on this initiative. Consideration is being given to future communication of the symbol’s presence to the general public, including as part of TaxTime messaging, with advance notice to be provided prior to any rollout of communication activity.
- It was also noted that the TPB’s face-to-face Outreach program has been placed on hold (subject to receiving requisite funding), with a substitute Webinar program to be trialled and evaluated. In addition, the TPB has recently started trialling appending to ATO open forums. It was also reiterated that the TPB is keen to participate in relevant association conferences and speaking events.
Tax (financial) advisers
The forum provided comments and suggestions on a number of in-confidence papers – in relation to registration policy matters and education issues as outlined further below – for the purpose of providing clarity and guidance to assist the TPB in developing and publishing information.
Registration policy matters
- Pursuant to minor changes to improve clarity and any further comments at the November financial adviser forum, final information sheets are expected to be published shortly on the following matters:
o What is a fee or other reward?
o Sufficient number requirement for partnership and company registered tax (financial) advisers.
- The TPB is also intending to release exposure drafts (for public consultation) on the following as soon as possible:
o Sufficient experience to provide services to a competent standard (for the purpose of registration as a tax (financial) adviser under the transitional registration option)
o Relevant experience (for the purpose of registration as a tax (financial) adviser under the standard registration option)
- It is also expected that final information sheets will soon be published on the following, with the TPB making minor edits to improve clarity:
o Course in Australian taxation law that is approved by the Board for tax (financial) advisers
o Course in commercial law that is approved by the Board for tax (financial) advisers
- It was confirmed that there will be appropriate reconsideration of the subject matter in course topics pursuant to any future legislative instrument that extends the definition of a tax (financial) advice service to incorporate particular interactions. It was also noted that there will be consultation in conjunction with any legislative instrument process.
- The representative from the Tax Institute noted their objection to current requirements, remarking that one unit is insufficient in respect of both courses (should instead entail two units for a Board approved course in taxation law, and three units for a Board approved course in commercial law). Further, representatives from the Chartered Accountants Australia and New Zealand (CAANZ) and the Institute of Public Accountants (IPA) also restated their view that the Board approved course in commercial law requirement for registered tax agents should only entail two units.
- The Board reiterated its previous view as to why 3 units of commercial law is appropriate for tax agents. Further, the Board highlighted its flexibility in considering innovative delivery models (if products comprise equivalent topics as noted in the guideline) and that registration statistics for new tax agent registrants do not indicate any significant barriers to entry.
Professional practice issues
Data access associated with Cloud and software usage
- The forum considered a high-level preliminary paper outlining some relevant considerations for practitioners when operating in the ‘Cloud’ environment. In particular, forum feedback was sought on questions raised in the paper (in relation to data access and use of software) for the purpose of ascertaining information regarding obligations and expectations.
- In particular, it was suggested that the scope of the paper could cover how interaction with the ‘Cloud’ and software influences meeting Code of Professional Conduct obligations.
- It was noted that further feedback (including relevant examples) could be provided to the TPB out of session, and that the TPB is planning to develop and release an exposure draft information sheet for public consultation in due course in 2015.
Suspension of members by an association
- The forum noted a risk in relation to a member being suspended or terminated by an association (or the member anticipating such an outcome) and then seeking to join another association. It was confirmed that the TPB is willing to receive information on ideas in relation to sharing relevant information, while also recognising that there are privacy constraints.
Possible forthcoming information requests
- The forum noted that recognised associations may receive forthcoming information requests for the purpose of reviewing whether eligibility requirements associated with accreditation as a TPB recognised professional association (as set out in the relevant Schedule in the Tax Agent Services Regulations 2009) continue to be met. It was noted that this would include seeking information in relation to those items where discretion was exercised by the TPB in granting recognition (voting member numbers and member qualifications), as well as other items including ability to pay debts, complaint handling and corporate governance.
- It was confirmed that the TPB intends to employ a simple process that avoids unnecessary regulatory burden, for instance just seeking to be apprised of when and where relevant information is made readily available (such as a record of the notice of an annual general meeting, a link to audited accounts etc.). Further, consideration is being given to the possibility of employing an appropriate annual declaration for recognised professional associations for the purpose of declaring that ongoing requirements for recognition continue to be met.
Document verification service
- It was noted that while there is no set standard in respect of identifying a person’s identity, there is a general obligation that registered agents exercise reasonable care under the Code of Professional Conduct. In this regard, it was noted that the Attorney General’s Department has a tool which allows for confirmation of a person’s identity based on certain source documentation; however, there are fees entailed with use of this document verification service (DVS).
- The TPB is currently in the early stages of exploring possibilities for the purpose of practitioners avoiding the need to incur a large up-front access fee in using the DVS, while also recognising that practitioners would still incur a small transaction-based fee that is payable to the provider of the DVS service (as well as additional costs in the event that they seek written evidence).
- It was confirmed that the TPB has an expectation that registered practitioners will pass on material correspondence from the ATO that their clients have not already received or been made aware of, including tax receipts and notices of assessment. However, it was also noted that the need to pass on other types of correspondence will vary depending on the particular circumstances, with a registered practitioner to exercise their own professional judgement.
- It was confirmed that the TPB will provide a supplementary message to clarify the Board’s view.
Members who require further information in relation to the above should contact us at Tax Policy.