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01 Nov 13 Tax Practitioners Board Consultative Forum

On Tuesday 22 October 2013, Tax Counsel Stephanie Caredes attended a meeting of the Tax Practitioners Board Consultative Forum. The Board has provided the following summary of the meeting:

Update from the TPB

Registrations

  • Registrations processing results have been trending in the right direction. In particular, as at the end of September 2013, the current year-to-date overall weighted average for processing registration applications is approximately 15 days.
  • The TPB is constantly seeking to identify opportunities that enable streamlined processing and improve the end-user experience as part of a continuous improvement ethos. This includes consideration of relevant performance indicators to facilitate ensuring applicants clearly understand requirements across the whole registration process.
  • It was also noted that there has been a reduction in the numbers of calls to TPB Enquiries Management over the last couple of months, correlating with increased traffic to the TPB website pursuant to updates made to the site.
  • Forum members suggested that consideration be given to opportunities to improve the application payment step at the end of the application process, as well as the provision of further guidance in regard to supervisory arrangements.

Compliance

  • In conjunction with an increasing awareness of the TPB, as well as the TPB’s proactive work program in regard to professional indemnity insurance (PI insurance) and personal tax obligations, there has been a significant increase in the number of complaints, referrals and finalised cases in comparison to the previous year. Public complaints represent approximately 50 per cent of all complaints and referrals, with many finalised without further action. As at 30 September 2013, there were 413 matters on hand.
  • The second edition of TPB’s Summary of penalties, sanctions and terminations booklet was recently released on the TPB website and distributed to attendees. It was noted that the contents or parts thereof could be freely communicated to members of the various associations. It was also observed that the TPB focuses on educating agents to modify their behaviour.

Communication activities

  • The Forum noted the listing of recently issued Board information products, including the second edition of the Board’s electronic newsletter (called eNews) released on 24 September. It was noted that open rates for eNews (approximately 47 per cent) continue to be well above industry average and there is an intention to release the next edition of the newsletter by early December.
  • The Board has finalised its Annual Report for 2012-13 and is aiming to table it in Parliament on 28 October.
  • The TPB’s second Strategic plan, which was released on 14 October, sets out the TPB’s direction for the next few years and guides our people and the work we do. The Plan outlines the TPB’s objective and linked goals and strategies, as well as service standards and TPB values. The TPB will review and report on progress toward achieving the objective, goals and strategies as contained in the Strategic plan.
  • The Board has continued its activities to proactively engage with registered agents, including through an Outreach program wherein the Board was encouraged by the response for the Perth and Darwin events earlier this year. The next event is being held in Adelaide from 6 to 8 November 2013, which will entail 8 sessions spread across 3 locations (CBD, Gawler and Hahndorf). Significant interest has already been received, with approximately 25 per cent of all registered agents in South Australia already confirming their attendance.

Education update

Financial advisers

  • The Board is considering the submissions received on the Board’s exposure draft on a Board approved course in Australian taxation law for tax (financial) advisers. The Board has had a meeting with academics to assist the Board in refining its approach and is looking to reissue the product as a further exposure draft when further details are provided regarding the Regulations.
  • It was noted that the TPB is currently awaiting input from Treasury in regard to registration requirements, observing that Treasury released a discussion paper in June 2013 outlining the proposed registration requirements for registered tax (financial) advisers. 

Board approved course in commercial law for tax 

  • In regard to a Board approved course in commercial law for the purpose of tax agent registration, it was observed that the Board spent a significant amount of time considering all the submissions and reviewing its position, with the final concluded position being that a course should consist of 3 units.
  • It was also noted that the Board advised the (previous) Minister that, in the long term, a Board approved course in commercial law should consists of 3 units. However, it was also confirmed that the Board will implement a transitional arrangement for applications made between 1 March 2013 and 30 June 2014 for tax agents who have only completed 2 units of study in commercial law.
  • On 18 September 2013, the Board published an updated version of its proposed guideline (PG) in relation to the requirements for a Board approved course in commercial law for tax agents (TPB (PG) 02/2010). The updated PG includes information regarding the Board’s transitional approach and the grandfathering of pre-1 March 2010 tax agents.
  • Statistics indicate that the requirement for 3 commercial law units has not represented a significant barrier to entry as a newly registered tax agent, with most entrants coming under Items 203, 205 or 206.

Professional practice work of the Board

Reasonable care

  • It was noted that the Board has considered the numerous submissions received in regard to the Board’s revised exposure drafts on reasonable care and subsequently developed proposed final versions of information sheets for:o   Code of Professional Conduct – reasonable care to ascertain a client’s state of affairs; ando   Code of Professional Conduct – reasonable care to ensure taxation laws are applied correctly.
  • The Board considered the final comments from forum members and noted that it will subsequently publish the final information sheets.
  • It was also observed that there is an intention to develop a separate product that provides specific guidance on examples related to larger firm situations, which will be linked within the abovementioned papers in due course as appropriate.

Managing conflicts of interest

  • It was also noted that the Board has considered the submissions received in regard to the Board’s Exposure draft on conflicts of interest TPB information sheet TPB(I) D19/2013: Code of Professional Conduct – managing conflicts of interest. 
  • It was observed that the TPB intends to finalise this information sheet, subject to any further written submissions from forum members and recognised associations over the next couple of days. 

Forum members also noted their appreciation of the Board’s consultation process and observed that the products provide greater clarity. The Board also noted its appreciation for the feedback and input it receives on its professional practice papers.

Future work - Confidentiality

  • The Board’s next item of focus for professional practice work will be to provide guidance in the form of an information sheet in regard to subsection 30-10(6) of the Tax Agent Services Act 2009 (TASA) – that is, where an agent has responsibility to ensure that the confidential information provided to the agent by the client is not disclosed to another party without that client’s consent.
  • In addition to highlighting the need for appropriate consideration of confidentiality of information and robust controls (including where services are provided outside of the office environment), there will also be regard to the growth of outsourcing, offshoring and Cloud in the Australian market for professional tax services. It was also observed that engagement letters have particular relevance in this regard.
  • An initial version of an exposure draft is expected to issue in 2 to 3 months.

Financial advisers update

  • To assist the Board in developing its policy and operational approach to the regulation of financial advisers who provide tax advice, the Board (and ASIC) has held separate sessions with financial association representatives and financial adviser providers, with the most recent being on 11 September 2013. The purpose of the sessions was to provide an update from the Board and also seek particular information on positions and any concerns in respect of key areas outlined in a consultation paper the Board had prepared, including in regard to:
    • what is a tax (financial) advice service (including seeking examples of services);o   professional indemnity insurance;
    • continuing professional education;
    • education requirements; 
    • relevant experience;
    • sufficient number; and 
    • Code of Professional Conduct (Code).
  • The following was noted during the financial adviser consultation sessions in regard to the above issues:
    • There is still scope for discussion in regard to the definition of what is a tax (financial) advice service, with further information sought from participants in regard to examples of services, service delivery models and supervisory arrangements.
    • There was general acceptance that PI insurance needs to align with ASIC requirements, where possible and appropriate.
    • There was general acceptance of the requirement for continuing professional education (CPE), including in regard to the types of activities. The Board asked the associations to provide further details of their existing requirements, including in regard to interaction and apportionment for the purpose of ASIC requirements.
    • There was general agreement that educational qualification requirements should include one unit in Australian taxation law. However, it was also suggested that ASIC Regulatory Guide 146: Licensing: Training of financial product advisers (RG146), which is currently in the process of being upgraded, may cover off some of the qualification requirements. It was noted that the TPB is currently mapping requirements against RG146 and also the Advanced Diploma of Financial Planning.
    • The Board is currently considering the submissions received in regard to the exposure draft proposed guideline, which was published on 22 March 2013, outlining the proposed requirements for a Board approved course in Australian taxation law. It was also observed that the Board is currently waiting on feedback from Treasury in regard to their June 2013 discussion paper on proposed registration requirements.
    • In regard to the sufficient number requirement, it was noted that there is no set formula (it is flexible, with appropriate regard to be given to the particular circumstances). The TPB is currently considering the different service delivery models within the financial planning industry.
    • There was no significant discussion in regard to the Code of Professional Conduct (Code), noting that most requirements were consistent with other applicable professional codes. The Board has sought further information in regard to examples of common causes of complaints and on what areas of the Code it would be most useful to provide guidance upon.
  • The Board noted that it welcomed comments and questions from Consultative Forum attendees in regard to issues in the consultation paper (particularly PI insurance and CPE), including receipt of any written submissions. In this regard, it was requested that information be provided to the Board by 11 November 2013, noting that the next consultation sessions with financial advisers is expected to be held in November and that there is an expectation the TPB publicly releases documentation regarding its proposed position on key issues by late January or early February. Further, it was noted that relevant comments made during the forum would also be considered as part of this submission process.
  • It was noted that the Board also anticipates holding a joint consultative session around late January or early February, bringing together the consultative forum members and the financial association and financial adviser provider representatives.

The Tax Institute has participated in the consultation processes for the Information Sheets regarding reasonable care and managing conflicts of interest and these submissions are available on our website. The Tax Institute will be participating in the consultation processes involving the consultation paper the Board has issued concerning key areas affecting financial advisers and the proposed Information Sheet on confidentiality.

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