Tax agents are furious about new rules imposed on them at their busiest time of year. Photo: File.
Tax agents embracing the workload of the financial year changeover are not at all pleased with the timing and imposition of a new Federal Government determination affecting how they operate.
At the beginning of July, tax agents were issued the new directive and told they had one month to comply with eight additional obligations imposed on them, in addition to rules already governing licences through the legislated Code of Professional Conduct.
The Tax Practitioners Board regularly issues guidelines for tax agents, but some are now saying the latest ministerial determination from Assistant Treasurer Stephen Jones is a step too far.
The extra obligations are partly a direct response to the PwC breach of trust scandal and some other incidents of poor behaviour by a minority of chartered accountants.
The agents have been ordered to make what appears to be commonsense commitments to a number of principles, but which require extensive administration work and costs to show they are complying.
These include upholding and promoting the code of conduct; not making a statement to the TPB that they know to be false or misleading; taking reasonable steps to identify and document any material conflicts of interest; maintaining confidentiality in dealings with the government; keeping proper client records; ensuring services are provided competently; documenting a system of quality management; informing clients of all relevant matters which could significantly influence their decisions to engage services; and advising clients how to make a complaint about them.
Some tax agents are saying the new obligations contain inconsistencies with the current legislation code.
Ten professional accountancy associations have written a nine-page letter to Mr Jones expressing their displeasure.
“The joint bodies welcome more robust and effective regulation of the tax system and the tax profession,” they wrote.
“However, rules that create inconsistencies and uncertainties work against compliance and good governance.
They add that, in practice, tax practitioners, many of them in small businesses, will find it difficult to comply with certain aspects of the new determination.
Letters of engagement must now be drafted that will ask clients and prospective clients to acknowledge they have been given the required updated information.
Administration and IT systems are having to be reworked and updated.
Tax agents are also firing off lengthy missives to their clients, outlining how they intend to comply with the rules and, in many cases, how they are already fulfilling those requirements.
One of those client letters circulating, seen by Region, condemns the new rules as “draconian” and “thought up by some public servant” who convinced the Assistant Treasurer to make the determination.
“On 1 July 2024, after all tax agents thought they had set their practice up for the 2024 tax season, the Assistant Treasurer issued a new determination which affects the way every tax agent in Australia will operate,” the tax agent said.
“The effective date is Thursday, 1 August 2024. That gave us 23 working days to change our business model.
“There has been no explanatory memorandum … and the TPB has said it will issue its interpretation of the new rules.
“No date has been given for the issuing of that material. In the meantime, I must have in place something to address the new rules.”
The TPB has since moved to allay concerns through an education campaign aimed at explaining the intention of the determination.
It has posted a Frequently Asked Questions page on its website, noting that the determination followed the consideration of feedback from “stakeholders” regarding a draft determination.
The determination was then registered on 2 July 2024 with a commencement date of 1 August 2024.
There will be a grace period, however.
“These reforms were aimed at strengthening the integrity of the tax system, increasing the powers of our regulators and strengthening regulatory frameworks to ensure they are fit for purpose,” it says.
“Recognising that there will be a transitional phase, once the new obligations commence, we will take a pragmatic approach to implementation.
“This includes providing a reasonable time for tax practitioners to understand your obligations, assess your own practice and implement changes, if required, to comply with the new obligations.
“Our immediate focus is to finalise our guidance, through consultation, and educate tax practitioners so you understand what is required of you.”
The Opposition has labelled the new obligations as “haphazard” and “burdensome”.
Shadow assistant treasurer Luke Howarth said compliance for small businesses was unfair in terms of time and money.
“Accountants have been left with little time to prepare and comply,” he said.
“At the busiest time of the year for many tax practitioners, they have received a red tape bomb from the Albanese government.”
Mr Jones has also released a new consultation paper reviewing TPB registration requirements for tax practitioners.
“The paper focuses on the education, qualification and experience requirements for new entrants and existing practitioners,” Mr Jones said.
“The proposals reflect the government’s commitment to strengthen our regulatory arrangements in response to the PwC matter.”
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