Australian Tax Advisers Challenge New Ethical Obligations Imposed by Assistant Treasurer

New requirements for advisers to inform clients of any relevant matters that might impact their relationship have sparked concerns among numerous professional bodies. Ten Australian professional associations representing tax advisers have collectively appealed to Assistant Treasurer Stephen Jones to revoke a new regulation imposing additional ethical obligations on tax practitioners.

Jones recently endorsed a regulation that introduces new ethical obligations, supplementing the already legislated Code of Professional Conduct enforced by the Tax Practitioners Board (TPB) under the Tax Agent Services Act (TASA) of 2009. These new obligations were negotiated with the Australian Greens last November in response to the PwC Australia tax scandal, as additions to the code tax advisers currently adhere to.

The Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, The Tax Institute, Australian Bookkeepers Association, Institute of Certified Bookkeepers, Institute of Financial Professionals Australia, Financial Advice Association of Australia, NTAA PLUS, and SMSF Association have all submitted a written demand to Jones, urging him to deregister the regulation and revise its content to address their concerns.

“The Joint Bodies welcome more robust and effective regulation of the tax system and the tax profession. However, rules that create inconsistencies and uncertainties work against compliance and good governance,” stated the bodies’ letter, submitted on Monday, July 15.

“In practice, tax practitioners, many of them in small businesses, will find it difficult to comply with certain aspects of the [legislative instrument] in its current form.”

Previously, the bodies expressed concerns over Jones’ unilateral ability to alter the Code of Professional Conduct without proper consultation or parliamentary scrutiny. One significant objection pertains to the obligation to keep clients informed of all relevant matters that might affect their decision to engage a tax adviser.

“Our members are very concerned about the obligation to keep their current and prospective clients informed of ‘any’ matter that could significantly influence a decision of a client to engage them,” the letter explained. “For clarity, the scope of section 45 of the [legislative instrument] should clearly exclude matters unrelated to a tax practitioner’s ability to provide tax agent services as a fit and proper person.”

The new provisions are set to be retrospective, requiring disclosure of matters dating back to July 1, 2022, which the bodies argue imposes a significantly onerous and impracticable requirement on tax practitioners.

“The retrospective nature of the [legislative instrument] and the commencement date of August 1, 2024, places a significantly onerous and impracticable requirement on tax practitioners,” the letter asserted.

While maintaining client confidence is already mandated under the existing code, the new rules require tax agents to report clients who refuse to correct misleading information in their income tax returns to authorities. The bodies argue that “this change could be considered to operate inconsistently with subsection 30-10(6) of the TASA and will cause unnecessary disruption and confusion for tax practitioners acting in their clients’ best interests.”

The August 1 start date has also raised concerns, as the legislative instrument was only uploaded earlier this month. The bodies have requested a delay of at least six months to allow practitioners to adapt to the new guidelines.

Jones has advised tax advisers to await guidance from the TPB on how the new provisions will be practically interpreted. TPB chairman Peter de Cure has indicated that webinars and guidance will be provided to help practitioners navigate the new rules.

Political opponents have criticized the government's handling of these changes. Shadow Assistant Treasurer Luke Howarth of the Liberal Party of Australia commented that the new regulation continues the government's antagonistic stance towards financial services professionals, now extending to accountants, bookkeepers, and tax agents.

“With a start date of August 1, accountants have been left with little time to prepare and comply with the Assistant Treasurer’s new obligations. At the busiest time of the year for many tax practitioners, they have received a red tape bomb from the [Prime Minister Anthony] Albanese government,” Howarth said.

“Some of these new obligations are far-reaching and potentially impossible for thousands of small tax practitioners to comply with. In his haphazard attempt to address bad behavior from a few large international accounting firms, the assistant treasurer has caused chaos and confusion for the rest of the industry.”

De Cure has also cautioned that Australian tax advisers who misuse the new reporting regulations to make vexatious complaints against fellow practitioners could themselves face investigation.

By fLEXI tEAM