The Federal Budget announcement that $20.1 million will be provided to the Tax Practitioners Board over four years is good news for a regulator with acknowledged resource problems, says Michael Croker, Australian Tax Leader at Chartered Accountants Australia and New Zealand.
But Croker said CAs would be disappointed there was no ministerial announcement about an expected review of the regulatory framework for tax practitioners, preferring instead to hit tax agents with higher registration fees.
“A post-implementation review of the Tax Agent Services Act 2009 was flagged when this legislation was enacted, and our pre-Budget submission strongly urged the government to follow through.”
Croker said there were many good reasons for a post-implementation review.
We need a quality, ethical professional tax community
“The Tax Practitioner’s Board (TPB) exists to ensure consumers receive quality tax-related services. The TPB sanctions unethical and incompetent tax practitioners who create an uneven playing field and reputational damage for our profession.
“Chartered Accountants ANZ is concerned about Australian Taxation Office data indicating some agents knowingly or carelessly claim false work-related deductions in their personal clients’ returns. This is casting a shadow over the majority of honest tax advisers and needs to be tackled head-on.
“Ethical and education standards need to be enforced if tax agents are to maintain the trust of regulators and the community.”
A collaborative approach
Working with professional associations such as ours, whose members commit to ethical standards, periodic quality reviews and disciplinary processes, a review should explore more effective, modern regulatory arrangements, Croker said.
“There also need to be better links with the ATO to identify and engage with so-called ‘agents of concern’.”
The growing number of tax service providers
The ‘traditional’ tax agent business model is breaking down, partly because of digital disruption but also because of the recognition given to a range of other service providers, Croker said.
For example, conveyancers now advise on the income tax residency status of vendors for CGT withholding purposes: refer Diagram.
A particularly troublesome area for the TPB and other regulators – such as ASIC and the Financial Adviser Standards and Ethics Authority – is the interplay of regulations impacting tax, SMSF advice and financial planning.”
Diagram: Disruption in the tax profession
Tax data access and use
“Sensitive taxpayer data has traditionally been accessible only by authorised tax and BAS agents using the ATO portal, but increasingly, data access is being sought by the FinTech sector and other service providers such as lawyers.”
“It is timely to review who has access to ATO data, how it is being used by those granted access, privacy and confidentiality issues.”
Tax agents or business advisers?
“Given these trends in the current regulatory environment, many Chartered Accountants increasingly see the label “tax agent” as anachronistic,” Croker said.
“Alternative regulatory models should be explored which acknowledge the broader intermediary roles performed by accounting professionals.”
Strategic Tax Planning Day
What tax planning opportunities does the Budget present for your clients? Get equipped with the tools to add more value with expert insights from practice leaders and the ATO. Join us in Sydney or online.Learn more
Australian Federal Budget 2018-19
Reports, insights and analysis of the Federal Budget delivered in CanberraLearn more