Written by: Letty Chen | Senior Writer (Tax) | TaxBanter
On Thursday 18 July, the TPB released a set of Frequently Asked Questions (FAQs) in relation to the new Code of Professional Conduct (Code) obligations for registered tax agents which commence on 1 August 2024.
The obligations are introduced by the Tax Agent Services (Code of Professional Conduct) Determination 2024, which was registered on 2 July 2024.
These eight new obligations are outlined in the recent Banter Blog article New Code obligations for tax agents. The key obligations include:
- advising all prospective and current clients of any matters that could significantly influence their decision to engage the agent
- taking reasonable steps to correct false, incorrect or misleading statements made to the TPB or the Commissioner — this includes a duty to report where another entity does not correct a statement within a reasonable time (e.g. where a client refuses to amend a lodged tax return).
The TPB’s FAQs contain 13 questions and responses mainly relating to its consultation and transitional approach.
The key takeaways are as follows.
Transitional compliance approach
The TPB will take a pragmatic approach to transition and implementation — providing education and support for those tax practitioners genuinely trying to do the right thing.
The TPB will provide a reasonable time for agents to understand their obligations, assess their practice and implement any necessary changes to comply with the new obligations.
The immediate focus is to finalise its guidance and educate tax practitioners.
Guidance materials
The TPB is currently undergoing consultation in developing its draft guidance.
The TPB will be releasing draft guidance materials publicly and consult over a four or six week period.
The FAQs note that the draft guidance is expected to be released in early September.
Webinars
The TPB will run webinars to explain the obligations and consult on draft guidance.
The first webinar has been scheduled for Wednesday, 7 August, 12 pm to 1 pm AEST. Register here.
Will the guidance recognise the differences in how a small practice and a large firm operates?
How a tax practitioner meets the existing and new requirements needs to be determined on a case-by-case basis, having regard to individual circumstances. The TPB recognises small practices operate differently to large firms. It will set requirements that apply to all tax practitioners, however, how a tax practitioner meets those requirements will need to be assessed against a number of factors, including the tax practitioner’s business model, the nature and size of their client base and the type of tax services provided.
Keeping clients informed of all relevant matters that could influence their decision to engage agent — what is a ‘relevant matter’?
The key part of this new obligation is to inform the client of all significant matters that can impact a client’s decision to engage a tax practitioner.
The draft guidance will explain how this principle is expected to apply to tax practitioners ‘on the ground’, and provide some examples of matters unrelated to a tax practitioner’s ability to provide tax agent services and therefore do not need to be disclosed to a client. For example, physical and mental health issues that are irrelevant to providing tax agent services and personal, religious or political beliefs.
The Explanatory Statement to the Determination provides some suggested matters that an agent may need to disclose to current and prospective clients, including sanctions imposed by the TPB, and any charge or conviction relating to an offence relating to fraud or dishonesty or a tax offence.
Do the new obligations conflict with the existing Code items?
The new obligations complement and do not conflict with the existing Code obligations.
For example, the new obligations that address the issue of making false and misleading statements creates a legal obligation on a tax practitioner to inform the ATO and/or the TPB where a client does not correct a false and misleading statement. As this new obligation creates a legal obligation, there is no conflict with Code item 6 (the obligation to maintain client confidentiality).
There are a range of existing circumstances where disclosure of information to regulatory agencies takes priority over tax practitioners’ obligations to maintain client confidentiality.
Does the obligation to ensure tax agent services being provided on your behalf are provided competently require staff to have formal training?
Not necessarily. The new obligations do not specify any particular method for how relevant knowledge and skills are to be maintained. Formal training and on-the-job training will continue to be something a tax practitioner will consider in relation to each employee.
