The Financial Advice Association is one of a group of 10 professional associations that has called this week the Federal Government to revise an amendment to tax advisers’ regulations that impose greater obligations on advisers.
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, FAAA, NTAA PLUS and SMSF Association have written directly to Minister for Financial Services Stephen Jones.
Jones has been told by the bodies they are concerned that the new rules contained in a determination issued by the minister create compliance hurdles for tax advisers that operate in small to medium practices.
The determination allows the minister to add obligations to the already legislated Code of Professional Conduct and some of the new material was a part of negotiations with the Australian Greens last year.
“The joint bodies welcome more robust and effective regulation of the tax system and the tax profession,” the nine-page letter said.
“However, rules that create inconsistencies and uncertainties work against compliance and good governance.
“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.”
One aspect that has members of all the bodies concerned is a provision related to keeping a client informed of all relevant matters related to the practitioner with which they engage that is in Section 45 of the determination.
This section was one Jones agreed with Greens’ Senator Barbara Pocock as part of a package to tighten rules on professional advisers registered as tax agents.
The bodies argue that the provision would be too broad and could capture issues that are irrelevant to the provision of tax services to a client.
“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 said.
“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 bodies also express concerns about the retrospectivity of the determination that would require advisers to consider any matters dating back to 1 July 2022 when reflecting on what they might need to disclose to existing and prospective clients.
It is argued in the bodies’ letter that a provision requiring a tax adviser to report their client to authorities if the client is refusing to correct misleading information in a return by a reasonable time conflicts with confidentiality requirements of the principal legislation.
There is also a concern that the 1 August start date is unreasonable for an instrument that was only uploaded in its final form earlier this month.
“The joint bodies are concerned that the [legislative instruments] commencement date of 1 August 2024 is unrealistic and unachievable for many tax practitioners who are already operating under heavy workloads to assist their clients and ensure tax revenue is correctly calculated and paid,” the letter said.
Each of the bodies has also conducted an e-mail and social media campaign to all its members in addition to signing the open letter to Jones.
The IPA refers to the disallowable nature of the legislative instrument in its initial communication with members – a reference to the fact the parliament could scrap the instrument signed off by the minister if the regulation or determination is deemed inappropriate for whatever reason.
