The Federal Coalition is preparing to move a disallowance motion in the Senate to wipe a new set of ethical obligations from the statute books that professional associations representing tax and financial advisers believe result in onerous and costly compliance activity.
A coalition statement issued on Tuesday flags its intention to disallow the contentious determination issued by Minister for Financial Services Stephen Jones, and follows more than a month of lobbying by 10 professional associations to urge Jones to withdraw the determination.
The determination introduces eight new ethical obligations that professional associations said would create conflicts with existing ethical obligations or require them to reveal information about themselves to current or prospective clients that has nothing to do with their capacity to provide tax agent services.
There is also an ethical obligation that some accountants and advisers believe is contrary to the principles of confidentiality in the main – the obligation to dob-in a client that has refused to change certain information on a tax return.
Jones refused to agree to amend the current version of the determination when he met with the bodies a fortnight ago, but he instead proposed a delay in the effective date of the determination so that firms with 100 or more employees would have to comply with it from 1 January 2025 but employers with fewer than 100 employees would have until 1 July 2025.
The Tax Practitioners’ Board had planned to finalise guidance on the new ethical obligations by November, and it had told the associations including the Financial Advisers Association of Australia that it would be aiming for a pragmatic approach.
The associations have spent the past fortnight lobbying Senators from across all parties to alert them to the problems they see with the determination, with cross bench Senators targeted as a part of letter-writing campaigns such as the one encouraged by Chartered Accountants Australia and New Zealand.
Shadow Treasurer Angus Taylor announced that the Coalition would move to shred the determination following industry feedback and noted that the determination created greater compliance costs for tax advisers and bookkeepers.
“This isn’t the right approach in a cost-of-living and cost-of-doing-business crisis,” Taylor said.
“Local accountants and bookkeepers have been blindsided by this new red tape, yet Labor has refused to listen to community feedback.”
Shadow Assistant Treasurer Luke Howarth said the determination reflected a government trend of issuing “rushed and botched regulation with a lack of meaningful consultation”.
A spokesperson for Assistant Treasurer Stephen Jones told Professional Planner that the government’s push to improve the standards of professionalism of tax and financial advisers was being facilitated by “introducing a set of modest obligations”.
“The Government has engaged in consultation with industry over potential changes since as early as December 2023,” the spokesperson for Jones said.
“Tax Practitioners and their professional associations were consulted throughout the development of the Code as it was proposed, including in the weeks before the Government’s announcement to introduce the new obligations.
“The Government hopes that given the extensive consultation period, the Senate votes to strengthen the integrity and accountability in the tax system.”
Jones’ determination is one of a range of government attempts to tighten the regulation of tax agents since the TPB revealed PwC Australia had breached confidentiality agreements related to government policy consultations.
Institute of Public Accountants policy adviser Tony Greco said that this latest legislative hiccup follows a consistent pattern of developing poor law.
“After breach reporting – dob-in rules – rules surfaced last year unannounced in poorly drafted legislation we thought it was an isolated incident. It’s déjà vu with the new code determination,” Greco said.
“The TPB has not yet finalised its guidance on breach reporting let alone come to terms with new eight Professional Code of Conduct, which includes client dob-in, which the Assistant Treasurer still maintains are ‘modest changes’.
“This is not the way important regulatory changes should be introduced into law especially when it impacts on the daily operations of all tax practitioners.”
Jones’ determination is one of a range of government attempts to tighten the regulation of tax agents since the TPB revealed PwC Australia had breached confidentiality agreements related to government policy consultations.
