Minister for Financial Services Stephen Jones has offered further consultation with 10 cranky professional associations before his determination with eight new ethical obligations is subject to a disallowance vote by the Senate on 10 September.
Jones has written to the joint bodies that include organisations such as Financial Advice Association, CPA Australia, and the Institute of Public Accountants proposing a roundtable to deal with two contentious parts of the determination, obligations which have been pushed back to next year.
The bodies have expressed concern when the instrument was issued on 2 July that they were not consulted on the final form of the document, and that a dob-in-a-client provision was introduced without any warning.
That provision requires advisers to tell tax authorities of a material issue a client has failed to change that renders a tax return misleading.
Concerns related to what constitutes ‘material’ have been raised by the bodies given that materiality may be subject to the judgement of either the adviser or the taxpayer.
A provision requiring tax advisers to provide information that might significantly influence the willingness of a client or prospective client to engage them is also under fire given that the term significant is also deemed by the professional bodies to be loose.
Jones told the bodies in a letter that he believed concerns from the bodies about the two contentious sections would be addressed by Tax Practitioners’ Board guidance, but that he has asked Treasury to do some further homework on whether the drafting can be improved.
He said that he wanted to arrange a roundtable next week between Treasury, his office and the professional associations to look more closely at how concerns could be addressed.
“Following this discussion, I intend to publicly consult on any draft amendments, explanatory statement and further TPB guidance,” Jones said in the letter signed to the bodies on 27 August.
“This will ensure that all stakeholders, including your members, continue to have the opportunity to contribute.
“I hope this approach demonstrates my commitment to constructive engagement with you, your members and the broader community.”
Jones’ roundtable proposal has been accompanied by changes to transitional provisions that will mean that there is no obligation on a tax agent or firm to go back to 2022 when they make disclosures to clients.
The IPA has welcomed the intention of Jones to sit down and talk further about the determination and also the tweaks to transitional arrangements that Jones’ has exposed to the membership bodies.
A message to members from the IPA said that the government will no longer require tax agents to ensure they comply with provisions of the determination before the start date.
The start date is 1 July 2025 for practitioners with 100 or less employees or 1 January 2025 for all other tax practitioners.
“The Commonwealth Government has made the duty to disclose all relevant matters to the client (s45) prospective to align with the transitional dates. The previous version required tax practitioners will need to consider matters arising from 2.5 years to 3 years earlier,” the IPA said.
“Both these amendments are welcomed improvements on the previous amended determination.”
Shadow Assistant Treasurer Luke Howarth told Professional Planner on Thursday that the disallowance will continue to be pursued by the coalition even with the government’s back down on aspects of ethical obligations.
“This latest concession changes nothing and the Coalition will still seek to disallow this outrageous attack on local accountants, bookkeepers and tax agents,” Howarth said.
“These obligations remain far-reaching, poorly drafted and potentially impossible for thousands of smaller tax practitioners to comply with.
The shadow minister said this was another “embarrassing mea culpa” and an example of the “terrible” stakeholder management and lack of consultation that has come to be expected from the government.
“Consultation should be done in a public and transparent manner, not with stakeholders being gagged and gaslit like we have seen here,” Howarth said.
