Financial advisers who are tax agents can breathe a sigh of relief following a backflip by Minister for Financial Services Stephen Jones on having a new set of legally-backed ethical principles apply from today.
Advisers with fewer than 100 employees will instead have until 1 July 2025 to get familiar and comply with eight new legally backed ethical obligations while larger organisations with 101 or more employees must be ready to comply by 1 January 2025.
This about face follows a frantic period of lobbying by the 10 professional bodies that opposed aspects of the new determination that Jones signed off.
A meeting was held with all the profession bodies this week to discuss their concerns about the new ethical obligations that include the obligation to dob in a client that is failing to heed advice to change misleading or inaccurate material in their tax return.
Bodies said that obligation could be read as being in conflict with the obligation to maintain confidentiality, and they were also concerned about how much information they needed to provide to clients so they can make a decision about whether to engage the services of a tax adviser.
After a period of silence in the lead up to the commencement date, Jones shredded the August 1 effective date after listening to the concerns of associations and has instead proposed a staggered implementation of the new rules based on practice size rather than a change on the content of the determination.
He said concerns raised by the bodies could be dealt with by guidance to be published by the Tax Practitioners’ Board.
The TPB has told professional associations in the past fortnight during an online meeting that it intends to finalise all relevant guidance by November.
Jones’ letter to the professional associations reiterated that the government recognises the role tax advisers play but that the determination was about the need to ensure misconduct was discouraged.
“Misconduct has serious impacts for consumers and causes them to lose trust in the tax profession and tax system,” Jones said.
“It also impacts compliant practitioners who are forced to compete with dishonest practitioners.”
A statement to Professional Planner from shadow Minister for Financial Services Luke Howarth said that Jones’ backflip on the effective date of the determination was another “embarrassing mea culpa from Stephen Jones and simply too little, too late”.
Howarth, who had previously called implementation of the new regime a “red tape bomb”, said this represented another scramble by Labor to fix a mess it created as was the case with the last minute changes to the Delivering Better Financial Outcomes bill.
“Unfortunately, Jones is only deferring the start date and is making no substantive changes to the raft of new obligations,” Howarth said.
Institute of Public Accountants general manager – technical policy Tony Greco acknowledged Jones willingness to make changes to the determination if that was deemed necessary in the future.
“We are pleased by [Jones’] amendment to the start date of the new obligations,” Greco said.
“We also appreciate his understanding of the critical nature of TPB guidance in ensuring these rules function well, and are pragmatic for the tax practitioner community.
“The transitional new dates allow the Tax Practitioner Governance and Standard forum, Treasury and the TPB to undertake further consultation and develop appropriate guidance.”
