The government has agreed to fix shortcomings raised by industry bodies over new ethical obligations for tax financial advisers, after two disallowance motions in the Senate attempted to block the new rules.
A statement issued by Chartered Accountants Australia and New Zealand following a final agreement between Minister for Financial Services Stephen Jones and 10 professional associations on revisions to the text of the Tax Agent Services (Code of Professional Conduct) Determination said the two threats to disallow the rules proposed by Jones were critical to getting much needed change.
The determination introduced new ethical obligations to tax advisers and agents as part of the government’s response to the PwC scandal, but has swept up professional services businesses who had nothing to do with the issue.
CA ANZ group executive advocacy Simon Grant said that the disallowance motions put by Coalition Senator Dean Smith and Independent Senator David Pocock helped hasten negotiations with the government to ensure that a revised regulation that was workable was issued.
Jones and the bodies struck agreement over the past 48 hours and the second of the disallowance motions was withdrawn by Pocock.
Changes were made to the provisions related to reporting a client to authorities so that they are more aligned to the professional ethical standards of accountants and set the bar for reporting a client higher than the initial text issued by Jones in July.
Grant said in an e-mail sent to CA ANZ members the document was improved as a result of further engagement with the bodies.
“Section 45 is now completely revised. It lists specific matters for disclosure and is more closely aligned to the policy intent of the provisions and, importantly, investigations and mental health will not have to be disclosed,” Grant said.
Section 45, along with Section 15, were the two controversial measures in the determination with the latter’s “dob in” provision having been revised.
Section 15 had been amended to raise the threshold what is considered a serious matter which the CA ANZ said is better aligned to members’ existing obligations under NOCLAR (non-compliance with laws and regulation) in the Accounting Professional and Ethical Standards Code of Ethics, which Grant described as a “pragmatic outcome”.
Grant thanked Jones, his office and Treasury for helping out but also the various Senators for helping pressure the government to change.
“We thank Senator Dean Smith and Luke Howarth, as well as Senator David Pocock for their disallowance motions, which helped hasten discussions with the government,” Grant said.
“We would also like to thank the Senate crossbenchers who listened to our concerns and stood with CA ANZ, the professional bodies and tax and BAS [business activity statement] agents to secure the commitment to these important changes.”
Shadow Minister for Financial Services Luke Howarth characterised the changes made by Jones as the government capitulating to the profession on a matter it should have consulted on much earlier.
“It should not take the threat of two disallowance motions, from both the Coalition and the Senate crossbench, to bring the Assistant Treasurer [Jones] to the table to consult on regulation in good faith,” Howarth said.
“After repeatedly dismissing outrage from tax practitioners and insisting the regulation was ‘a modest set of obligations’, the Assistant Treasurer capitulated and finally admitted the regulation was defective and that significant changes were required after a Senate vote on disallowance was negatived 31 votes to 31 votes last month.
“The government has since scrambled to fix this botched regulation, with it continuing to be rewritten up until the eleventh-hour yesterday. With just hours before imminent disallowance, the Assistant Treasurer signed off on a new instrument and backed down at the last minute, once again.”
CPA Australia spokesperson Belinda Zohrab-McConnell said that the professional associations now looked forward to negotiating with the Tax Practitioners’ Board on developing guidance that aligns with the revised determination.
