Financial services professionals and tax advisers will find it harder to depend on secrecy provisions with laws to protect them from actions by regulators.

The Federal Government has moved over the past two years to gradually break down the secrecy walls between agencies such as the Australian Taxation Office and the Tax Practitioners Board so there is a greater chance of one or the other regulatory body being able to prosecute.

The Review of Tax Regulator Secrecy Exceptions consultation paper, released on 20 December, is currently doing the rounds that raises further questions about where government agencies might be able to cooperate so one or more can properly investigate the conduct of an individual or firm.

The paper has a 28 February comment deadline, and it considers areas where the ATO and TPB can support each other on investigations of serious offences, support professional integrity, aid in the identification and prevention of fraud, and for other government purposes that are in the broad public interest.

This paper does not simply cover the relationship between the ATO and the TPB, it delves even further into whether other government bodies or programs should be able to have access to what is known as protected information.

It asks whether financial advisers should be given access to material held by the ATO to enable the most accurate information to be used when preparing advice for a client, but it also raises concerns about the manner in which security of information is ensured.

Financial advisers need to be able to ensure they have baseline security standards suitable to handle sensitive information that might come to them via the ATO.

The consultation paper also flags that a new platform would have to be created for financial advisers for access.

“A new platform would need to be developed and built to enable the ATO to provide limited client specific superannuation information once a client has authorised access for their financial adviser,” the consultation paper said.

“This would be a significant cost to taxpayers for granting access to a relatively small cohort of financial advisers.”

Bodies such as the National Disability Insurance Agency and the Department of Foreign Affairs and Trade are mentioned as bodies being considered as organisations that could be given access to protected information about individuals for specific purposes.

There is also a reference to internet service providers and whether ISPs should get specific information from the ATO to help enforce orders to block certain kinds of use of their platform.

What does this mean in practice?

The ATO and TPB found themselves in strife when certain information could not be shared between the two agencies about the PwC tax leaks matter. This is part of the reason why the secrecy provisions have been modified so agencies are able to communicate more freely.

Financial planners that are tax agents that choose to saunter down the dark end of the street will find it more challenging to evade prosecution as a result.

The inability of agencies to share information with each other that might relate to individual taxpayers in the past has meant the door is firmly shut on Agency A getting access to material from Agency B even if the information might assist in pinging Person C for an offence.

That will slowly disappear as might the ability of people to mess around elsewhere with government administration.

Advisers will need to be careful about the way they behave but they might also be able to get direct access to information held by the ATO related to a client’s finances and superannuation.

Financial advisers would find some of their work becomes easier to do if access is facilitated after a client gives their consent via a platform built precisely for that purpose.

How much of the paper’s content will actually see the light in final policy remains to be seen.

The submission deadline might be February 28 but progress on the policy area may end up delayed because of a minor event called a Federal Election due to be called between now and sometime in May.

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