The Chair of The Tax Institute’s National Taxation of Individuals Technical Committee: published an article entitled: ‘Assessing the impact of the TASA changes on the profession‘ in the Institute’s weekly email publication: TaxVine (9, 22.3.24). It reflects on the significant administrative changes to the regulation of the tax profession, made in 2023, and assesses the impact of those changes, on the tax profession and, in particular, registered tax agents and BAS agents (registered agents). I’ve extracted the article below.
2023 was a year of significant change for the tax profession, and were the focus of extensive media attention last year for various reasons [including the TPB’s action in sanctioning a PwC partner and that firm; the resulting scrutiny and digging by a the Senate Committee; ‘white hot’ public, Government and Parliamentary interest in these issues; the ‘extracting teeth’ response, of PwC, to these issues; rankling between the ATO and the TPB over this; a belated Federal Police inquiry; changes to the Federal Government’s purchasing policy, effectively removing PwC from tendering for Government work; PwC selling its Government advisory business to an independent party for $1; and a belated government response to 2019 Keith James report, into the ‘fitness for purpose’, of the tax agents system, established by TASA]. This scrutiny led to wide-sweeping legislative changes to increase regulation of the tax profession. The legislative changes made to the Tax Agent Services Act 2009 (TASA) were effected by Schedule 3 to the Treasury Laws Amendment (2023 Measures No. 1) Act 2023 which was enacted on 27 November 2023.
Under the changes, the Tax Practitioners Board (TPB) gained increased powers. Registered agents face increased TASA obligations, including new breach reporting rules (‘dob-in’ provisions) and requirements around employing or engaging ‘disqualified entities’. Some of the professional associations have also mandated increased annual ethical hours as part of their members meeting their CPD obligations.
Separately but relevantly, the Administrative Appeals Tribunal (AAT) — soon to be redesigned as the Administrative Review Tribunal (ART) — handed down some thought-provoking decisions, exemplified by the decisions in favour of the taxpayer in Bendel and Commissioner of Taxation (Taxation) [2023] AATA 3074 and Bowerman and Commissioner of Taxation (Taxation)[2023] AATA 3547. The Australian Taxation Office (ATO) also expanded the client-agent linking program on 13 November 2023 to include entities with an ABN (other than sole traders) and intensified its efforts to collect old debts that were deemed ‘uneconomical to pursue’, creating ongoing pressures for many tax agents already struggling to navigate the challenges of the last few years.
While each of these disruptions merits a separate and thorough examination, this article focuses on the changes imposed on registered agents who now find themselves adapting to a transformed landscape as a tax professional.
In Australia, more than 63% of taxpayers seek the assistance of tax practitioners, and there are approximately 45,419 registered tax agents, as highlighted in the Australian National Audit Office’s 2022 report. According to the TPB’s Annual Report 2022–23 , the TPB received 2,400 complaints during that period, constituting 5.28% of the tax profession.
These statistics raise questions about the necessity of the extensive changes that have been already made and those further changes that are proposed to be implemented. Some of the already legislated changes took effect on 1 January 2024, with ongoing implementation of further legislated changes throughout the year. While this summary does not delve into detailed analysis, it serves as a reminder of the modifications, with more comprehensive insights provided by The Tax Institute’s (TTI) Tax Policy and Advocacy Team in previous analyses (including this free member-only webinar titled ‘Understand your new TASA obligations’ recorded on 29 November 2023).
The key legislative changes are summarised in the table below.
| Law change | Start date | Explanation |
| Update the objects clause in the TASA | 1 January 2024 | The objects clause in the TASA has been updated to modernise the object of the TASA to recognise its role in supporting public trust and confidence in the integrity of the tax profession and the tax system. |
| Expand the Code of Professional Conduct (Code) (in section 30-10 of the TASA) to prevent the use of ‘disqualified entities’ | 1 January 2024 | New Code items 15 and 16 prevent registered agents from:
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| Give the Minister the ability to expand the Code | 1 January 2024 | The Minister will have the power (by way of legislative instrument) to expand the Code to include additional obligations that registered agents must comply with, to address emerging or existing behaviours and practices. Any such additional obligations will not be subject to the usual Parliamentary scrutiny. |
| Move to annual registration period | 1 July 2024 | The registration period for registered agents will change from at least every three years to at least every year. This will not affect the TPB’s CPE requirements, but it will remove the need for registered agents to make an annual declaration. |
| Breach reporting – self-reporting | 1 July 2024 | A registered agent will be required to notify the TPB in writing if the agent has reasonable grounds to believe that they have breached the Code and the breach is a significant breach. |
| Breach reporting – another registered agent | 1 July 2024 | A registered agent will be required to notify the TPB and the relevant TPB-recognised professional association in writing if the agent has reasonable grounds to believe that another registered agent has breached the Code and the breach is a significant breach. |
| Enhance the TPB’s financial independence | 1 July 2024 | The TPB’s financial independence from the ATO will be enhanced by establishing a ‘special account’ for the TPB, allowing Commonwealth funding separate from the ATO for the TPB for specified purposes. |
| Board member appointments | 1 October 2024 | Ensure that individuals appointed to the TPB as Board members meet the definition of ‘community representatives’. Broadly, this prevents an individual from a firm with more than 100 employees from being appointed to the Board. |
The Minister’s authority to expand the Code to impose additional obligations on registered agents tax practitioners is enabled by new Code item 17 in section 30-10 of the TASA and new section 30-12 which were inserted by Schedule 3 to the Treasury Laws Amendment (2023 Measures No. 1) Act 2023. The Minister has released an exposure draft of the Tax Agent Services (Code of Professional Conduct) Determination 2023 ( draft Determination). The Joint Bodies’ submission on the draft Determination can be found here.
This draft Determination proposes to impose supplementary obligations in addition to those already contained in the Code in the TASA. The new obligations relating to the professional and ethical conduct of registered agents require them:
- to uphold and promote the ethical standards of the tax profession;
- not to make false or misleading statements to the TPB or the Commissioner;
- to identify and avoid conflicts of interest in dealings with Australian government agencies;
- to maintain confidentiality in dealings with Australian government agencies;
- to keep proper (i.e. ‘complete and accurate’) client records relating to the tax agent services they have provided to each of their clients, including former clients;
- to ensure tax agent services provided on their behalf are provided competently;
- to maintain adequate quality assurance and other internal control procedures; and
- to keep all their current and prospective clients informed of all relevant matters.
Once more, ethics takes centre stage in the recent changes, along with government interactions. However, it’s valid to question the proportion of tax agents who engage directly with the Government or its agencies. Many registered agents typically deal only with individual taxpayers and small businesses, yet all registered agents are subject to uniform regulation, despite the differing nature of their practices.
More reforms are on the horizon, with the release in December 2023 of the Government’s consultation paper Enhancing the Tax Practitioners Board’s sanctions regime. Many in the tax profession may be asking themselves, ‘When will the relentless pace of change ease?’
Any changes to the TASA should be proportionate and targeted — i.e. risk-based, or based on risk profile — rather than blanketing the entire agent community which may cause unintended consequences for many practitioners and increase compliance costs and the cost of providing professional tax advice to the community.
Consider the impact these changes will have on our profession and envision the future landscape for ourselves. Will there be a surge of tax practitioners opting to leave due to the added responsibilities imposed on them? Will recent graduates be inclined to join what is now considered the most heavily regulated profession in Australia? Will corporate and community organisations still welcome our presence on their boards and committees? And who will step up to represent the taxpayers who depend on us to guide them through Australia’s complex taxation system, if our integrity and honesty as a profession is questioned?
Annette Morgan, CTA, Senior Lecturer at Curtin University, Director of the Curtin Tax Clinic
[EDITORIAL COMMENT – inserted by me in ‘square brackets’]
FJM 1.4.24