Concerns over Jones’ tax ethics law remain despite consultations
Treasury officials are expecting negative submissions from tax and financial advisers over a revised determination about ethical obligations. This is despite Assistant Treasurer Stephen Jones making efforts to appease cranky professional associations.
A week-long consultation period closed on Wednesday with professional associations, including Chartered Accountants Australia and New Zealand, flagging issues with the determination. This is despite industry groups helping Treasury design the amendments.
The revisions follow a commitment from Jones almost a month ago that he would consult with the profession to try to make what he saw as an essential element of responding to the
PwC tax leaks saga workable for everyone involved.
Revisions were made to the determination following more than two months of intense lobbying of the government by professional associations and their members about the vagueness of wording that the bodies said would create onerous obligations.
Changes to a requirement for tax advisers to notify clients of adverse issues such as bankruptcy or disciplinary decisions have received support because they are now confined to issues that are publicly known rather than disclose investigations that were yet to conclude or prove wrongdoing.
A letter from CAANZ to its membership sent last week said that it was satisfied with the changes to the disclosure provision known as Section 45.
“CAANZ is comfortable with the amendments to section 45 which now make it clearer that tax and BAS agents will now only be required to disclose particular, significant matters in the public domain, such as bankruptcy, convictions for fraud, dishonesty, serious tax offences, or promoter penalties, and suspensions or terminations by the Tax Practitioners Board,” the email says.
“These important changes to disclosure requirements are the result of CA ANZ’s prolonged and effective advocacy.”
The peak accounting body, however, continues to be critical of a provision in the determination that requires tax advisers to dob in clients if certain conditions are met.
These conditions include a requirement that the client should be reported if an adviser has reasonable grounds to believe that a client’s actions “have caused, are causing, or may still cause substantial harm to the interests of others”.
These conditions replicate the provisions of the ethical standards of the accounting profession that apply to members of CAANZ, CPA Australia, and the Institute of Public Accountants, but CAANZ is concerned that this will damage trust between an adviser and their client.
“We still consider that even with the changes [in the determination] the relationship between a taxpayer and their agent will be eroded by these new obligations,” CAANZ’s e-mail to members says.
“This could lead to an outcome of reduced compliance in the proper collection of tax revenues.”
The Jones determination is set to be subject to a second disallowance vote in the Senate on October 8 after an initial attempt to kill of the new regulation impacting tax agents was defeated by the crucial vote of Senator David Pocock.
Pocock introduced a second notice of motion to disallow the determination during the last sitting week of the Senate.
Shadow assistant treasurer Luke Howarth told The Mandarin the determination should be wiped off the statute books as it was unnecessary.
“While the assistant treasurer’s admission that the original determination is defective is a welcome backdown, he must also admit it can’t be fixed and should be disallowed,” Howarth said.
“The proposed rewrite makes minor improvements to the most contentious aspects of the determination which might make compliance slightly easier for large firms, but small firms and solo practices will still be left with an unnecessary and burdensome compliance nightmare.”
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Stephen Jones a surprise Labor fundraising star
Labor’s Assistant Treasurer Stephen Jones has somehow found himself to be the hottest ticket in town, selling out two upcoming fundraisers in record time.
The surprise answer appears to be Assistant Treasurer Stephen Jones. Margin Call is told Jones’s name recently sold out two fundraisers in record time – tickets to a Sydney boardroom lunch next week went within minutes, and a follow-up in Adelaide a week later lasted only barely longer.
Jones is hardly the most popular minister in business circles. To say he’s widely regarded as a bit of a goose is the most kind translation of the most common reactions.
He’s still under pressure over the government’s response to Michelle Levy’s Quality of Advice Review, locked battle with accountants over contentious proposed laws to rein in rogue tax agents, and fighting battles on host of other fronts as well.
Which may well be the key to his sudden popularity.
Jones’s office is said to have become so adept at fending off requests for a chat about the issues from industry players that a paid lunch looks to be the only way to get time to press a case.
Jones may be the surprise hit of the election season luncheon round, but his ministerial colleagues are certainly not shirking their duties.
A quick straw poll of industry sources suggest Labor has issued more than 20 invitations so far this financial year for business to dine with its ministers, close to double the count for their Liberal counterparts.
Labor’s list includes headline events with the Prime Minister and Cabinet in Perth in early September, the annual Federal Labor Business Forum in Sydney in August, as well as a host of lesser functions.
October brings at least nine Labor fundraisers, including Jones’ sold-out events and functions headlined by Attorney-General Mark Dreyfus, Health and Aged Care Minister Mark Butler and Home Affairs Minister Tony Burke.
Labor’s Business Roundtable is charging $3000 a head for members for its to attend, and $4000 for non-members, suggesting October could be a bumper month for the party.
But if you’re thinking of attending, Labor is keen to make sure its functions don’t become another front in the political boys club.
“Federal Labor Business Forum invites all members to join the Federal Labor Party in championing gender equality. We encourage equal representation when nominating your event guests,” the invitations say.
The new breach reporting rules will create a challenging environment for tax agents and could see practitioners falsely accused of misconduct, the association cautions.
By Miranda Brownlee • 02 February 2024 • 
The dob-in provisions or breach reporting rules are one of the most significant changes passed in the new provisions to the Tax Agent Services Act in November, according to Robyn Jacobson, senior advocate at the Tax Institute.
The new provisions, which were introduced as an amendment to Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, will require tax agents to notify the Tax Practitioners Board (TPB) if they have reasonable grounds to believe that another registered agent has breached the code and that breach is significant. The provisions apply from 1 July this year.
“This is an obligation to dob in another agent where you think they have significantly breached the code,” said Ms Jacobson in a recent Accountants Daily webcast.
“If you fail to dob in that registered agent who you believe has breached the code in a significant manner, then you will be facing a penalty.”
Tax agents will also be required to dob themselves into the TPB where they believe they have breached the code in a significant matter.
“If you’re dobbing yourself in, then of course you’ll face some sort of sanction from the board for having breached the code. If you fail to dob yourself in, you will have breached this new obligation,” said Ms Jacobson.
“If it relates to another agent, then you have an obligation to dob them in and if you fail to do so you will be penalised for failing to dob them in.”
Where there are two unrelated tax agents, the tax agent will still have the same obligation to dob the other agent in where the conditions are met but not their staff, Ms Jacobson explained.
“So, we're not dobbing in lawyers and lawyers have no obligation to dob in, it is one registered agent in respect of another registered agent, whether or not they are in the same firm,” she said.
This could create significant issues where there is a disgruntled tax agent, she warned.
“What if I am disgruntled with you? What if you took over one of my clients, this would be a great way to stick you up and create a false allegation. There’s no particular protection for you, it would be investigated and even though at the end it may be determined that I made a false representation, it could have significant reputational damage,” she said.
Ms Jacobsen said the new rules will also apply where a tax agent has picked up a new client and sees that the previous agent has not managed Division 7A or FBT obligations, or logbooks, for example, they will also have an obligation to dob in if it is a material significant breach.
A significant breach under the provisions includes indictable offences or offences involving dishonesty.
“Now, these sorts of offences could be bribery, corruption, fraud, embezzlement, money laundering, social security fraud, tax and GST fraud, theft or dishonest use of position. It could also be a breach of civil law, criminal law, Commonwealth or state law. So you can see it is extremely broad,” said Ms Jacobson.
“I’m still trying to work through in practice how would I, as an agent, determine if you had been involved in some sort of embezzlement or making a false or misleading statement.”
Ms Jacobson said while the provisions only apply where the tax agent has reasonable grounds to believe there has been misconduct, they are not required to prove it.
“It’s still going to be a very challenging environment for agents to operate in. We are concerned that in their current form, [these provisions] could have a devastating impact on an agent who was falsely accused of misconduct,” she stated.
Ms Jacobson said the Tax Institute, along with other industry bodies, will continue to work with the government and TPB to understand how this can become as practical and as straightforward as possible to implement.
ICIJ reviewed hundreds of pages of court records to examine the Big Four firm's role in a controversial tax maneuver, which one expert labeled "easily replicable."
