Chapter 1
Introduction
1.1
The Tax Agent Services Bill 2008 aims to improve regulation of
tax agents and other intermediaries in the tax field. It is the culmination of
a process dating back to 1992, when a working party was first established to
review the regulatory arrangements and professional standards for tax agents.
Tax agents have been regulated under Part VIIA of the Income Tax Assessment
Act 1936 since 1943.[1]
Conduct of the inquiry
1.2
The bill was introduced into the House of Representatives on 13 November 2008. On 26 November, on the recommendation of the Senate Selection of Bills
Committee, the Senate referred the provisions of the bill to the Economics Committee
for inquiry and report by 12 February 2009.
1.3
The committee advertised the inquiry in The Australian and
on its website and wrote to many peak organisations inviting submissions. The
committee received 36 submissions (listed in Appendix 1), and held a public
hearing in Canberra on 6 February 2009 (see Appendix 2). Submissions are
available on the committe’s website at https://www.aph.gov.au/senate/committee/economics_ctte/index.htm
The Committee thanks submitters and witnesses for their contribution.
The bill
1.4
The bill will replace the existing law regulating tax agents in
Part VIIA of the Income Tax Assessment Act 1936. According to the Government’s
second reading speech, the bill has three objects:
- to improve consistency in the registration of tax agents and
other intermediaries in the tax field and to regulate the provision of tax
agent services;
- to enhance the protection of consumers of tax agent services,
thereby reducing the level of uncertainty for taxpayers and the risks
associated with the self‑assessment tax system;
- to strength the integrity of the tax system and the tax industry.
1.5
The bill -
- establishes a national Tax Practitioners Board as a statutory
authority within the Australian Taxation Office to replace the existing
state-based Tax Agents’ Boards;
- requires that certain entities who provide tax agent services or
Business Activity Statement (BAS) services for a fee must be registered;
- introduces a legislated Code of Professional Conduct to govern
provision of tax agent services by tax agents and BAS agents;
- provides for a wider and more flexible range of administrative
sanctions which the Tax Practitioners Board may impose for non-compliance with
the code of conduct;
- introduces civil penalties and injunctions to replace criminal
penalties for certain misconduct by registered agents and unregistered entities.
Previous consultation on drafts of the bill
1.6
The bill is the culmination of a process dating back to 1992,
when a working party was first established to review the regulatory
arrangements and professional standards for tax agents. In November 1994 a
National Review of Standards in the Tax Profession made a number of
recommendations. In 1998 the then government intended a new regime to start on 1 July 1999. However its introduction was delayed at the request of the tax profession to
allow practitioners to focus on preparing for the reforms introduced with A New
Tax System from 1 July 2000. Confidential consultation on a detailed discussion
paper occurred in 2005 and confidential consultation with professional bodies
representing tax agents and bookkeepers occurred in 2006. Draft legislation and
regulations were exposed for public comment for three months in mid-2007 (114
submissions were received) and for four weeks in mid-2008 (45 submissions were
received).[2]
1.7
In response to the 2007 consultation, the 2008 draft bill made
changes including:
- the independence of the Tax Practitioners Board was enhanced;
- adjustments were made to the definitions of ‘tax agent service’
and ‘BAS service’ to clarify their scope;
- certain aspects of the registration system were adjusted and
simplified;
- the wording of several of the provisions in the Code of
Professional Conduct were narrowed or otherwise adjusted to make clearer the
obligations of tax agents and BAS agents;
- arrangements relating to the provision of continuing professional
education for the purposes of complying with the Code were revised;
- consequential and transitional provisions include an additional ‘safe
harbour’ from administrative penalty for taxpayers for the late lodgement of a
document in the approved form resulting from a tax agent’s or a BAS agent’s
careless error.[3]
1.8
The 2007 consultation included draft regulations, and the 2008
consultation included draft regulations and an incomplete draft consequential and
transitional provisions bill. This has not been introduced to parliament with
the present bill. According to Treasury it is not yet finalised and is
expected to be introduced in 2009 (see paragraph 1.14 below).[4]
1.9
The 2008 draft regulations contain qualification requirements for
tax agents and BAS agents, and requirements for associations to become a
recognised professional association or a recognised BAS agent association.[5]
1.10
The consequential and transitional bill contains ‘safe harbour’
provisions which protect the taxpayer from administrative penalties if their
contravention was caused by the carelessness of the tax agent.[6]
1.11
The Government has promised a post-implementation review after
three years, although this is not written in the bill.[7]
1.12
Witnesses were generally happy with the level of consultation on
the bill:
...a good example of effective consultation...[8]
We appreciate the extensive and detailed consultation process
that Treasury has undertaken.[9]
1.13
However, some witnesses were concerned that the transitional
provisions bill had not been introduced to parliament at the same time. The
Committee is also disappointed about this. The parts of the main bill which
commence on proclamation (the main provisions about registration, civil
penalties, and the Board’s power of investigation) cannot commence before the
transitional provisions bill has received Royal Assent (see clause 1-5). Thus
the transitional bill must come to parliament and be passed before the new
scheme can start.
1.14
Treasury accepted it would have been desirable for the transitional
provisions bill to be available contemporaneously, but claimed that the
limitations of drafting resources, and the need to act at a suitable stage in
the tax cycle, meant that waiting for it would probably have led to a year’s
delay. They promised the transitional provisions bill would be available soon:
I understand that it is the intent to release it very shortly so
that it will be before the parliament when the parliament is debating the main
bill [10]
Comment of Scrutiny of Bills Committee
1.15
The Senate Standing Committee for the Scrutiny of Bills has a
standing brief to consider whether bills unduly trespass on personal rights and
liberties and related matters. It noted that Parts 2 to 5 of the bill are to
commence on Proclamation, but in any event within nine months after Assent.[11]
The Scrutiny Committee takes the view that the parliament is responsible for
determining when laws come into force. Where commencement is delayed more than
six months, the Scrutiny Committee expects that the explanatory memorandum to
the bill will provide an explanation, which is not provided in this case. The Scrutiny
Committee drew Senators’ attention to the provision, as it may be considered to
delegate legislative powers inappropriately.[12]
1.16
At the Economic Committee’s hearing Treasury explained that the
commencement provisions are arranged so that the Tax Practitioners Board can be
appointed immediately on Assent. There must then be a delay for the Board to do
what is necessary (for example, producing guidelines) before the provisions
concerning registration can start. The Government considers that up to nine
months is a reasonable time for this.[13]
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