what is a tax (financial advice service? · 2018-11-27 · who needs to register •financial...

What is a tax (financial advice service?

A tax agent service (excluding

representations to the ATO)

Provided by a AFS licensee or representative of

one

Provided in the course of advice usually given by an AFS licensee or representative

Relates to ascertaining, or advising about

liabilities, obligations or

entitlements that arise, or could arise under a

tax law

Reasonably expected to be

relied upon by the client for tax

purposes

1

3

4 2

5

Who needs to register

•Financial planners and advisers who provide tax (financial) advice services

for a fee or other reward must be registered. This includes:

•Australian financial services (AFS) licensees

•Authorised representatives (ARs)

• individual ARs

•corporate authorised representatives.

•Excludes employees and in-house services.

•Employee representatives may be required to be registered to meet the

sufficient number requirement.

Company and partnership – sufficient number• To determine sufficient number you should consider the:

•size of the business

• types of services

•number of qualified and experienced staff

• frequency of training

• level and type of technology or software used

•supervisory arrangements

•any conditions imposed on the entity

•The sufficient number could include:

•partners, directors, employees, contractors, staff under

service trust

•authorised representatives, managers or compliance

officers

Maintaining your registration

•Fit and proper

•Continuing professional education/development

•Professional indemnity insurance

•Code of Professional Conduct

•Notify us of changes that affect your registration

•Complete the annual declaration

Responsible Manager Obligations

All you need to knowRHETT DAS

DIRECTOR, INTEGRITY COMPLIANCE

DisclaimerThe material shown in this presentation is for general information purposes only and any opinions or views expressed in the course of the presentation does not constitute legal advice.

Whilst all care is taken in the preparation of this material no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by Integrity Compliance or any member or employee of Integrity Compliance or its associated entities.

Before acting on any of the information contained in this presentation you should obtain appropriate legal advice. The presentation also does not take into account any individual personal circumstances, specific investment or risk needs, objectives and financial situation.

Except as expressly permitted, this presentation may not be copied, reproduced, transmitted or re-distributed and remains the property of Integrity Compliance.

What are we covering off on todayThe AFSL Application Process

Specific Ongoing Responsible Manager Obligations

Positives and Negatives of Running Your Own AFSL

ASIC Requirements on Suitability of Responsible Manager Candidates

For What is ASIC Looking in Terms of Individual Licencing

The Application ProcessPreparation of core proofs and supporting documentation

A5 - Business description

B1 - Table of Organisational Competence plus an Org Chart

B5 - Financial Statements – profit and loss, balance sheet & cash flow projections

People Proofs - Business References

Potentially additional proofs for certain authorisations

Lodge and FS01

No set time on how long an application will take once it is lodged with ASIC

Better applications progress quicker

Ongoing RM Compliance Obligations Day to day running of the business and understanding the legal and compliance obligations of the licensee

Lodgement of Forms – eg ensure annual accounts and financial audit forms are lodged, remember you need to notify ASIC if your RMs change

Moral compass of the business

Can anyone guess the first question I usually get asked by a person who has just been asked to be a responsible manager?

Negatives of Running Your Own AFSL

You need to make time to run your AFSL and it can be at the expense of time in front of new clients or dedicating extra time to run the business

It is probably going to cost more

All the risk of running the AFSL sits with you

You are on your own – smaller community

Positives of running your own AFSL

Walk your own path and flexibility in everything you do eg from a product, software/systems/templates and process perspective - you have control and can do things your way

If the dealer group or a member of a dealer group gets into trouble you wont be dragged into it or find out one day that you no longer have a dealer group

ASIC Requirements of Suitability of RM Candidates

The five options - RG 105.49

Option 1 Meet widely adopted and relevant industry standard set by APRA

3 years relevant experience over the past 5 years

Option 2 Be individually assessed by an authorised assessor as having relevant knowledge equivalent to a diploma


Option 3 Holds a university degree in a relevant discipline and complete a relevant short industry course


Option 4 Holds a relevant industry – product specific qualification equivalent to a diploma or higher


Option 5 If not relying on Options 1 – 4 you need to provide a written submission that satisfies us that your responsible manager has appropriate knowledge and skills for their role and must cover all the information in RG 105.74

More potential changes for RMs

There would be a new Option 6 which would reflect the higher education and training standards

Every Licensee would have at least one responsible manager who satisfies the new option 6

There would be a transitional arrangement for existing RMs

In Summary

Invest some time in this process and yourself and do your research

Just because a someone says one thing does not mean it is always right – there are a lot of mixed messages

Ask the question

Take the time to invest in some sort of frame work and if that is not your thing come and talk to us and we can provide you with one

Questions

Contact us:

1300 416 736

[email protected]

mailto:[email protected]

Task Timeline CompleteLetter to licencee to resign for all ARs (including Corporate ARs) EarlyLetter to clients to inform of change of AFSL (approved by Licencee) EarlyPI Cover (min $2mil cover) Quoted and lined up beforeAPL EarlySecondary APL (continue to hold and Industry Funds) EarlyNew AFSL bank account EarlyDistribution Agreements Obtain them earlyShare Broking Agreement Obtain them earlyCommission and Fee Software EarlyFSG EarlyBankruptcy & Police Check for all ARs Day of licenceSign up ARs on ASIC website (Reps and Financial Advisers) Day of licenceSend copies of your old client files to your old Licencee EarlyCompliance Manual EarlyRisk Management Manual EarlyCompliance Calendar EarlyAR & Employee Induction Program EarlyClient Authority Forms (Cash accounts) Get them ready earlyKaplan - Training Register Day of licenceCompliance (RM) Training EarlyRisk Profile Questionnaire & Asset Allocation EarlyDocuments and software templates changed Get them ready earlyAR & SubAR Licencee Agreements Get them ready earlyAUSTRAC registration Day of licenceStaff training on obligations for AFSL EarlyOrganise Stationery/Website/Social Media changes Get them ready earlyConsider Cyber Insurance EarlyReports on all clients for all fund managers (portfolio valuation, holdings and contact details)

Early

AFCA membership Day of licenceTax Practitioners Board Membership Day of licenceFPA Day of licenceAR certificates Get them ready earlyAppoint Auditor Within 30 days of licence

Integrity Compliance Pty LtdLevel 21, 357 Collins Street VIC 3000

1300 416 736 www.icompliance.com.au

New AFSL Checklist

www.tpb.gov.au Page 1 of 85

Explanatory Paper TPB 01/2010

Code of Professional Conduct This is a Tax Practitioners Board (TPB) Explanatory Paper (TPB (EP)). It is intended as information only. It provides a detailed explanation of the TPB’s interpretation of the Code of Professional Conduct (Code) contained in Division 30 of the Tax Agent Services Act 2009 (TASA), translating the provisions into practical principles that can be applied by the profession.

This TPB (EP) is designed to assist registered tax practitioners, the relevant institutions, professional associations, potential registrants and the wider community to understand the factors that provide the basis for the TPB’s approach to the application of the TASA.

The principles, explanations and examples in this paper do not constitute legal advice and do not create additional legal obligations beyond those that are contained in the TASA.

Document history

The TPB released this TPB (EP) in the form of an information sheet as an exposure draft on 7 April 2010. The TPB invited comments and submissions in relation to the information contained in it. The closing date for submissions was 6 June 2010. The TPB considered the submissions made and published the TPB(EP).

On 13 July 2017 the TPB updated this TPB(EP) to incorporate a reference to tax (financial) advisers, and to update currency and clarity.

Issued: 16 December 2010

Last modified: 13 July 2017


Contents Purpose of explanatory paper ................................................................................................................... 3

Professional conduct of registered tax practitioners .................................................................................. 4

What is the Code of Professional Conduct? .............................................................................................. 6

Who does the Code apply to? ................................................................................................................... 6

What are the principles of the Code? ........................................................................................................ 6

(1) You must act honestly and with integrity ........................................................................................... 8

(2) You must comply with the taxation laws in the conduct of your personal affairs ............................ 10 ................................................................................................................................................................ 10

(3) You must account for money or other property you receive on trust from or on behalf of your clients ...................................................................................................................................................... 12

(4) You must act lawfully in the best interests of your client................................................................. 13 What does acting ‘in the best interests of your clients’ mean? ............................................................... 13

What does acting ‘lawfully’ in the best interests of your client mean?..................................................... 16

(5) You must have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities that you undertake in the capacity of a registered tax agent, BAS agent or tax (financial) adviser ................................................................................................................ 17

(6) Unless you have a legal duty to do so, you must not disclose any information relating to a client’s affairs to a third party ............................................................................................................................... 20

(7) You must ensure that a tax agent service provided on your behalf is provided competently ......... 23 What does ‘competently’ mean? ............................................................................................................. 23

(8) You must maintain knowledge and skills relevant to the tax agent services you provide .............. 28 What is a registered tax practitioner required to do to maintain relevant knowledge and skills? ........... 28

(9) You must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client .............................................................................................................................. 28

(10) You must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client .................................................. 31

(11) You must not knowingly obstruct the proper administration of the taxation laws ....................... 34 What are a registered tax practitioner’s obligations under this principle? ............................................... 34

(12) You must advise your client of the client’s rights and obligations under the taxation laws that are materially related to the tax agent services you provide .................................................................... 36

(13) You must maintain professional indemnity insurance that meets the Board’s requirements ..... 38

(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner .................................................................................................................................. 39

Appendix 1 – Case examples .................................................................................................................. 43


Purpose of explanatory paper

1. This Tax Practitioners Board (TPB) explanatory paper (TPB(EP) is designed to provide

assistance and explanation of general principles and matters relating to the Code of

Professional Conduct (Code) that may be relevant to the professional practice of registered

tax agents, registered BAS agents and registered tax (financial) advisers (collectively

known as ‘registered tax practitioners’). The TPB(EP) will also be relevant to the TPB’s

powers to take certain actions under the Tax Agent Services Act 2009 (TASA).

2. The object of the TASA is to ensure that tax agent services (which, unless otherwise

stated in this paper, includes BAS services and tax (financial) advice services) are provided

to the public in accordance with appropriate standards of professional and ethical

conduct. The Code was created to assist in achieving this objective.

3. The Code is legislated and sets out the professional and ethical standards that registered

tax practitioners are required to comply with. It outlines the duties that registered tax

practitioners owe to their clients, the TPB and other registered tax practitioners.

4. This TPB(EP) however, does not have the force of law and provides information and

interpretative guidance only. Therefore, it is not intended to determine or exhaust the

positions or actions the TPB may take in particular cases. Rather, this TPB(EP) provides a

decision making tool that the TPB may refer to when considering Code matters. It is also

intended to assist registered tax practitioners in providing tax agent services.

5. This TPB(EP) provides the TPB’s view in relation to the meaning of the Code provisions.

This TPB(EP) does not create additional legal obligations beyond those which are

contained in the TASA. In particular, a finding by the TPB that a registered tax practitioner

has breached the Code does not itself give rise to a civil action against a registered tax

practitioner by their client. Whether or not such an action arises is a matter for the client to

determine in accordance with the general law.

6. In applying the Code to particular circumstances, the TPB has an obligation to ensure that its

decisions are soundly based and do not constitute an improper use of the TPB’s powers

under the TASA. This obligation generally requires the TPB to observe the rules of natural

justice when making a decision, ensure that there is enough evidence or other material to

justify a decision, exercise its power having regard to any relevant considerations and have

regard to the individual merits of a particular case when exercising a discretionary power. In

addition, the TPB must exercise its powers in a manner that is not unreasonable.

7. The principles outlined and the case examples contained in this TPB(EP) provide examples

of how the concepts relevant to the principles of the Code have been applied in different

contexts. The cases are intended to act as a guide to the meaning and application of the

principles in the Code.


8. Registered tax practitioners that are members of professional bodies may have

professional and ethical obligations imposed on them as members of those bodies.1

While other codes may present similar duties and requirements, the duties created by

the TASA are, where applicable, required to be complied with in addition to these other

obligations.

Professional conduct of registered tax practitioners

9. The term ‘professional conduct’ refers to the way in which registered tax practitioners act

while in their professional capacity. When providing services, it is expected that registered

tax practitioners will display an appropriate, professional standard of behaviour beyond that

which is expected of someone who is not acting in a professional capacity.

10. The TPB has a range of options available to it under the TASA in making findings about the

conduct of registered tax practitioners. The options available to the TPB include:

• imposing sanctions for breach of the Code

• applying for a civil penalty for breach of the civil penalty provisions

• terminating a registered tax practitioner’s registration on the basis that the

registered tax practitioner is no longer a fit and proper person to be a registered

tax practitioner.

Code of Conduct Provisions

11. The provisions of the Code are contained in section 30-10 of the TASA.

12. The Code establishes a set of ethical and professional standards to be observed by

registered tax practitioners. In relation to tax agents and BAS agents, these provisions

apply only to conduct which occurs after the commencement of the TASA on 1 March

2010, and for tax (financial) advisers, the Code provisions apply only to conduct which

occurs after 1 July 2014.

13. The TPB may commence an investigation to determine whether there has, in fact, been a

breach of the Code.2

If the TPB is satisfied, following an investigation, that there has been

a breach of the Code, it may apply one or more of the sanctions set out in section 30-15 of

the TASA.

1 Examples of such ethical and professional standards may include APES 110 Code of Ethics for Professional

Accountants and APES 220 Taxation Services. These standards apply to members of several accounting professional bodies including the Institute of Chartered Accountants in Australia, CPA Australia and the National Institute of Accountants.

2 Section 60-95 of the TASA


14. For further details of the administrative sanctions that may be applied for a breach of the

Code, refer to the section of this TPB(EP) titled ‘What are the consequences if a registered tax practitioner fails to comply with the Code?’

Civil Penalty Provisions

15. A civil penalty is a pecuniary penalty that is imposed by a court exercising civil rather than

criminal jurisdiction. State and Commonwealth government bodies can apply to the courts to

have a pecuniary penalty imposed against an individual for breaching a civil penalty provision

in some circumstances. Unlike criminal penalties, civil penalties do not include criminal

convictions or imprisonment.

16. While the Code applies only to registered tax practitioners, the civil penalty provisions

apply to unregistered persons or entities in addition to registered tax practitioners.3

17. If there is a breach of any of these civil penalty provisions, the TPB has the option of

applying to the Federal Court of Australia (Federal Court) for a civil penalty order

against the tax practitioner.4

18. The TPB also has the option of applying to the Federal Court for an injunction. An

injunction is a court order that requires a person to do, or refrain from doing,

something. If a tax practitioner fails to comply with the terms of an injunction as

specified in the court order, the practitioner may be guilty of contempt of court.

19. The TPB may apply for an injunction as an alternative to seeking a civil penalty (in the case

of a permanent injunction) or in combination with a civil penalty application (in the case of an

interim injunction). An interim injunction will generally remain operative until the Federal

Court makes its final determination.

Termination of registration

20. The TPB may terminate the registration of a registered tax practitioner if the TPB is satisfied

that a registered tax practitioner no longer meets the ‘fit and proper person’ requirement for

registration.

21. In determining whether a registered tax practitioner is a fit and proper person, the TPB can

examine the registered tax practitioner’s previous conduct. The TPB may consider actions

or omissions that occurred prior to the commencement of the TASA on 1 March 2010,

and for tax (financial) advisers, prior to 1 July 2014, to the extent that the behaviour is

relevant to the registered tax practitioner’s present fitness and propriety.

3 Division 50 of the TASA 4 Subdivision 50-C of the TASA


Application of the TASA

22. Some conduct by a registered tax practitioner that is covered by the civil penalty

provisions could equally constitute a breach of the Code. Examples of this conduct may

include:

• signing false declarations

• making false or misleading statements

• employing or using the services of a de-registered entity.

What is the Code of Professional Conduct?

23. Section 30-10 of the TASA establishes the legislated Code for registered tax practitioners.

The Code sets out the professional and ethical standards required of registered tax

practitioners. This section also outlines the duties that registered tax practitioners owe their

clients, the TPB and other registered tax practitioners.

24. The Code consists of a list of core principles which are grouped into five categories:

• Honesty and integrity

• Independence

• Confidentiality

• Competence

• Other responsibilities.

Who does the Code apply to?

25. The Code applies to all registered tax practitioners.

What are the principles of the Code?

26. Section 30-10 of the TASA contains the Code consisting of the following 14 principles:

Honesty and integrity

(1) You must act honestly and with integrity.

(2) You must comply with the taxation laws in the conduct of your personal affairs.

(3) If:

(a) you receive money or other property from or on behalf of a client, and

(b) you hold the money or other property on trust;

you must account to your client for the money or other property.


Independence

(4) You must act lawfully in the best interests of your client.

(5) You must have in place adequate arrangements for the management of conflicts of

interest that may arise in relation to the activities that you undertake in the capacity of a

registered tax agent, BAS agent or tax (financial) adviser.

Confidentiality

(6) Unless you have a legal duty to do so, you must not disclose any information relating to a

client’s affairs to a third party without your client’s permission.

Competence

(7) You must ensure that a tax agent service that you provide, or that is provided on your

behalf, is provided competently.

(8) You must maintain knowledge and skills relevant to the tax agent services that you

provide.

(9) You must take reasonable care in ascertaining a client’s state of affairs, to the extent that

ascertaining the state of those affairs is relevant to a statement you are making or a thing

you are doing on behalf of a client.

(10) You must take reasonable care to ensure that taxation laws are applied correctly to the

circumstances in relation to which you are providing advice to a client.

Other responsibilities

(11) You must not knowingly obstruct the proper administration of the taxation laws.

(12) You must advise your client of the client’s rights and obligations under the taxation laws

that are materially related to the tax agent services you provide.

(13) You must maintain professional indemnity insurance that meets the Board’s

requirements.

(14) You must respond to requests and directions from the Board in a timely, responsible and

reasonable manner.


(1) You must act honestly and with integrity

What is ‘acting honestly and with integrity’?

27. Honesty and integrity are terms which have their ordinary meanings.

28. The Macquarie Dictionary5

defines each of the terms as follows:

Honesty

1 the quality or fact of being honest; uprightness, probity or integrity 2 truthfulness, sincerity or frankness

3. freedom from deceit or fraud

Integrity

soundness of moral principle and character; uprightness, honesty

29. The principles of honesty and integrity impose an obligation on a person to ensure:

• straightforwardness

• fair dealing

• a commitment not to mislead or deceive

• truthfulness.6

30. The terms ‘honesty’ and ‘integrity’ are not defined in the TASA. Guidance can therefore be

obtained from decisions of the courts. The following considerations have been used by the

courts in determining when a person is acting with honesty and integrity:

• has the person acted with good morals and without depravity?7

• has the person acted properly and without deceit?8

• has the person acted without intent to gain an improper benefit or advantage for himself,

herself or for another?9

• has the person acted with such carelessness as to demonstrate that no genuine attempt

has been made to carry out the duties and obligations imposed on him or her by law?10

5 The Macquarie Dictionary, [Multimedia], version 5.0.0 6 Accounting Professional and Ethical Standards Board, ’APES110 Code of Ethics for Professional Accountants’ (2006) at [110.1]; Accounting Professional and Ethical Standards Board, ‘APES220 Taxation Services’ (2007) at [3.3]; International Ethics Standards Board for Accountants ‘Code of Ethics for Professional Accountants’ (2009) at [110]. 7 Australian Securities and Investments Commission v Vines [2005] NSWSC 1349; Commonwealth bank of Australia v Friedrich 5 ACSR 115 at 196 8 Hall and Ors v Poolman and Ors [2007] NSWSC 1330 at [325] 9 As above; Burnett and Tax Practitioners Board [2014] AATA 687 at [70]-[74]. 10 As above


• is the person of such integrity that others may entrust their taxation affairs to that person’s

care?11

• is the person of such reputation and ability that officers of the ATO may assume that

taxation returns lodged by the registered tax agent have been prepared by the agent

honestly?12

• has the person, through their behaviour, displayed an inadequate sense of their obligations

as a registered tax practitioner and/or an evident reluctance to ascertain and comply with

those obligations?13

• has the person failed to make full disclosure of a matter in circumstances where that matter

is relevant in assessing the suitability of that person to be registered, such as in the case of

registered tax practitioners or legal practitioners?14

• does the person have a sufficient understanding of what is right and what is wrong so that

they can be relied on to carry out their role or function as a registered tax practitioner?15

• making a false representation has also been held to be inconsistent with the integrity

required for registration as a registered tax practitioner16

• accessing a taxpayer’s personal taxation information on the Tax Agent Portal without

authority has been held to breach the requirement of the Code to act honestly and with

integrity17

• engaging in rude, inappropriate and uncooperative behaviour toward ATO officers has been

held to breach the requirement of the Code to act honestly and with integrity18

• failing to notify regulatory authorities, such as the ATO and the TPB, of fraudulent activity

that a registered tax practitioner was aware of and that posed a risk to taxpayers and the

integrity of the taxation system has been held to be inconsistent with the integrity required

for registration as a registered tax practitioner.19

11 Re Su and Tax Agents’ Board of South Australia 82 ATC 4284 at 4286; Burnett and Tax Practitioners Board [2014]

AATA 687. 12 As above 13 Re Fitzgibbon and Tax Agents’ Board of Queensland 93 ATC 2053; Burnett and Tax Practitioners Board [2014] AATA

687. 14 Bouffiere v Tax Agents’ Board of NSW [2007] AATA 1978; Re Davis (1947) 75 CLR 409; Re Kerin and Tax Agents’ Board of South Australia [2009] AATA 974 15 Re Denton and Tax Agents’ Board, South Australia 83 ATC 4009 at 4014; Burnett and Tax Practitioners Board [2014]

AATA 687. 16 As above; Re Kerin and Tax Agents’ Board of South Australia [2009] AATA 974 17 Burnett and Tax Practitioners Board [2014] AATA 687 at [70]-[74]. 18 Burnett and Tax Practitioners Board [2014] AATA 687. 19 Su and Tax Practitioners Board [2014] AATA 644 at [30]-[32].


(2) You must comply with the taxation laws in the conduct of your personal affairs

What does ‘taxation laws’ mean?

31. The term ‘taxation law’ under the Code means:

(a) ‘any Act of which the Commissioner of Taxation has the general administration

(including any part of an Act to the extent to which the Commissioner has the general

administration of the Act);

(b) any regulations under the Acts in paragraph (a) above, and

(c) the Tax Agent Services Act 2009 and the regulations made under that Act.’20

32. The Commissioner of Taxation is responsible for the administration of a number of Acts and

regulations concerning, among other things:

• income tax

• indirect taxes (including GST, luxury car tax, wine equalisation tax)

• superannuation

• the Medicare levy

• fringe benefits tax

• franking tax

• withholding taxes

• petroleum resource rent tax

• the administration or collection of the above taxes.

What does ‘personal affairs’ mean?

33. The term ‘personal affairs’ refers to a registered tax practitioner’s personal taxation

obligations, including timely lodgment of personal income tax returns and activity

statements, payment of superannuation guarantee contributions and PAYG withholding

and instalment payments.21

34. In the case of a company or partnership registered tax practitioner, the taxation obligations

of the company or partnership mean the personal affairs of the company or partnership

registered tax practitioner.

20 Section 995-1 of the Income Tax Assessment Act 1997 21 Paragraph 3.28 of the Explanatory Memorandum to the Tax Agent Services Bill 2008


35. ‘Personal affairs’ also includes the affairs of the registered tax practitioner’s practice, for

example, the registered tax practitioner’s duties and obligations with regard to

maintaining registered tax practitioner registration.22

36. In particular, a partnership or company registered tax practitioner must ensure that at all

times there is a sufficient number of individuals – being registered tax agents (in the case

of a tax agent), registered tax agents or BAS agents (in the case of a BAS agent), or

registered tax agents or tax (financial) advisers (in the case of a tax (financial) adviser) –

to provide tax agent services (including BAS services and tax (financial) advice services)

to a competent standard and to carry out supervisory arrangements.

37. In other words, the registered tax practitioner must have enough registered individuals to:

• ensure services are provided competently

• exercise supervision over the services provided.

When is a registered tax practitioner complying with the taxation laws, in the conduct of their personal affairs?

38. Some of the factors that may be considered in deciding whether a registered tax

practitioner has complied with the taxation laws in their personal affairs are:

• whether the registered tax practitioner has properly complied with their personal

taxation obligations, including the timely lodgment of the practitioner’s personal

income tax returns and activity statements23

• whether the registered tax practitioner has properly complied with the taxation

obligations of the registered tax practitioner practice.24

This requires that the

practitioner ensures timely performance of the practitioner’s obligations concerning

the maintenance of tax agent, BAS agent or tax (financial) adviser registration and

communications with the TPB

• whether the registered tax practitioner has taken reasonable care in interpreting the

law as it applies to their personal tax affairs.25

22 Bar Association (NSW) v Cummins (2001) 52 NSWLR 279 at 289; Re John Jeremy William Wyborn and Tax Agents’ Board of New South Wales [2007] AATA 1492 23 Paragraph 3.28 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; Grosfeld and Tax Practitioners Board [2014] AATA 100 at [30] and [41]. 24 Paragraph 3.29 of the Explanatory Memorandum to the Tax Agent Services Bill 2008 25 Paragraph 3.27 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.


(3) You must account for money or other property you receive on trust from or on behalf of your clients

What does ‘account’ mean?

39. The Macquarie Dictionary

26 defines ‘account’ in this context, as follows:

‘Account …

14. To render an account, especially of money

17. Account for, a. to give an explanation of…’

Under what circumstances will a registered tax practitioner hold money, received

from or on behalf of a client, ‘on trust’?

40. Where money or other property has been received by a registered tax practitioner from a

client, in circumstances that indicate the money or other property was to be held on behalf of

the client and/or applied for some specific purpose and in accordance with certain terms,

that money or other property may be held on trust for the benefit of the client.27

41. Examples of money received on trust may include, but are not limited to, the following:

• subject to the terms of a retainer, money held or received in advance by the

registered tax practitioner for the purpose of settling or meeting liabilities

• client tax refunds

• money paid to the registered tax practitioner for the purpose of seeking specialist advice.

What is a registered tax practitioner required to do to account for money received

from or on behalf of a client on trust?

42. To comply with this requirement of the Code, a registered tax practitioner is required to

keep money or other property which the registered tax practitioner holds on trust for the

client separate from the registered tax practitioner’s personal money or other property.

43. There is no Australia-wide scheme of legislation requiring registered tax practitioners to

hold separate trust accounts. Some professional bodies have promulgated rules about how

members are to deal with client funds but these are not industry-wide.28

26 The Macquarie Dictionary, [Multimedia], version 5.0.0. 27 Cohen v Cohen (1929) 42 CLR 91; Walker v Corboy (1990) 19 NSWLR 382 at [2] – [3]; Associated Alloys

Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 at [33] – [34]. See also APES 10 Trust Money; Accounting Professional and Ethical Standards Board and Paragraph 2.2, Guidance Notes GN3, Operation of Trust Accounts, Accounting Professional and Ethical Standards Board. 28 These rules include Accounting Professional and Ethical Standards Board, ‘APES110 Code of Ethics for Professional Accountants’ (2006) at [270.2]; APS 10 Trust Accounts; Guidance Note GN3 “Operation of trust Accounts’ issued jointly by the Institute of Chartered Accountants in Australia, CPA Australia and the National


44. The TPB notes that the trust accounting arrangements, outlined in the Code of Ethics for

Professional Accountants, while not binding on all registered tax practitioners, may provide

some guidance on adequate arrangements that could be adopted. Measures that the

registered tax practitioner must adopt to ensure compliance with the Code include, but are

not limited to:

• keeping money and other property held on trust separate from the registered tax

practitioner’s personal or business assets

• only applying the money or other property the registered tax practitioner holds on

trust to the purpose for which it was intended and for which the registered tax

practitioner has authority to do so

• maintaining records of account such that the registered tax practitioner can account

to entitled persons, on demand, for any money or other property held on trust

• complying with all laws and regulations relating to the custody and accounting for

such assets, and/ or

• only disbursing money or other property held on trust in accordance with express

client instructions or as required by operation of law.29

(4) You must act lawfully in the best interests of your client

What does acting ‘in the best interests of your clients’ mean?

45. Acting ‘in the best interests of your client’ has been held to mean acting in a representative

character in the exercise of the registered tax practitioner’s responsibility to the client.30

This

requires a registered tax practitioner to advance and protect their client’s interests to the best

of their ability, in all circumstances.

46. An act or omission by a registered tax practitioner which is inconsistent with the

obligation imposed by the Code will be in breach of this provision of the Code.

47. This duty is similar to the fiduciary duties owed by other professional advisors to clients, and

is necessarily limited or circumscribed by the scope of the engagement between the

registered tax practitioner and the client.31

Institute of Accountants; International Ethics Standards Board for Accountants “Code of Ethics for Professional Accountants’ (2009) at [270.2]. APESB has recently issued an exposure draft APES 310 Dealing with Client Monies which will replace APS 10. 29 Case U122 87 ATC 731 at 734 per DP Thompson; Section 270 of the ‘Code of Ethics for Professional

Accountants APES 110, Accounting Professional and Ethical Standards Board. 30 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96 per Mason J 31 Re Woods (No. 1) and Migration Agents Registration Authority [2004] AATA 457 at [359]


48. While the Code does not create a fiduciary duty between a registered tax practitioner and

their client, in considering the meaning of ‘acting in the best interests of your client’, the TPB

considers that the nature of the duty between a registered tax practitioner and their client is

similar to that between lawyers and their clients, or other professional services providers

and their clients, and therefore the interpretation of these duties will provide an indication of

how this obligation should be applied in the context of registered tax practitioners.

49. Given this, the following discussion of fiduciary duties should not be interpreted as meaning

that the Code creates such a duty but rather the nature of these duties and what has been

considered breaches of the duties will guide the TPB in determining whether a registered

tax practitioner has breached this Code obligation.

50. Fiduciary duties generally require a person to act in good faith for the benefit of another and

to avoid situations where their personal interests conflict with that duty.32

51. Some relationships are automatically considered to be a ‘fiduciary relationship’, for example

the relationship between a solicitor and their client. The relationship between a registered

tax practitioner and their client is not one of these relationships. However, despite this,

registered tax practitioners are required by the Code to act in the best interest of the client.

52. The nature of the relationship between a client and their registered tax practitioner will be

determined by reference to the circumstances of the case, the circumstances of the

relationship, the terms of the engagement and the position of the client.

53. The relationship between a registered tax practitioner and client is not wholly contained

within the contract between the registered tax practitioner and the client. This is because the

Code creates positive obligations that registered tax practitioners must comply with in

providing tax agent services to their clients. Therefore the duties owed by the registered

tax practitioner to the client are not wholly contractual.

32 Butterworths Concise Australian Legal Dictionary, Second Edition, LexisNexis


54. Characteristics of the relationship between a registered tax practitioner and their client that

may be relevant to determining the scope of the duty include:

• the existence of ‘a relationship of confidence’33

and the duty to maintain client

confidence (principle 6 of the Code)34

• an undertaking by the registered tax practitioner to perform a task or fulfil a duty

in the interests of the client35

• dependency or vulnerability on the part of the client that causes them to rely on

the registered tax practitioner for the taxation services provided by that registered

tax practitioner 36

• a reasonable expectation that the registered tax practitioner will act in the client’s best

interests.37

While this duty may already exist under the common law, it also arises

under a provision of the Code

• the objectives of the TASA38

, which are to ensure that tax agent services

(including BAS services and tax (financial) advice services) are provided to the

public in accordance with appropriate standards of professional and ethical

conduct, and the Code prescribed under the TASA to achieve this purpose.39

55. This duty is designed to prevent registered tax practitioners from being influenced by

personal and other interests when acting for clients and to prevent a registered tax

practitioner from actually misusing the registered tax practitioner’s position for the

registered tax practitioner’s personal advantage.40

56. The extent of the duty owed by the registered tax practitioner to the client is determined

from the character of the relationship between the registered tax practitioner and the

client.

57. The duty can be determined from the circumstances of the engagement, for example by a

letter of engagement, report, advice or other communication between the registered tax

practitioner and the client, the duties imposed by the TASA and any relevant course of

conduct between the registered tax practitioner and the client.41

33 Breen v Williams (1996) 186 CLR 71; Hospital Products Ltd v United States Surgical Corporation

(1994)156 CLR 41 at 69 34 Subsection 30-10(6) of the TASA 35 Breen v Williams (1996) 186 CLR 71; Australian Securities Commission v AS Nominees Ltd & Ample

Funds Ltd (1995) 62 FLR 504; Hospital Products Ltd v United States Surgical Corporation (1994) 156 CLR 41 at 72, 96-97; Pavan v Gowshan & Associations Pty Ltd v Ratnam (1996) 23 ACSR 214 at 224; Townsend & Anor v Roussety & Co (WA) Pty Ltd & Anor (2007) WASCA 40 at 124-130. 36 As above; Hospital Products Ltd v United States Surgical Corporation (1994) 156 CLR 41 at 142 37 Australian Securities Commission v AS Nominees Ltd & Ample Funds Ltd (1995) 62 FLR 504 38 Section 2-5 of the TASA 39 Re Woods (No. 1) and Migration Agents Registration Authority [2004] AATA 457 at [359] 40 Chan v Zacharia (1984) 53 ALR 417 at 433 per Deane J 41 As above at 431 per Deane J


58. These duties impose the following obligations on the registered tax practitioners who owe

them:

• a duty not to promote the registered tax practitioner’s personal interest by making or

pursuing a gain in circumstances in which there is a conflict or a real and substantial

possibility of a conflict between the registered tax practitioner’s personal interests and

those of the persons whom the registered tax practitioner is bound to protect42

• a duty not to use the registered tax practitioner’s position to make a personal profit or

gain unless authorised to do so by the registered tax practitioner’s client and to account

to the client for any such unauthorised profit or gain.43

Accounting for any

unauthorised gain will not operate as an excuse for the initial breach that gave rise to

the gain.

What does acting ‘lawfully’ in the best interests of your client mean?

59. Acting ‘lawfully’ in the best interests of a client requires a registered tax practitioner to act in

a client’s best interest but only to the extent that their actions are consistent with the law.

That is, ‘acting in the best interests of clients’, is not a justification for a registered tax

practitioner to contravene or disregard the law.44

Example

Michael works in the hospitality industry. He engages Rahul, a registered tax agent, to

prepare and lodge his income tax return. He instructs Rahul to claim a deduction for work

clothing for the black trousers he is required to wear. Although Michael might believe it is in

his best interest to reduce his taxable income, Rahul is aware that Michael cannot claim the

cost of his work clothing as an allowable deduction because the trousers are not protective or

specific to his occupation. Rahul advises Michael accordingly and must not act in

accordance with Michael’s instruction.45

60. When acting for, or on behalf of, a client, the registered tax practitioner must only act where

they are authorised to do so, and only if their actions are in accordance with or are

sanctioned by the law.

61. There may also be examples of where the law overrides the duty of a registered tax

practitioner to their client. For example, providing information or documents to the ATO

following a notice pursuant to section 353-10 in Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).

46 Another example may include providing information pursuant to a

court order.

42 Australian Securities Commission v AS Nominees Ltd & Ample Funds Ltd (1995) 62 FLR 504 43 Chan v Zacharia (1984) 53 ALR 417 at 433 per Deane J; Warman International Ltd v Dwyer (1995) 128 ALR 201 at

209 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ 44 Burnett and Tax Practitioners Board [2014] AATA 687. 45 Example 3.5 from the Explanatory Memorandum to the Tax Agent Services Bill 2008 46 See further, Principle 6 below; Paragraph 3.37 of the Explanatory Memorandum of the Tax Agent Services Bill 2008


(5) You must have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities that you undertake in the capacity of a registered tax agent, BAS agent or tax (financial) adviser

When will a conflict of interest arise?

62. Registered tax practitioners must ensure adequate arrangements are in place to manage any

conflicts of interest that may arise, wholly or partially, in relation to the provision of tax agent

services.47

63. Essentially a conflict of interest will arise where the registered tax practitioner has a personal

interest or has a duty to another person which is in conflict with the duty owed to a client. A

conflict of interest may be an actual or perceived conflict and can arise before the registered

tax practitioner accepts an engagement or at any time during the engagement.

64. A perceived conflict arises where there is a perception, by others, that the service or benefit

will not be provided fairly or impartially. Registered tax practitioners have a duty to manage

both actual and perceived conflicts of interests.

65. Examples of where a conflict of interest can arise include, but are not limited to:

• where the registered tax practitioner acts for both clients in a matter e.g. a husband

and wife experiencing matrimonial issues. This may be both an actual conflict, in that

the interests of each client conflict, and/or a perceived conflict, in that one of the

clients believes that the registered tax practitioner is not providing, or may not provide,

services fairly or impartially to him or her

• where a registered tax practitioner’s personal interest is involved, e.g. where a

registered tax practitioner is providing taxation advice in relation to the treatment of a

particular transaction and the registered tax practitioner will or may benefit from the

transaction occurring or not occurring

• where a registered tax practitioner acts against a client, or a former client, having

previously acted for that client in a related matter.

What are ‘adequate arrangements for the management of conflicts of interest’?

66. Whether a registered tax practitioner’s conflict management arrangements are sufficient will

be a question of fact having regard to the particular circumstances of the matter in question,

including:48

• the nature, scale and complexity of the registered tax practitioner’s business

• the nature of the services provided by the registered tax practitioner

• any information the registered tax practitioner obtains that is relevant to the actual or potential conflict of interest.

49

47 Paragraph 3.34 of the Explanatory Memorandum to the Tax Agent Services Bill 2008 48 See, for example, ASIC v Citigroup Global Markets Australia Pty Ltd (ACN 113 114 832)(No. 4) [2007] FCA 963 49 Paragraph 3.36 of the Explanatory Memorandum to the Tax Agent Services Bill 2008


67. In addition to generally anticipating potential conflict situations before they arise, three

mechanisms that registered tax practitioners may use to manage conflicts of interest

are:

• controlling conflicts of interest

• avoiding conflicts of interest

• disclosing conflicts of interest.

68. Further, where a conflict arises or is likely to arise before an engagement commences or tax

agent services are provided, the registered tax practitioner will need to determine the

appropriate course of action to deal with the conflict before the engagement commences.

69. Whilst many conflicts of interest can be managed by a combination of internal controls and

disclosures, some conflicts cannot be managed in these ways and in such cases the

registered tax practitioner should avoid the conflict or refrain from providing tax agent

services (including BAS services and tax (financial) advice services) in those

circumstances.

Controlling conflicts of interest

70. To control conflicts of interest, a registered tax practitioner should:

• identify the conflicts of interest relating to the registered tax practitioner’s practice

• assess and evaluate those conflicts

• decide upon, and implement, an appropriate response to those conflicts.50

Avoiding conflicts of interest

71. In some circumstances, regardless of the arrangements put in place, the registered tax

practitioner will not be able to adequately manage the conflict of interest and therefore

should not perform the services for the client.51

72. Again, the registered tax practitioner should have regard to the factors listed above

concerning the adequacy of conflict management arrangements in determining whether,

in all the circumstances, the registered tax practitioner will be able to manage the conflict.

50 Regulatory Guide 181 Licensing: Managing conflicts of interest (2004) ASIC at RG 181.20 (this regulatory

guide considers conflict management procedures in the context of paragraph 912A (1) (aa) of the Corporations Act 2001 which is expressed in similar terms to the requirement under subsection 30-10 (5) of the Tax Agent Services Act 2009 and may provide useful guidance on an approach to be adopted with respect to this obligation

under the Code). 51 As above at RG 181.28


Disclosing conflicts of interest

73. Disclosure about conflicts of interest should:

• be timely, obvious, specific and meaningful to the client

• occur before or when the tax agent service is provided, but in any case, at a time that allows

the client a reasonable time to assess its effect

• refer to the specific service to which the conflict relates.52

74. Examples of adequate and effective conflict management arrangements may include, but are

not limited to,, the following:

• continuous disclosure of any conflicts

• informed written consent of the client(s) involved in the conflict of interest, specifically

authorising disclosure of the conflict of interest to the other parties involved in the conflict.

This may be in the form of a signed waiver or other authorisation

• maintenance of appropriate records and documentation detailing the conflict management

policies and procedures of a registered tax practitioner and recording what action has been

taken in relation to any conflicts of interest

• maintaining ‘ethical walls’ – a form of physical and intellectual separation between the

management of the affairs of the clients involved in an actual or potential conflict of interest.

This may include:

o the physical separation of various departments in order to insulate them from

each other

o having an ongoing educational program to emphasise the importance of not

improperly or inadvertently breaching duties to a client

o having strict and carefully defined procedures for dealing with situations where

it is considered that action may need to be taken to avoid a risk of a breach of

duty, in addition to the maintenance of proper records when this action is

taken

o monitoring of compliance with the procedures

o enforcing disciplinary sanctions where there has been a breach of any internal

procedures.53

75. For such measures to be effectively implemented, these should be established as a systemic

part of the registered tax practitioner’s practice in relation to situations giving rise to potential

conflicts of interest.54

52 Paragraph 3.35 of the Explanatory Memorandum to the Tax Agent Services Bill 2008 53 Regulatory Guide 181 Licensing: Managing conflicts of interest (2004) ASIC at RG 181.52; see also Conflicts

of Interest, Agenda item 2, International Ethics Standards Board for Accountants, June 23-24, 2010. 54 Paragraph 3.36 of the Explanatory Memorandum to the Tax Agent Services Bill 2008


76. Further guidance in relation to the application of this Code item to tax and BAS agents is

provided in TPB(I) 19/2014 Code of Professional Conduct – Managing conflicts of interest. Further guidance in relation to the application of this Code item to tax (financial) advisers is

provided in TPB(I) 30/2016 Code of Professional Conduct - Having adequate arrangements for managing conflicts of interest for tax (financial) advisers.

(6) Unless you have a legal duty to do so, you must not disclose any information relating to a client’s affairs to a third party

77. Code Item 6 provides that, unless there is a legal duty to do so, registered tax practitioners

must not disclose any information relating to a client’s affairs to a third party without the

client’s permission.

78. In the absence of client authorisation or a legal duty to disclose, any disclosure of information

relating to the affairs of a client will be a breach of this provision of the Code.

79. This includes allowing clients to view or have access to documents containing information

relating to the affairs of other clients in circumstances where the other clients had not authorised

the disclosure of their information.55

80. This would also include disclosure of client information to an offshore entity engaged by a

registered tax practitioner to provide certain services to the registered tax practitioner. Where

relevant information is to be disclosed to offshore or onshore entities by a registered tax

practitioner, a registered tax practitioner should obtain client permission, such as in a letter of

engagement, report, advice or other communication with the client.

81. Any unauthorised disclosure of client information held by the registered tax practitioner may

result in an administrative sanction under the TASA.56

82. In addition to this principle, the Privacy Act 1988 sets out a number of Australian Privacy

Principles (APPs) which govern the collection, use, storage and disclosure of personal

information and other conduct by organisations. The Privacy Act 1988 requires that

organisations which are subject to the APPs, observe these standards.

83. Registered tax practitioners should seek their own advice about whether the provisions of

the Privacy Act 1988 apply to them. Whether or not a registered tax practitioner is legally

required to comply with the APPs, they should be regarded as a benchmark for good

information handling procedures that may be appropriately adapted depending on the

particular circumstances of the registered tax practitioner.

55 Li and Tax Practitioners Board [2014] AATA 299 at [55]-[58]. 56 As above; Li and Tax Practitioners Board [2014] AATA 299.

https://www.tpb.gov.au/code-professional-conduct-managing-conflicts-interest-tpb-information-sheet-tpbi-192014

https://www.tpb.gov.au/tpbi-302016-managing-conflicts-of-interest-tax-financial-advisers

https://www.tpb.gov.au/tpbi-302016-managing-conflicts-of-interest-tax-financial-advisers


What is ‘information relating to a client’s affairs’?

84. The phrase ‘information relating to a client’s affairs’ is not defined in the TASA. Therefore,

this phrase should be interpreted consistently with the ordinary meanings of the words

contained in the phrase.


provides the following definitions in relation to this phrase:

‘Relate…

3. to have reference (to) 4. to have some relation (to)

Affair 1. Anything done or to be done; that which requires action or effort; business; concern

2. (plural) matters of interest or concern; particular doings or interest; …

4. thing, matter 5. a private or personal concern; a special function, business or duty’

86. In this context, the phrase ‘information relating to a client’s affairs’ means information in

‘relation, connection, reference or regard’ to the ‘activities, business or concerns’ of the

registered tax practitioner’s client.58

87. The terms of this provision of the Code do not require that the information relating to the

client’s affairs actually be provided to the registered tax practitioner by the client

themselves.

88. To be protected under this principle, it is only necessary that the information relates to the

affairs of a client.59

89. When employment changes or a new client is engaged, the registered tax practitioner is

entitled to use prior professional experience to assist a client. However, the registered tax

practitioner should not use or disclose any confidential information either acquired or

received as a result of a professional or business relationship.60

The registered tax

practitioner’s duty not to disclose any information relating to a client’s affairs continues

beyond the term of the engagement with the client.61

57 The Macquarie Dictionary, [Multimedia], version 5.0.0 58 Johns v Connor (1992) 27 ALD 25 at 34-35; Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556 at

563-564; Re Allrange Tree Farms Pty Ltd and Deputy Commissioner of Taxation (2004) 84 ALD 238 at 243 59 Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556; Re Corrs Chambers Westgarth and Commissioner of Customs (1998) 53 ALD 769 60 Paragraph 140.6, APES 110 Code of Ethics for Professional Accountants, 2006 61 Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 1 All ER 517; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at

47-48 (considering Prince Jefri)


What is the meaning of ‘third party’?

90. A ‘third party’ is any person other than the client to whom the information relates.62

91. A third party may be situated within or outside the firm or organisation that employs the

registered tax practitioner.

92. Further, in relation to a tax (financial) adviser who is an authorised representative of

Australian financial services (AFS) licensee, a third party includes the AFS licensee, and

vice versa. However, the following is also recognised:

• in the context of an AFS licensee / authorised representative relationship, it is understood

that authorised representatives (who are registered tax practitioners) often use ‘fact finds’

other documents to obtain consent from clients and therefore facilitate the flow of client

information to the AFS licensee from the authorised representative

• an authorised representative of an AFS licensee is required to provide information to the

AFS licensee pursuant to s912G of the Corporations Act 2001 (Corporations Act)63

if

requested, provided the request is made:

o in connection with the obligations imposed on the AFS licensee under Chapter 7 of the

Corporations Act

o within 7 years after the day on which the personal advice was provided to the client.

Under what circumstances can a registered tax practitioner disclose information

relating to a client’s affairs?

93. A registered tax practitioner may disclose information relating to a client’s affairs to a

third party, only if:

• disclosure is authorised by the client, or

• there is a legal duty to disclose.64

62 Section 22 of the Acts Interpretation Act 1901 63 As notionally inserted by Australian Securities and Investments Commission (ASIC) Class Order [CO 14/923]

Record-keeping obligations for Australian financial services licensees when giving personal advice. 64 Paragraph 3.37 of the Explanatory Memorandum of the Tax Agent Services Bill 2008; Crowley and Others v Murphy (1981) 34 ALR 496; Parry-Jones v Law Society [1969] 1 Ch. 1; [1968] 2 W.L.R. 397


94. Examples of where there is a legal duty to disclose information relating to a client’s

affairs include:

• providing information to the TPB under a notice issued pursuant to section 60-100

of the TASA

• providing information to a court or Administrative Appeals Tribunal (AAT) pursuant

to a direction, order, or other court process, to provide that information

• providing information or documents to the ATO pursuant to section 353-10 in

Schedule 1 to the Taxation Administration Act 1953 concerning taxation laws. This

requirement is subject to that material being properly withheld under legal

professional privilege

• a tax (financial) adviser who is an authorised representative of an AFS licensee

providing information to the AFS licensee pursuant to s912G of the Corporations

Act.65

95. Further guidance in relation to the application of this Code item to tax and BAS agents is

provided in TPB(I) 21/2014 Code of Professional Conduct – Confidentiality of client information. Further guidance in relation to the application of this Code item to tax

(financial) advisers is provided in TPB(I) 32/2017 Code of Professional Conduct – Confidentiality of client information for tax (financial) advisers

(7) You must ensure that a tax agent service provided on your behalf is provided competently

What does ‘competently’ mean?

96. A registered tax practitioner should be a person of such competence and integrity that

others may entrust their taxation affairs to the registered tax practitioner’s care. The

registered tax practitioner should be a person of such reputation and ability that the

Commissioner of Taxation may assume that the taxation returns or other documents

lodged by the registered tax practitioner have been prepared honestly and competently.66


provides the following definition of ‘competent’:

‘Competent 1. properly qualified; capable; 2. fitting, suitable, or sufficient for the purpose; adequate’

65 As notionally inserted by ASIC Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice 66 Re Su and Tax Agent's Board of South Australia 82 ATC 4284 at 4286. 67 The Macquarie Dictionary, [Multimedia], version 5.0.0.

https://www.tpb.gov.au/confidentiality-client-information-information-sheet-tpbi-212014

https://www.tpb.gov.au/confidentiality-client-information-information-sheet-tpbi-212014

https://www.tpb.gov.au/tpbi-322017-code-professional-conduct-confidentiality-client-information-tax-financial-advisers

https://www.tpb.gov.au/tpbi-322017-code-professional-conduct-confidentiality-client-information-tax-financial-advisers


98. Competence, with respect to registered tax practitioners, can therefore be defined as a

state of being capable, fitting, suitable or sufficient to provide a tax agent service

(including a BAS service or tax (financial) advice service).

99. A registered tax practitioner will be competent if the registered tax practitioner

possesses such skill, ability and knowledge required to perform a tax agent service

that clients may entrust their taxation affairs to the registered tax practitioner’s care and

officers of the ATO may rely upon client returns or other documents prepared by the

registered tax practitioner.68

100. The maintenance of competence by a registered tax practitioner requires a continuing

awareness and understanding of technical, legal and business developments relevant

to the tax agent services provided by the registered tax practitioner.69

101. The assurance of competence by a registered tax practitioner, in the provision of a tax

agent service, requires the registered tax practitioner:

• to act diligently in accordance with applicable technical and professional standards

when providing a tax agent service70

• to maintain knowledge and skills at the level required to ensure that a client is

provided with an appropriate standard of tax agent services71

• to exercise reasonable care in the provision of a tax agent service.72


provides the following definition of ‘diligent’:

‘Diligent’ 1. constant and persistent in an effort to accomplish something; 2. pursued with persevering attention’

103. Acting diligently requires a registered tax practitioner to act in accordance with the

terms of the client engagement carefully, thoroughly and on a timely basis.74

68 As above; Burnett and Tax Practitioners Board [2014] AATA 687. 69 Accounting Professional and Ethical Standards Board, Stasos v Tax Agents' Board (1990) 90 ATC 4950. 70

While the Board acknowledges that a lack of diligence may not always correspond with a lack of competence,

diligence may, nonetheless, be an ingredient of competence; Su and Tax Practitioners Board [2014] AATA 644; Li and Tax Practitioners Board [2014] AATA 299. 71

Refer to the discussion of subsection 30-10(8) of the TASA below for further details; also see Comino and Tax Agents'

Board of NSW [2009] AATA 766; Su and Tax Practitioners Board [2014] AATA 644 72 Refer to the discussion of subsections 30-10(9) and (10) of the TASA below for further details; Burnett and Tax Practitioners Board [2014] AATA 687; Su and Tax Practitioners Board [2014] AATA 644; Li and Tax Practitioners Board

[2014] AATA 299. 73 The Macquarie Dictionary, [Multimedia], version 5.0.0. 74 Accounting Professional and Ethical Standards Board, 'APES110 Code of Ethics for Professional Accountants’ (2006)

at [130].


104. Circumstances that suggest a lack of competence include, but are not limited to:

• providing tax agent services relating to an area of the taxation laws in which the

registered tax practitioner is not properly qualified, capable or suitable, without first

obtaining the necessary support of a third party expert75

• not providing clients with a means of communicating with the registered tax

practitioner or otherwise remaining inaccessible to clients76

• causing inappropriate delay in the lodgment of client tax returns and other

documents77

• causing inappropriate delay in forwarding on client tax refunds from the ATO78

• not making sufficient enquiries to ascertain the affairs of clients to enable the registered tax

practitioner to be reasonably satisfied that documents they prepare and lodge on behalf of

these clients are correct.79

• performance of work of a quality such that it needs to be redone80

• failing to lodge the registered tax practitioner’s own income tax returns or otherwise

failing to adequately manage the registered tax practitioner’s personal taxation affairs

or those of the tax agent, BAS agent or tax (financial) adviser practice.81

What is a registered tax practitioner required to do to ensure that services are provided competently?

105. There are a number of steps a registered tax practitioner may take to ensure that tax

agent services are provided competently. These include, but are not limited to:

• maintaining adequate knowledge, skill and resources in the area/s the registered tax

practitioner provides services

• not accepting an engagement or providing services where the registered tax practitioner has

insufficient knowledge and skill to complete the engagement or provide those services

competently unless the registered tax practitioner is able to obtain such knowledge and skill,

without delay and cost to the client

• not accepting an engagement or providing services where this would breach a condition that

has been imposed on the registered tax practitioner’s registration82

75 Explanatory Memorandum to the Tax Agent Services Bill 2008 at Example 3.32. 76 Case U122 87 ATC 731 at 736; Pappalardo v Tax Agents’ Board of Victoria 2003 ATC 2207; Grosfeld and Tax Practitioners Board [2014] AATA 100 at [44]. 77 As above. 78 As above. 79 Su and Tax Practitioners Board [2014] AATA 644; Li and Tax Practitioners Board [2014] AATA 299. 80 Re Modini and Tax Agents’ Board of Queensland (2007) 98 ALD 466 at 475. 81 Case U122 87 ATC 731 at 735; Carbery & Associates v Tax Agents’ Board of Queensland 2001 ATC 2025 at

2033; Pappalardo v Tax Agents’ Board of Victoria 2003 ATC 2207 at 2211; Re Su and Tax Agents’ Board of South Australia 82 ATC 4284; Comino and Tax Agents’ Board of NSW [2009] AATA 766. 82 Stasos v Tax Agents’ Board (1990) 90 ATC 4950; Comino and Tax Agents’ Board of NSW [2009] AATA 766.


• where a registered tax practitioner has a narrow, specialised area of expertise, not providing

tax agent services outside of this area of expertise unless the registered tax practitioner has

taken steps to obtain the necessary knowledge and skills83

• setting out and agreeing the scope and cost of the services to be provided in a letter of

engagement, signed consent, or other communication with the client. This should clearly

outline what services are to be performed as part of the engagement based on the needs of

the client and the skills, qualification and experience of the registered tax practitioner

• obtaining expert advice and assistance where appropriate

• obtaining knowledge and skill through private study and research

• informing the client of any likely delay and cost for the registered tax practitioner to acquire

the requisite knowledge and skill to provide the service competently, and obtaining the

client’s consent to the registered tax practitioner providing the service.

What measures can a registered tax practitioner adopt to ensure that a tax agent service provided on their behalf is provided competently?

106. A registered tax practitioner is accountable for any tax agent services provided on their

behalf.

107. In the case of an individual registered tax practitioner, a person working under the

supervision and control of that registered tax practitioner is permitted to provide

relevant tax agent services on behalf of that registered tax practitioner. In the case of a

company or partnership registered tax practitioner, a person working under the

supervision and control of an individual registered tax practitioner is permitted to

provide relevant tax agent services on behalf of the company or partnership registered

tax practitioner.84

108. Where those tax agent services are provided on behalf of the registered tax

practitioner by any other person or entity, the registered tax practitioner is still required

to ensure that those services are provided competently.

109. Importantly, if an entity not permitted under the TASA to provide tax agent services on

behalf of a registered tax practitioner does, in fact, provide those services, the

registered tax practitioner may be liable to a civil penalty for allowing this to occur. This

may also constitute a breach of the Code to the extent that the registered tax

practitioner has not complied with a taxation law and has not acted honestly and with

integrity.

110. To ensure that a service provided on behalf of a registered tax practitioner is provided

competently, the registered tax practitioner must ensure that the provider of the

service, including any subcontractor, has the requisite skills and experience. They

must also ensure that adequate supervision and review arrangements are in place to

ensure the accuracy of any services provided.85

83 Paragraph 3.40 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 84 Paragraph 3.41 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 85 Section 50-30 of the TASA.


111. This does not necessarily require the registered tax practitioner to independently verify

the technical accuracy of material prepared by a third party expert on the registered

tax practitioner’s behalf.

112. The level of supervision will depend upon a range of factors including:

• the educational qualifications and extent of experience of the provider of the service

• the nature of the actual service being provided

• any structures or processes in place within an organisation (for example, supervisory

arrangements or quality assurance procedures) to facilitate the competent provision

of tax agent services.86

113. The matters that could be considered relevant in determining the adequacy of the level

of supervision and control that is being undertaken by a registered tax practitioner,

may include, but are not limited to:

• whether the registered tax practitioner has identified the knowledge and skills required of

an entity to competently provide a tax agent service on the registered tax practitioner’s

behalf and has assured that the entity providing the tax agent service both possesses and

maintains the knowledge and skills87

• the physical proximity of the relevant registered tax practitioner to the person carrying out

the work on the registered tax practitioner’s behalf88

• the level and depth of personal physical or other oversight undertaken by the registered tax

practitioner over the provision of tax agent services on the registered tax practitioner’s

behalf89

• the undertaking of ongoing, periodic review of the tax agent services provided on the

registered tax practitioner’s behalf, rather than only undertaking final review of services

performed.90

86 Paragraph 3.42 and 3.43 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; Subsection 50-

30(5) of the Tax Agent Services Act 2009. 87 Paragraph 3.44 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 88 Subsection 30-10(8) of the TASA. This is also analogous to the obligations imposed on financial services licensees

pursuant to ‘Regulatory Guide 104: Licensing: Meeting the general obligations’, ASIC 2007. 89 Re McGowan and Tax Agents’ Board of Queensland 96 ATC 2056 at [5]; Scott v Tax Agents’ Board of Queensland 2001 ATC 2218 at 2254; Re S & T Income Tax Aid Specialists Pty Ltd and Christopher Forward and Tax Agents’ Board of New South Wales 87 ATC 2001. 90 Re S & T Income Tax Aid Specialists Pty Ltd and Christopher Forward and Tax Agents’ Board of New South Wales 87 ATC 2001 at 2006; Scott v Tax Agents’ Board of Queensland 2001 ATC

2218 at 2254.


(8) You must maintain knowledge and skills relevant to the tax agent services you provide

What is a registered tax practitioner required to do to maintain relevant knowledge and skills?

114. A registered tax practitioner must maintain knowledge and skills in the areas of the

taxation laws and tax administration relating to the tax agent services provided by the

registered tax practitioner. In relation to the provision of a tax agent service (including

BAS service and tax (financial) advice service), the maintenance of competence by a

registered tax practitioner requires continuing awareness, understanding and up-to-

date knowledge of relevant technical, legal and business developments.91

115. It is a mandatory requirement for renewal of registration as a registered tax practitioner

that the registered tax practitioner has completed continuing professional education

(CPE) that meets the TPB’s requirements.92

Further information in relation to the CPE

requirements for registered tax and BAS agents are set out in TPB(EP)04/2012: Continuing professional education policy requirements for tax and BAS agents and the

CPE requirements for registered tax financial advisers are set out in TPB (EP) 06/2014 Continuing professional education policy requirements for registered tax (financial) advisers.

(9) You must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client

Under what circumstances is a registered tax practitioner required to comply with this principle?

116. A registered tax practitioner is required to comply with this principle if the registered tax

practitioner is acting on behalf of a client. This includes, for example, preparing and

lodging a return on behalf of a client.93

91 Re McGowan and Tax Agents’ Board of Queensland 96 ATC 2056 at [5]; Re S & T Income Tax Aid Specialists Pty Ltd and Christopher Forward and Tax Agents’ Board of New South Wales 87 ATC 2001; Scott v Tax Agents’ Board of Queensland 2001 ATC 2218 at 2254. 92 Paragraph 20-5(1)(d) of the TASA. 93 Paragraph 3.48 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.

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What are a registered tax practitioner’s obligations under this principle?

117. A registered tax practitioner is only required to take reasonable care in ascertaining the

client’s state of affairs to the extent that the state of those affairs is relevant to a

statement the registered tax practitioner is making or a thing the registered tax

practitioner is doing on behalf of a client. Therefore, the requirement to take reasonable

care is necessarily limited by the scope of the engagement between the registered tax

practitioner and the client.94

What does ‘reasonable care’ mean for registered tax practitioners?

118. The standard of ‘reasonable care’ generally required of a registered tax practitioner is

that of a competent and reasonable person, possessing the skills, qualifications and

experience that are required to become a registered tax practitioner.95

119. If, however, a registered tax practitioner specialises in any particular areas of the

taxation laws, the standard of ‘reasonable care’ required is that of a competent and

reasonable person professing to have the skills relevant to the area of specialisation.96

120. ‘Reasonable care’ means what is reasonable in the circumstances. This will depend

upon a range of factors, including the scope of the tax agent services being provided

and the client’s level of professional knowledge and experience.97

What is ‘reasonable care in ascertaining a client’s state of affairs’?

121. It is considered that ‘more is expected of a registered tax practitioner than a taxpayer

completing his or her own return’.98

This higher standard of care is a reflection of a

registered tax practitioner’s ‘knowledge, education, experience and skill’.99

122. It should be noted at the outset that this requirement under the Code does not create a

requirement that a registered tax practitioner effectively ‘audits’ all of the registered tax

practitioner’s clients before providing tax agent services to avoid breaching the Code.100

123. Rather, this requirement is a duty of registered tax practitioners to take care beyond

placing complete reliance on the accounts prepared, or work done, by a person without

considering their level of knowledge and/or understanding of the taxation laws and the

correctness of their work to ensure that the information upon which the provision of the

tax agent services is based is accurate.101

94 Paragraph 3.49 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 95 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539; Martinazzo and Commissioner of Taxation [2009] AATA 61. 96 Re Sparks and Federal Commissioner of Taxation [2000] AATA 28; Reeders v Federal Commissioner of Taxation 2001 ATC 2334 at 2336; Martinazzo and Commissioner of Taxation[2009] AATA 61. 97 As above; Re Arnett and Federal Commissioner of Taxation 39 ATR 1095; Re Keitac Pty Ltd ATF the McNamara Property Development Trust and Commissioner of Taxation [2007] AATA 1206 at [39] – [45]. 98 Paragraph 3.54 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 99 Walker v Hungerfords (1987) 49 SASR 93; Miscellaneous Taxation Ruling MT 2008/1. 100 Paragraph 3.54 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 101 As above.


124. In most cases, this will require that a registered tax practitioner ask the client

appropriate questions, based on the registered tax practitioner’s professional

knowledge and experience, to ascertain the accurate factual basis upon which the tax

agent services are provided and, where appropriate, to obtain supporting documents

and records evidencing these facts.102

125. The requirement to take reasonable care relates to the services that are to be provided

and is therefore subject to the agreed scope of the engagement with the client. A

registered tax practitioner would not be required to make further enquiries and it would

be reasonable to rely on information or advice, if the scope of the tax agent services

excludes the examination of information provided by the client or requires the

registered tax practitioner to rely on the information or advice of another expert.103

These observations must also be considered in light of other paragraphs in this section

and with the obligations under the TASA, which must be complied with.

126. Taking reasonable care will in many cases require that a registered tax practitioner ask

questions based on their professional knowledge and experience in seeking

information.104

Where there are grounds to doubt the information provided by a client,

the registered tax practitioner must take positive steps and make reasonable enquiries

to satisfy themselves as to the completeness and/or accuracy of that information.105

127. Where a statement provided by a client seems plausible and is consistent with

previously established statements and the registered tax practitioner has no basis on

which to doubt the client’s reliability or the veracity of the information supplied, the

registered tax practitioner may discharge their responsibility by accepting the statement

provided by the client without further checking.106

128. However, if the information supplied by a client seems implausible or inconsistent with

a previous pattern of claim or statement, further enquiries would be required.107

102 Paragraph 3.52 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; Reeders v Federal Commissioner of Taxation 2001 ATC 2334 at 2337; Burnett and Tax Practitioners Board [2014] AATA 687; Su and Tax Practitioners Board [2014] AATA 644; Li and Tax Practitioners Board [2014] AATA 299. 103 Paragraph 3.50 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; Re Keitac Pty Ltd ATF the McNamara Property Development Trust and Commissioner of Taxation [2007] AATA 1206. 104 Paragraph 3.52 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 105 Paragraphs 3.52 to 3.54 and Example 3.12 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; Su and Tax Practitioners Board [2014] AATA 644; Li and Tax Practitioners Board [2014] AATA 299. 106 See Example 3.14 and Paragraph 3.53 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 107 Paragraph 3.30 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.


129. Again, whilst there is no requirement to audit, examine or review books and records or

other source documents supplied by a client, a registered tax practitioner does not

discharge their responsibility in such a case by simply accepting what they have been

told.108

130. Where information has been provided by a suitable, independent, third party expert and

there is no prior experience to the contrary, it may be reasonable for a registered tax

practitioner to rely on that information without further checking or enquiries.

131. Further guidance in relation to the application of this Code item to tax and BAS agents

and to tax (financial) advisers is provided in TPB(I) 18/2013 Code of Professional Conduct – Reasonable care to ensure taxation laws are applied correctly and TPB(I) 28/2016 Code of Professional Conduct - Reasonable care to ascertain a client's state of affairs for tax (financial) advisers.

(10) You must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client

What are the obligations of a registered tax practitioner under this principle?

132. This principle requires a registered tax practitioner to take reasonable care to ensure

the correct interpretation and application of the taxation laws to the circumstances in

relation to which clients seek advice.109

These circumstances may be the actual

circumstances of the client or hypothetical circumstances provided by the client.110

133. This principle does not require registered tax practitioners to determine the correct

application of the law; rather it requires registered tax practitioners to take reasonable

care to ensure the correct interpretation and application of the law in the

circumstances.111

Note: Section 995-1 of the Income Tax Assessment Act 1997 provides that a ‘taxation

law’ means:

(a) an Act of which the Commissioner has the general administration (including a part of an

Act to the extent to which the Commissioner has the general administration of the Act);

or

(b) regulations under such an Act (including such a part of the Act); or

(c) the Tax Agent Services Act 2009 or regulations made under that Act.

108 Paragraph 3.54 of the Explanatory Memorandum to the Tax Agent Services Bill 2008 109 Paragraph 3.56 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 110 Paragraph 3.31 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 111 Paragraph 3.56 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.

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The Commissioner of Taxation is responsible for the administration of a number of Acts and

regulations concerning:

• income tax


• superannuation



• franking tax



• the administration or collection of the above taxes

• product grants or benefits mentioned in section 8 of the Product Grants and Benefits Administration Act 2000 or the administration or payment of the product grants and benefits

• net fuel amount, or the administration, collection or payment of a net fuel amount.

What is ‘reasonable care’ for the purposes of this principle?

134. It is considered that ‘more is expected of a registered tax practitioner than a taxpayer

completing his or her own return’.112

This higher standard of care is a reflection of a

registered tax practitioner’s ‘knowledge, education, experience and skill’.113

135. For the purposes of this principle, taking ‘reasonable care’ in ensuring the taxation laws

are applied correctly means giving appropriately serious attention to complying with the

obligations imposed under a taxation law at a standard that could be expected of a

reasonable person in the registered tax practitioner’s position.114

112 Re Sparks and Federal Commissioner of Taxation [2000] AATA 28; Reeders v Federal Commissioner of Taxation 2001 ATC 2334 at 2336; Martinazzo and Commissioner of Taxation [2009] AATA 61. 113 As above; Re Arnett and Federal Commissioner of Taxation 39 ATR 1095; Re Keitac Pty Ltd ATF the McNamara Property Development Trust and Commissioner of Taxation [2007] AATA 1206 at [39] – [45]. 114 Re Martinazzo and Commissioner of Taxation [2009] AATA 61 at [67]; Burnett and Tax Practitioners Board [2014]

AATA 687.


136. Where a registered tax practitioner is uncertain about how a taxation law applies to a

particular set of circumstances, taking reasonable care may include seeking

clarification from relevant authorities and sources such as:

• legislation and related extrinsic material (for example, explanatory memoranda)

• relevant case law

• rulings and determinations issued by the Commissioner on the topic

• the Commissioner’s instructions in documents such as income tax returns, BAS returns,

fact sheets and practice statements

• any other guidance material published by the Australian Taxation Office (ATO), including

on its website

• information published or provided by a recognised professional association or other

regulatory agency

• information or relevant commentaries published by other experts, registered tax

practitioners or specialists

• relevant training material.115

137. In consulting relevant authorities and sources, the registered tax practitioner may

choose to seek assistance from another appropriately qualified person who has the

ability and resources to provide advice on taxation laws.116

138. Further guidance in relation to the application of this Code item to tax and BAS agents

and to tax (financial) advisers is provided in TPB(I) 18/2013 Code of Professional Conduct - Reasonable care to ensure taxation laws are applied correctly and TPB(I) 29/2016 Code of Professional Conduct - Reasonable care to ensure taxation laws are applied correctly for tax (financial) advisers.

115 Paragraph 3.57 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 116 In order to demonstrate to the TPB that reasonable care has been taken through consulting, or seeking the

assistance of, appropriately qualified parties, a registered tax practitioner will be required to provide some written or documentary record of such a request.

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(11) You must not knowingly obstruct the proper administration of the taxation laws


139. A registered tax practitioner must not knowingly obstruct the proper administration of

the taxation laws.

140. A registered tax practitioner does not breach this requirement by relying on the

registered tax practitioner’s or the client’s rights to withhold documents or to not provide

information. Examples of such rights may include legal professional privilege or the

ATO accountant’s concession set out in the published ‘Guidelines to accessing

professional accounting advisers’ papers’.117

What does ‘knowingly obstruct’ mean?

141. The word obstruction is defined by reference to its ordinary meaning.118


defines the relevant terms as follows:

Obstruct

2. to interrupt, make difficult, or oppose the passage, progress, course, etc., of Obstruction

1 something that obstructs; an obstacle or hindrance

2 the act of obstructing

143. The test for determining whether an act or omission constitutes an obstruction is a test

of reasonableness - that is, in doing the act or making the omission, has the person

acted reasonably?120

144. This is a question of fact to be answered with respect to the specific circumstances of

a particular case.121

The word ‘knowingly’ requires that the registered tax practitioner

had actual knowledge, as opposed to constructive knowledge, of the obstruction

caused by the registered tax practitioner’s conduct.122

117 Paragraph 3.61 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 118 Jenkins v Allied Ironfounders Ltd (1970) 1 WLR 304 at 315; Scanlan v Swan 82 ATC 4402 at 4405. 119 The Macquarie Dictionary, [Multimedia], version 5.0.0. 120 Scanlan v Swan 82 ATC 4402 at 4405. 121 O’Reilly v Commissioners of the State Bank of Victoria 83 ATC 4156 at 4163. 122 Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553.


145. In determining whether this test is satisfied, the following considerations are relevant:

• a temporary denial of access on reasonable grounds may fall short of being an

obstruction123

• denial of documents for an indefinite period may constitute an obstruction124

• a positive act of obstruction by a person, from whom access to inspection of documents or

other information is sought, is not necessarily a requirement in establishing that there has

been an obstruction125

• actions essentially negative in character, for example withholding specific information, or

knowledge of the means to access that information, from the TPB or the Commissioner

may be considered an obstruction126

• an act or omission that causes delay may be considered an obstruction where it can be

established that the delay sought was for other than a genuine and reasonable purpose127

• repeated failure by a person to keep appointments or supply information may be

considered an obstruction128

• repeated failure by a person to respond adequately to formal requests for

information may be considered an obstruction. This will include excessive or

repeated delays in responding, not replying to the request for information, giving

information that is not relevant or does not address the issues in the request

and/or supplying inadequate information.129

What does ‘proper administration of’ the taxation laws mean?

146. The phrase ‘proper administration of’ is not defined in the legislation and so adopts its

ordinary meaning.

147. The Commissioner has primary responsibility for the general administration of the

taxation laws.130

148. The TPB is, however, responsible for the general administration of the TASA.131

The

TASA is a taxation law.132

149. The proper administration of the taxation laws includes performing the statutory duties

and functions as required by the taxation laws.

123 Scanlan v Swan 82 ATC 4402 at 4405 124 Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 101 ALR 407 at 414. 125 Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 101 ALR 407 at 415. 126 O’Reilly v Commissioners of the State Bank of Victoria 83 ATC 4156 at 4163. 127 Scanlan v Swan 82 ATC 4402 at 4405. 128 Paragraph 74 of the ATO Practice Statement PS LA 2006/8 Remission of shortfall interest charge and general interest charge for shortfall periods (PS LA 2006/8). 129 As above 130 Section 8 of the ITAA 1936; section 1-7 of the ITAA 1997; section 34 of the Taxation Administration Act 1953; section

356-5 of Schedule 1 to the Taxation Administration Act 1953. 131 Section 1-15 of the TASA. 132 Section 995-1 of the ITAA 1997.


150. A registered tax practitioner will breach the Code where the registered tax practitioner

knowingly obstructs the Commissioner or the TPB, or officers properly acting on behalf

of the Commissioner or the TPB in performing their respective statutory duties and

functions as required by the taxation laws.

(12) You must advise your client of the client’s rights and obligations under the taxation laws that are materially related to the tax agent services you provide


151. A registered tax practitioner is required to advise the registered tax practitioner’s

clients of the client’s rights and obligations under the taxation laws that are materially

related to the tax agent services that the registered tax practitioner provides to that

client.133

152. In this context, the phrase ‘related to’ will carry its ordinary meaning of ‘associated

with’, ‘connected with’ or ‘linked with’.134

153. For a client’s rights and obligations to be materially related to the tax agent services

provided, a connection between the rights and obligations and the tax agent services

is required. This connection must be substantial, rather than so tenuous that it is

immaterial or can be ignored.135

154. Whether a client’s rights and obligations are materially related to a tax agent service in

any given case will vary according to the nature of the services provided to the client.

Note: Section 995-1 of the Income Tax Assessment Act 1997 provides that a ‘taxation law’ means:

(a) an Act of which the Commissioner has the general administration (including a part of an

Act to the extent to which the Commissioner has the general administration of the Act); or

(b) regulations under such an Act (including such a part of the Act); or

(c) the Tax Agent Services Act 2009 or regulations made under that Act.

133 Paragraph 3.62 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 134 Re Nabalco Pty Ltd and Collector of Customs (1993) 32 ALD 771; Collector of Customs v The Western Australian Government Railways Commission (Westrail) (1995) 39 ALD 21. 135 Warne and Defence Force Retirement and death Benefits Authority (1989) 18 ALD 662; International Development and Construction Pty Ltd v North Sydney Council [2005] NSWLEC 691.


The Commissioner of Taxation is responsible for the administration of a number of Acts and

regulations concerning:

• income tax


• superannuation



• franking tax



• the administration or collection of the above taxes

• product grants or benefits mentioned in section 8 of the Product Grants and Benefits Administration Act 2000 or the administration or payment of the product

grants and benefits

• net fuel amount, or the administration, collection or payment of a net fuel amount.

155. The registered tax practitioner’s obligations under this principle only extend to services

within the scope of engagement between the registered tax practitioner and the

client.136

156. These rights and obligations could be referred to in a letter of engagement, report,

advice or other communication with the client and may include, but are not limited to,

providing advice on:

• the nature of self-assessment, including the Commissioner’s ability to amend an assessment within a certain time after the original assessment, impose penalties and issue rulings on which clients may rely

• the client’s obligation to keep proper records and the consequences of not doing so137

• that the responsibility for the accuracy and completeness of the particulars and information required to comply with the taxation laws rests with the client

• the application of the safe harbour provisions contained in the Taxation Administration Act 1953

• where necessary, the rights or options available to clients, including how to seek a private ruling and how to object or appeal against adverse decisions made by the Commissioner.

138

157. Any letter of engagement, report, advice or other significant communication with the

client should be in writing.

136 Paragraph 3.64 of the Explanatory Memorandum to the Tax Agent Services Bill 2008; O’Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 at 213 per Mahoney J. 137 'Taxpayers’ Charter – What you need to know’, Australian Taxation Office, June 2010. 138 Paragraph 3.63 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.


(13) You must maintain professional indemnity insurance that meets the

Board’s requirements


158. Registered tax practitioners are potentially liable to clients for the registered tax

practitioner’s own professional negligence as well as the negligence of those providing

services on the registered tax practitioner’s behalf.139

159. It is an ongoing eligibility requirement of registration, as well as a requirement under

the Code, that a registered tax practitioner maintains professional indemnity (PI)

insurance that meets the TPB’s requirements.140

This requirement serves as an

important protection to clients in the event that they are made liable to pay tax or

penalties that are imposed as a result of the conduct of a registered tax practitioner,

and therefore it is in the public interest that registered tax practitioners are adequately

insured.141

160. If a registered tax practitioner fails to maintain PI insurance that meets the TPB’s

requirements, they will be in breach of this requirement of the Code142

and may also

cease to meet the registered tax practitioner registration requirement under

Subdivision 20-A of the TASA that they maintain, or will be able to maintain, PI

insurance as required by the TPB.

161. The TPB’s PI insurance requirements for tax and BAS agents are set out in TPB (EP) 03/2010 Professional indemnity insurance for tax and BAS agents and the TPB’s PI

insurance requirements for tax (financial) advisers are set out in TPB(EP) 05/2014 Professional indemnity insurance requirements for tax (financial) advisers.

139 Scott v Tax Agents’ Board of Queensland [2001] AATA 435 at [180] – [183]. 140 Subsections 20-5(1)(c), 20-5(2)(d), 20-5(3)(e) and 30-10(13) of the TASA. 141 Grosfeld and Tax Practitioners Board [2014] AATA 100 at [42]. 142 As above.

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(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner


162. If a registered tax practitioner receives a request or direction from the TPB, the

registered tax practitioner must respond to that request in a timely, responsible and

reasonable manner.

163. Claiming legal professional privilege or other legal rights on behalf of a client will not

be considered an unreasonable response to a direction of the TPB.143

What does ‘timely, responsible and reasonable’ mean?

164. These terms are not defined in the legislation and should therefore take on their

ordinary meanings.

165. The Macquarie Dictionary

144 relevantly defines these terms as follows:

‘Timely

1. Occurring at a suitable time

Responsible

…

2. Having a capacity for moral decisions and therefore accountable; capable of rational thought or action

3. able to discharge obligations or pay debts

4. reliable in business of other dealings; showing reliability

Reasonable

1. Endowed with reason

2. agreeable to reason or sound judgment 3. not exceeding the limit prescribed by reason, not excessive

4. moderate’

143 Paragraph 3.68 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 144 The Macquarie Dictionary, [Multimedia], version 5.0.0.


166. Examples of failures to respond to a TPB request or direction in a timely, responsible

and reasonable manner may include:

• failing to provide written responses to TPB correspondence within the time

period specified for the response145

• making arrangements with the TPB to provide information and subsequently

failing to provide that information in accordance with the arrangement146

• providing responses to TPB requests and/or directions that are false or misleading147

• providing inadequate responses to requests for information from the TPB.148

What are the consequences if a registered tax practitioner fails to comply with the Code?

167. As detailed in paragraphs 16 to 22 of this TPB(EP), conduct that constitutes a breach

of the Code may also be relevant to a determination of whether a registered tax

practitioner is a fit and proper person or whether the civil penalty provisions will apply

to the registered tax practitioner’s conduct.

What are the specific sanctions provided for a breach of the Code?

168. A registered tax practitioner is required to comply with all the obligations set out in the

Code. If, following an investigation, the TPB is satisfied that a registered tax practitioner

has failed to comply with any of the principles of the Code, it may impose one or more

of the following administrative sanctions on the registered tax practitioner:

• a written caution

• an order requiring the registered tax practitioner to take one or more actions

including, but not limited to, the following:149

o completing a course of education or training specified in the order by the TPB

o providing services (for which the registered tax practitioner is registered) only

under the supervision of another registered tax practitioner that has been

specified in the order, and/or

o providing only those services specified in the order

• suspension of registration, and/or

• termination of registration.150

145 Morrissey v Tax Agents’ Board of Queensland 2004 ATC 2309; Cowlishaw & Ors v Tax Agents’ Board of Queensland [1999] AATA 412 at [9]; Pappalardo v Tax Agents’ Board of Victoria [2003] AATA 990 at [30]; Grosfeld and Tax Practitioners Board [2014] AATA 100. 146 As above. 147 As above. 148 Grosfeld and Tax Practitioners Board [2014] AATA 100. 149 Section 30-20 of the TASA. 150 Section 30-15 of the TASA.


169. The severity of any sanction imposed by the TPB will depend upon the TPB’s

consideration of the nature and extent of the breach and the individual circumstances of

each case.151

170. If the TPB imposes a sanction, other than a caution, on a registered tax practitioner,

details of the sanction will be included on the TPB’s public register of registered and

deregistered tax practitioners.152

What is the effect of an order?

171. An order is a direction from the TPB requiring a registered tax practitioner to take one

or more actions.153

172. If the TPB decides to make an order, it will notify the registered tax practitioner in

writing of the order. The order may specify, as appropriate:

• the period of time within which the registered tax practitioner must complete the

requirements specified in the order; and/or

• the period of time during which the order applies.154

What is the effect of a suspension of a registered tax practitioner’s registration?

173. If a registered tax practitioner’s registration is suspended, the registered tax practitioner

must not provide tax agent services for the period of that suspension.155

174. If the registered tax practitioner does provide tax agent services during a period of

suspension, the TPB may do one or more of the following:

• impose further administrative sanctions

• apply to the Federal Court for a civil penalty order, and/or

• apply to the Federal Court for an injunction to restrain the registered tax practitioner

from continuing to provide tax agent services.156

What period of suspension may the TPB impose?

175. The TPB may determine the period of suspension as it sees fit.157

If a registered tax

practitioner’s registration is already suspended when the TPB suspends that registered

tax practitioner’s registration, the TPB may extend the registered tax practitioner’s

original suspension for a further period. In this case, the further period of suspension

commences at the end of the original suspension period.158

151 Paragraphs 3.71 to 3.73 of the Explanatory Memorandum to the Tax Agent Services Bill 2008. 152 Regulation 12 of the Tax Agent Services Regulations 2009. 153 Subsection 30-20(1) of the TASA. 154 Subsection 30-20(2) of the TASA. 155 Subsection 30-25(2) of the TASA. 156 Sections 30-15, 50-5, 50-10, 50-15, 70-5 and Subdivision 50-C of the TASA; paragraphs 3.77 of the Explanatory

Memorandum to the Tax Agent Services Bill 2008. 157 Subsection 30-25(1) of the TASA. 158 Subsection 30-25(3) of the TASA.


Can a registered tax practitioner apply for renewal of registration during a suspension period?

176. If a registered tax practitioner’s registration is due to expire during the period for which

the registered tax practitioner is under suspension, the registered tax practitioner is still

permitted to apply for registration or renewal of registration despite the fact that the

registered tax practitioner is under suspension.159

What is the effect of a termination of a registered tax practitioner’s registration?

177. If the TPB decides to terminate a registered tax practitioner’s registration, the

practitioner will receive a written notice, which will include:

• the TPB’s decision to terminate the registered tax practitioner’s registration

• the reasons for the decision

• details of any period during which the registered tax practitioner is prohibited from applying for

registration

• the registered tax practitioner’s rights of review.160

Is the TPB required to notify a registered tax practitioner of a decision to impose a sanction on that registered tax practitioner?

178. If the TPB decides to impose a sanction on a registered tax practitioner for a breach of

the Code, the TPB is required to provide that registered tax practitioner with notification

of that decision in writing.161

Is a TPB decision to impose an administrative sanction subject to review?

179. If the TPB makes a decision to impose an administrative sanction (except for a written

caution), the registered tax practitioner may apply to the Administrative Appeals Tribunal

(AAT) for a review of that decision.162

Need more information?

For further information, refer to the TPB’s website at www.tpb.gov.au

159

Subsection 30-25(4) of the TASA. 160 Section 40-20 of the Tax Agent Services Act 2009. 161 Subsections 30-20(2), 30-25(1) and 40-20(1) and paragraphs 60-125(8) (c) and (d) of the TASA. 162

Paragraphs 70-10(e), (f) and (g) of the TASA.

http://www.tpb.gov.au/


Appendix 1 – Case examples

In considering whether or not there has been a breach of the Code, the TPB will make a

determination based on the specific facts and circumstances of each case that it considers.

The cases have been divided into categories based on the principles of the Code to which they

apply. The case examples outlined below include a summary, outline of relevant facts and relevant

principles established or confirmed by the case for each relevant Code item that applies.

A summary table categorising applicable Code items for the case examples is also provided

below.

Case example Applicable Code items for relevant case principles

Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 101 ALR 407

• Code item 11 – not knowingly obstruct the

proper administration of the taxation laws

Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (ACN 113 114 832) (No 4) (2007) 241 ALR 705

• Code item 5 – have in place adequate

arrangements for management of conflicts of

interest that may arise

Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 1 All ER 517

• Code item 5 – have in place adequate

arrangements for management of conflicts of

interest that may arise

• Code item 6 – not disclose any information relating

to a client’s affairs to a third party unless you have a

legal duty to do so

Burnett and Tax Practitioners Board [2014] AATA 687

• Code item 1 – act honestly and with integrity

• Code item 7 – a tax agent service provided on

your behalf is provided competently

• Code item 9 – take reasonable care in ascertaining

a client’s state of affairs

• Code item 10 – take reasonable care to ensure

taxation laws are applied correctly

Chan v Zacharia (1984) 53 ALR 417 • Code item 4 – act lawfully in the best interests of

your client

Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556

• Code item 6 – not disclose any information

relating to a client’s affairs to a third party unless

you have a legal duty to do so

Re Corrs Chambers Westgarth and Commissioner of Customs (1998) 53 ALD 769

• Code item 6 – not disclose any information

relating to a client’s affairs to a third party unless

you have a legal duty to do so



Re Cowlishaw and Ors and Tax Agents’ Board of Queensland [1999] AATA 412

• Code item 14 – respond to requests and

directions from the Board

Grosfeld and Tax Practitioners Board [2014] AATA 100

• Code item 2 – comply with the taxation

laws in the conduct of your personal affairs



• Code item 13 – maintain professional indemnity

insurance that meets the Board’s requirements

• Code item 14 – respond to requests and directions

from the Board

Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539





Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41

• Code item 4 – act lawfully in the best interests of

your client

Keitac Pty Ltd ATF McNamara Property Development Trust and Commissioner of Taxation [2007] AATA 1206; (2007) 68 ATR 61



Leo Comino and Tax Agents Board of New South Wales 2009 AATA 766

• Code item 8 – maintain knowledge and skills

relevant to the tax agent services you provide

Li and Tax Practitioners Board [2014]

AATA 299

• Code item 6 – not disclose any information relating

to a client’s affairs to a third party unless you have a

legal duty to do so

• Code item 7 – a tax agent service provided on your

behalf is provided competently



Martinazzo and Commissioner of Taxation [2009] AATA 61



Pappalardo v Tax Agents' Board of Victoria [2003] AATA 990

• Code item 14 – respond to requests and

directions from the Board

Reeders v Federal Commissioner of Taxation 2001 ATC 2334





Scanlan v Swan 82 ATC 4402

• Code item 11 – not knowingly obstruct the

proper administration of the taxation laws

Su and Tax Practitioners Board [2014]

AATA 644 • Code item 1 – act honestly and with integrity





• Code item 12 – advise your client of rights

and obligations under the taxation laws

Su and Tax Agents’ Board of South Australia [1982] AATA 127

• Code item 7 – a tax agent service

provided on your behalf is provided

competently

Re Warne and Defence Force Retirement and Death Benefits Authority (1989) 18 ALD 662

• Code item 12 – advise your client of rights and

obligations under the taxation laws

Re Woods (No. 1) and Migration Agents Registration Authority [2004] AATA 457

• Code item 4 – act lawfully in the best interests of

your client

1. You must act honestly and with integrity

Su and Tax Practitioners Board [2014] AATA 644

Summary

Imposition of a non-application period of three years considered in relation to termination of

registration for breaches of the Code in the TASA and ceasing to meet the registration requirement of

being a fit and proper person.

Keywords: registration as tax agent; termination of registration; rejection of application for

renewal of registration; prohibition on applying for registration for three years; whether length of

non-application period excessive; whether fit and proper person; breaches of the Code of

Professional Conduct; unsatisfactory understanding of role as tax agent; shortcomings in

integrity; concerns over competence as a tax agent; lack of insight into the seriousness of

shortcomings.


Outline of relevant facts

Over a five-week period from 6 July 2011 to 9 August 2011, the tax agent prepared and lodged

164 tax returns on behalf of taxpayers based on the instructions of intermediaries. The taxpayers

had not authorised the intermediaries to arrange preparation and lodgment of their tax returns,

and all of those tax returns contained false information including overstated PAYG withholding

amounts, incorrect income figures, and deductions that were not allowable.

The agent failed to take any steps to (a) confirm the information and claims made by any of the

intermediaries, (b) seek any identification for any of the taxpayers, (c) make personal contact

with any of the taxpayers, and (d) use the ATO tax agent portal to check the accuracy of

payment summaries provided or any of the details relating to the taxpayers.

The agent did not dispute the findings of the TPB that, by his conduct, the agent had breached

subsections 30-10(1), (7), (9) and (12).

The Administrative Appeals Tribunal (AAT) identified four reasons for affirming the TPB’s

decision to impose a non-application period of three years:

1. the agent’s unsatisfactory understanding of the role of a tax agent as evidenced by his failure

to acknowledge the importance of testing and confirming information provided by clients

2. perceived shortcomings in the agent’s integrity arising from his evidence at the hearing

regarding (a) information on further potential returns that he deleted and did not disclose to

the authorities and (b) his method for charging for the 164 tax returns that he lodged

3. concerns over the agent’s competence as a tax agent arising from deductions being claimed

that were excessive and/or lacked a nexus with the taxpayer’s employment

4. the agent’s lack of insight into the seriousness of the shortcomings in his behaviour as

evidenced by his failure to acknowledge that his performance as a tax agent had been

comprehensively unsatisfactory.

Relevant principle/s established or confirmed by the case

The AAT considered that there was “no room in the system for tax agents who do not understand” that “[t]he self assessment tax system requires accurate information to be provided to the ATO. It requires tax agents to do all they can to ensure that the information their clients provide is accurate. From time to time they need to ask their clients hard questions. They need to scrutinise the answers and form a professional judgment as to whether what they are being told is reliable.”

The AAT stated that “[t]he primary purpose of not permitting a person to apply for registration for a period of time is to protect the public and the integrity of the tax system. Whilst [the agent] may see the period of three years as further punishment for his actions, that is not its purpose. It is to protect the public, and the taxation system, from further harm. [The agent] needs time to develop an improved level of integrity and competence, without which he will find it difficult to satisfy the Board that he should once again be registered as a tax agent.”



Summary

Fitness and propriety of a registered tax agent considered in relation to:

• whether the agent was of good fame, integrity and character

• findings that the agent breached the Code in the TASA for:

o accessing a taxpayer’s records on the ATO Tax Agent Portal without authority

o preparing and lodging tax returns on behalf of clients containing inaccurate and unsupported

claims, without making sufficient enquiries with the clients to ascertain their affairs or to

confirm the correct application of taxation laws to ensure that these returns were prepared

and lodged competently

• lack of contrition and understanding and appreciation of the taxation laws and seriousness of the

agent’s conduct.

Keywords: fit and proper; good fame, integrity and character; application for renewal of

registration; honesty and integrity; competence; reasonable care to ascertain a client’s state of

affairs; reasonable care to ensure that taxation laws are applied correctly; relationship with the

Board, the Commissioner and the AAT; contrition; knowledge of the taxation laws; appreciation

of responsibilities and obligations of a registered tax practitioner; excessive and unsupported

claims in clients’ tax returns.


This case involved an application by the agent to the AAT for review of a TPB decision to reject

the agent’s application for renewal of her registration as a tax agent. The TPB had conducted an

investigation into the agent’s conduct and, as a result of this investigation, received evidence

that:

• a number of taxpayers whose 2010 and 2012 tax returns were lodged by the agent were

subject to ATO audits. As a result of these audits, the ATO made significant adjustments to

claims in these returns, including for work-related expense deductions and tax offsets, and

imposed administrative penalties on these clients. These decisions were based on findings

that various claims were made without any nexus to a work related activity, were not

reasonably substantiated and/or were unsupported estimates. In one case, the agent had

created a log book in order to respond to an ATO request for substantiation during the audit

• the agent had accessed the taxation records of taxpayers on the ATO Tax Agent Portal on

three occasions without authorisation.

In her responses to the TPB during the course of its investigation, the agent maintained that she

fulfilled her obligations in the preparation of her clients’ returns by relying on limited information

provided by these clients, including their estimates of expenses incurred without making further

enquiries or sighting supporting documentation. The agent also submitted that the ATO had

significantly changed its policies and enforcement approach in relation to the claiming of

deductions and was inconsistent in the interpretation and application of its own policies.


The TPB determined that the agent’s conduct breached the Code in the TASA, specifically the

requirements under the Code to:

• act honestly and with integrity (subsection 30-10(1))

• act lawfully in the best interests of her clients (subsection 30-10(4))

• ensure that tax agent services she provided, or that were provided on her behalf, were

provided competently (subsection 30-10(7))

• take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining

the state of those affairs was relevant to a statement she was making or a thing she was

doing on behalf of the client (subsection 30-10(9))

• take reasonable care to ensure that taxation laws were applied correctly to the circumstances

in relation to which she was providing advice to a client (subsection 30-10(10).

The TPB decided to reject the agent’s application for renewal of her registration as a tax agent,

on the basis that it was not satisfied that she met the ‘fit and proper person’ eligibility requirement

for registration. In reaching its decision, the TPB took into account the serious nature of the

agent’s conduct which was found to breach the Code and her responses to the TPB’s requests

for information regarding her alleged conduct, which demonstrated a lack of understanding and

appreciation of the seriousness of her conduct. Having regard to these matters, the TPB found

that the agent was not of good fame, integrity and character, and therefore not a fit and proper

person to be registered as a tax agent.

The AAT affirmed the TPB’s decision to reject the agent’s application for renewal of her tax

agent registration.

In affirming the TPB’s decision, the AAT also had regard to the agent’s conduct during the AAT

proceeding. This included denials of any wrongdoing, the making of seriousness and unfounded

allegations against ATO officers in response to allegations concerning her conduct and the

giving of inconsistent and misleading evidence. This also included the agent’s verbal evidence

regarding the ATO’s purported policies and compliance approach, which was contradicted by

evidence given by the ATO in the proceeding. This led the AAT to form the view that the agent

had a ‘flawed understanding of relevant tax law and ATO requirements in the area of [work related expense] deductions, nexus and substantiation’.

In this regard, the AAT concluded that the agent failed to show contrition and had an insufficient

appreciation of her responsibilities and obligations as a tax agent and the seriousness of her

conduct. Consequently, the AAT determined that it could not have confidence that she would not

engage in similar conduct in the future and that she would pose an unacceptable risk to the

community if she were allowed to continue in practice as a tax agent.


• A registered tax practitioner’s diligence in providing tax agent services, current knowledge

of the relevant legal frameworks (including income tax laws) and competence and

professionalism in dealing with both clients and the ATO are relevant to assessing

whether the practitioner possesses the integrity and competence required of a registered

tax practitioner, such that others may entrust their taxation affairs to their care.


• These qualities are also relevant to whether the practitioner is a fit and proper person to

be registered under the TASA. This is particularly so in a self-assessment tax regime, in

which inaccuracies in returns generally only come to light during random audits and

penalties for inaccurate claims and late lodgments can be imposed on taxpayer clients,

who rely on the practitioner to properly advise, guide and lodge accurate and timely

returns and other tax documents with the Commissioner on their behalf.

• The access of a taxpayer’s records without proper authorisation is a matter that is

relevant to determining whether a registered tax practitioner has acted without honesty

and integrity. Further, the circumstances surrounding the unauthorised access and the

practitioner’s explanation of these circumstances and of their conduct are relevant to

determining whether they possess the integrity required of a registered tax practitioner,

and also whether they have a sufficient level of contrition and understanding of their

legal obligations and constraints upon them to be considered a fit and proper person for

registration. In this regard, the AAT noted that ‘Mrs Burnett either was or should have been aware that the ability to access tax records through the Tax Agent Portal is a privilege conferred on tax agents on the understanding that they will only access the records of their own clients’.

2. You must comply with the taxation laws in the conduct of your personal

affairs


Summary


• failing to lodge personal income tax returns and BAS

• failing to provide clients with a means of contact

• failing to ensure that tax agent services were provided competently

• failing to maintain PI insurance as required by the TPB

• failing to respond to requests from the TPB.

Keywords: fit and proper; application for renewal of registration; compliance with taxation laws in

the conduct of personal affairs; competence; relationship with the Board and the Commissioner;

appreciation of responsibilities and obligations of a registered tax practitioner; requirement to

maintain PI insurance.



This case involved an application by the agent to the AAT for review of a TPB decision to reject

the agent’s application for renewal of his registration as a tax agent. The TPB had conducted

an investigation into the agent’s conduct and, as a result of this investigation, found that:

• the agent failed to lodge his 2009 to 2012 personal tax returns and December 2009 to

September 2012 BAS by their respective due dates, with periods of delays extending up to

over one year

• the agent failed to provide tax agent services competently to 14 clients. In particular, the

agent had:

o not provided these clients with a means of contact, and remained inaccessible to

them for extended periods

o caused inappropriate delays in the preparation and lodgment of tax returns for

seven of these clients

o failed to provide tax agent services requested by seven of these clients after

accepting payment of fees for these services

o failed to return client source documents, when requested, to nine of these clients

o failed to forward ATO notices of assessment of tax refunds to two of these clients.

• the agent failed to maintain PI insurance that meets the TPB’s requirements until April

2013, despite being notified by the TPB of its PI insurance requirement and requested to

provide details of his insurance arrangements on previous occasions

• the agent failed to provide adequate and timely responses to TPB requests for information

on several occasions from April 2011 to February 2013.

The TPB determined that this conduct breached the Code in the TASA, specifically the

requirements under the Code to:

• comply with the taxation laws in the conduct of his personal affairs (subsection 30-10(2))

• ensure that tax agent services he provided, or that were provided on his behalf, were

provided competently (subsection 30-10(7))

• maintain PI insurance that meets the TPB’s requirements (subsection 30-10(13))

• respond to requests and directions from the TPB in a timely, responsible and reasonable

manner (subsection 30-10(14)).

The TPB also became aware of findings in Supreme Court proceedings that the agent had

breached his duty as executor of a deceased estate. The court found that he was not a fit and

proper person to continue as an executor and the grant of probate to the agent was revoked. In

particular, the TPB noted that the agent’s conduct that led to the court’s findings involved the

withdrawal of significant funds from the estate bank account to the agent’s business account,

and that this breach of duty was exacerbated by the fact that these withdrawals were concealed

in the description of the payments in the agent’s statement of account.


The TPB decided to reject the agent’s application for renewal of his registration as a tax agent,

on the basis that it was not satisfied that he met the ‘fit and proper person’ eligibility

requirement for registration. In reaching its decision, the TPB took into account the serious

nature of the agent’s conduct which was found to breach the Code and the findings of the

Supreme Court regarding his conduct as executor of a deceased estate. Having regard to

these matters, the TPB found that the agent was not a fit and proper person to be registered as

a tax agent.

The AAT affirmed the TPB’s decision to reject the agent’s application for renewal of his tax

agent registration.

In affirming the TPB’s decision, the AAT took into account the persistent and sustained nature

of the agent’s breaches of the Code and the agent’s failure to adequately respond to the TPB’s

requests for information regarding his alleged conduct, which demonstrated a lack of

understanding and appreciation of the seriousness of his conduct. Consequently, the AAT

determined that it could not have confidence that he would take adequate steps to ensure

compliance with his responsibilities and that such breaches would not reoccur in the future.

The AAT also found that although the Supreme Court findings were unrelated to the agent’s

registration as a tax agent, they were relevant to the consideration of whether the agent was a

fit and proper person. The AAT noted that the findings related to the management of financial

affairs for others that required duties to be discharged with ‘integrity, trust and competence’,

which are not dissimilar to the obligations of a registered tax practitioner. Following from this, ‘a finding of misconduct demonstrates the presence of qualities that are inconsistent with fitness and propriety to practice as a tax agent’


The failure by a registered tax practitioner to lodge a personal tax return or BAS by the

relevant legislative due date constitutes a breach of the requirement under subsection 30-

10(2) of the TASA that the registered tax practitioner complies with the taxation laws in the

conduct of their personal affairs. A breach of this requirement may also adversely impact on

the registered tax practitioner’s fitness and propriety for registration under the TASA. This is

particularly so given the overriding public protection rationale of the TASA and the premise

that ‘incompetence in relation to one’s own affairs more often than not has an effect sooner or later in relation to the affairs of a client’.


4. You must act lawfully in the best interests of your client

Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41

Summary

In relation to a manufacturer and distributor the High Court considered whether a fiduciary

relationship existed and whether the manufacturer had breached their duty to the distributor.

Keywords: fiduciary duty; fiduciary relationship; breach; disadvantage or vulnerability; reliance;

distributorship agreement; importation of fiduciary duties into commercial transactions; relevance

of terms of contract to existence of fiduciary relationship.


Hospital Products Ltd (the appellant) had entered into a distributorship agreement with the United

States Surgical Corp (the respondent) under which the appellant was to be the sole distributor of

the respondent’s products in Australia. The appellant subsequently proceeded to produce copies

of the respondent’s products and filled orders for the respondent’s products with the copies.

In this case, the High Court had cause to consider whether the appellant owed a fiduciary duty to

the respondent and whether that duty had been breached. As the relationship of manufacturer

and distributor was not an established fiduciary relationship, the High Court looked at the

elements of a fiduciary relationship.


• The critical feature of a fiduciary relationship is that the fiduciary undertakes to act on behalf

of, or in the interests of, another person in the exercise of a power or discretion which will

affect the interests of that other person in a practical or legal sense. [per Mason J]

• Underlying the concept of fiduciary obligation is the notion that inherent in the nature of the

relationship itself is a position of disadvantage or vulnerability on the part of one of the

parties which causes that party to place reliance upon the other. This requires equitable

protection, which acts upon the conscience of that other person. [per Dawson J]


Chan v Zacharia (1984) 53 ALR 417

Summary

In relation to the dissolution of a partnership one of the issues considered by the High Court was

whether a fiduciary relationship existed and whether the fiduciary duty had been breached.

Keywords: fiduciary relationship; fiduciary duty; breach; partnership; dissolution; assets;

constructive trust.


Both parties were doctors who were operating a medical practice in partnership with each other.

The partnership was dissolved and, in the process of accounting for the assets of the partnership,

a dispute arose in relation to the lease, specifically an option to renew, held by the partnership.

The partners could not agree on if, when or how the option was to be exercised.

During this time, the appellant engaged in separate negotiations with the owner of the leased

property which resulted in the owner offering the lease to the appellant individually and not for the

partnership. The respondent brought an action against the appellant claiming, among other things,

that the appellant had breached his fiduciary duty to the respondent as a partner.


In considering the nature of fiduciary duties, the High Court held the following:

• The subject matter over which the fiduciary obligations extend is determined by the character

of the venture or undertaking for which the partnership exists, and this is to be ascertained,

not merely from the express agreement of the parties, whether embodied in written

instrument or not, but also from the course of dealing actually pursued by the firm’.

• The objective of this rule is to preclude the fiduciary from both being swayed by

considerations of personal interest and actually misusing the fiduciary’s position for personal

advantage.

• The statement of the rule provided by Deane J, with whom Gibbs CJ, Brennan and Dawson

JJ agreed, was:

o A person who is under a fiduciary obligation must account to the person to whom the

obligation is owed for any benefit or gain:

(i) which has been obtained or received in circumstances where a conflict or significant

possibility of conflict existed between the fiduciary duty and the fiduciary’s personal

interest in the pursuit or possible receipt of such a benefit or gain, or

(ii) which was obtained or received by use or by reason of the person’s fiduciary position

or their opportunity or knowledge resulting from it.


Re Woods (No. 1) and Migration Agents Registration Authority [2004] AATA 457

Summary

• In relation to their registration with the Migration Agent Registration Authority (MARA) a

migration agent’s fitness and propriety was considered in light of misconduct in the Legal

Practice Tribunal and whether this conduct also breached the MARA Code of Conduct.

• The AAT affirmed MARA’s decision and found that the agent was not a person of integrity or

was not a fit and proper person to give immigration assistance and had not complied with the

MARA Code of Conduct. The AAT stated also that the standards of conduct required of

migration agents were no less than the standards of conduct owed by lawyers.

Keywords: migration agent; breach of Code of Conduct; conflict of interest; vulnerability; fit and

proper person; standard of conduct.


Woods was a solicitor and migration agent that, in the course of acting for the client in obtaining a

visa to enter Australia, entered into a business arrangement with that client whereby a company

part owned by Woods, was a shareholder in a business acquired by the client.

In undertaking this transaction, Woods and his associates engaged in conduct that amounted to

misconduct in the Legal Practice Tribunal. The question before MARA was whether this conduct

could support a determination that Woods was not a fit and proper person to be a migration

agent.


• As to whether the duty of a migration agent to their clients was any different to that of a

lawyer to their clients, the Tribunal held that the standard of conduct of migration agents are

no less than the standard of conduct owed by lawyers. Here the Tribunal had regard to the

objectives of the Act, the intention of Parliament as evident by the Minister’s speech upon

introduction of the Act, the numerous decisions of superior courts referring to the vulnerability

of migration applicants and the duty generally of a professional seeking reward and, not

insignificantly, the prescription of a Code of Conduct applicable to migration agents.

• The Tribunal did not consider it was sufficient for the applicant to submit that a lower

standard of conduct ought to be expected of migration agents given the limited nature of

the training and qualifications required compared to that of lawyers.


5. You must have in place adequate arrangements for the management of

conflicts of interest that may arise in relation to the activities that you

undertake in the capacity of a registered tax agent, BAS agent or tax

(financial) adviser

Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 1 All ER 517

Summary

In relation to litigation, the use of Chinese walls within an accounting firm was considered and

whether the actions of the accounting firm were enough to discharge their duty not to allow a

conflict of interest to arise between the interests of multiple clients.

Keywords: accountant; conflict of interest; information barriers; Chinese walls; consent.


The defendant, KPMG, was an accounting firm that had been acting for BIA, the investment

agency responsible for managing the general reserve fund of the Government of Brunei as

auditors. The plaintiff had been the chairman of BIA until 1998. The plaintiff had engaged the

defendant to provide litigation support services for 18 months from 1996 to 1998, during which

time the defendant was entrusted with and acquired large amounts of confidential information

concerning the assets and income of the plaintiff.

In 1998, the plaintiff was dismissed from his position of chairman at BIA and the Government of

Brunei commenced an investigation into the affairs of BIA relating to the period that the plaintiff

was the chairman. The Government engaged the defendant to assist in this investigation. The

defendant did not consider that there was an unmanaged conflict of interest by agreeing to assist

in the investigation as the defendant had established information barriers, referred to as ‘Chinese

walls’ within those parts of the firm assisting with the BIA investigation.

The plaintiff’s consent to assist in the investigation of BIA was never sought by the defendant. The

plaintiff sought an injunction restraining the defendant from assisting with the investigation.

A key question for the House of Lords was whether the arrangements put in place by the

defendant were sufficient to discharge their duty to not allow a conflict of interest to arise between

the interests of multiple clients.


• A person cannot, without the consent of both clients, act for one client while their partner is

acting for another with a conflicting interest. The person’s disqualification has nothing to do

with the confidentiality of the client information. It is based on the inescapable conflict of

interest which is inherent in the situation.

• The court should grant an injunction restraining the defendant acting for the second client

unless it is satisfied on the basis of clear and convincing evidence that effective measures

have been taken to ensure that no disclosure will occur.


• A ‘Chinese wall’ will ordinarily involve a combination of the following:

o the physical separation of various departments in order to insulate them from each

other

o an ongoing educational program to emphasise the importance of not improperly or

inadvertently breaching duties to a client

o strict and carefully defined procedures for dealing with situations where it is considered

that action may need to be taken that might create a risk of a breach of duty, in addition

to the maintenance of proper records when this action is taken

o monitoring of compliance with the procedures

o disciplinary sanctions where there has been a breach of any internal procedures.

• To be effective, these measures need to be ‘an established part of the organisational structure

of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the

purpose by members of staff engaged on the relevant work.’

Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (ACN 113 114 832) (No 4) (2007) 241 ALR 705

Summary

In relation to an allegation that Citigroup had breached the Corporations Act 2001, the Federal

Court considered whether a fiduciary relationship existed between Citigroup and Toll and then

whether Citigroup failed to manage a conflict of interest. The Court also considered whether a

fiduciary relationship could be contracted out of.

Keywords: fiduciary relationship; fiduciary duty; Corporations Act 2001; conflict of interest;

Chinese walls.


This case involved allegations by ASIC that Citigroup had breached its fiduciary relationship with

Toll Holdings, a client, as Citigroup had profited from trading in shares in Patrick, the company for

which Toll Holdings was making a takeover bid.

ASIC also alleged that Citigroup had failed to establish adequate arrangements for the

management of conflicts of interest pursuant to section 912A (1) (aa) of the Corporations Act 2001.

In dismissing the application from ASIC, the Federal Court commented on the requirement to

establish adequate arrangements for the management of conflicts of interest.



• The requirement to establish adequate arrangements for the ‘management’ of conflicts of

interest indicates that this requirement does not necessarily require that those subject to it

eliminate conflicts of interest.

• Whether the given conflict management arrangements employed by an entity are adequate

will be a question of fact to be determined on the basis of the circumstances of a particular

case.

• In relation to ethical walls generally, this form of conflict management, to be adequate, will

need to be an established part of the organisational structure of the business as opposed to

an ‘ad hoc’ arrangement.

6. Unless you have a legal duty to do so, you must not disclose any

information relating to a client’s affairs to a third party

Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556

Summary

In relation to a Freedom of Information application, the AAT considered whether certain

documents should not be disclosed because they revealed information respecting the affairs of

another person.

Keywords: freedom of information; exemption; affairs of a person; Income Tax Assessment Act 1936.


This case involved an application to the AAT for review of a decision by the Australian Taxation

Office to refuse access (in whole or part) to certain documents requested under the Freedom of Information Act 1982 in the course of proceedings for recovery of amounts owing by the applicant.

The refusal of the request was based on a number of grounds for exemption contained in that Act,

including that certain documents revealed information “respecting the affairs of another person”

under section 16 (2) of the Income Tax Assessment Act 1936. In substituting the original decision,

the AAT held that certain information fell within the non-disclosure provision in subsection 16 (2)

and was thereby exempt.



In applying subsection 16(2) to the information requested by the applicant, the AAT set out a

number of guiding principles on the interpretation of the phrase “respecting the affairs of another

person” in the context of that provision.

These principles are as follows:

• To respect the affairs of another person, it is not necessary that information be capable of

identifying the person.

• The “affairs” of a person are to receive a broad interpretation. The ordinary meaning of

“affairs” extends to the activities, business or concerns of a person.

• The interpretation of “affairs” is not affected by the status of the person, i.e. whether the

affairs of an individual or corporate entity are under consideration.

• To be “respecting” the affairs of a person, information must, in a general sense, be

in “relation, connection, reference (or) regard” to such affairs.

Re Corrs Chambers Westgarth and Commissioner of Customs (1998) 53 ALD 769

Summary

In relation to a Freedom of Information application, the AAT considered whether certain

documents should not be disclosed because they revealed information respecting the affairs of

another person

Keywords: freedom of information; exemption; affairs of a person; Income Tax Assessment Act 1936.


This case related to a request for access under the Freedom of Information Act 1982 to

documents prepared and compiled as part of a taxation review of a corporate group and its

subsidiaries. The documents comprised copies of correspondence with unrelated third parties, a

private ruling in relation to an unrelated third party and a note regarding a tax agent’s request for

advice concerning an unrelated third party.

The Commissioner refused access on the basis that they were exempted under that Act, in

particular as they were “respecting the affairs of another person” pursuant to subsection 16(2) of

the Income Tax Assessment Act 1936. The applicant applied to the AAT for review of the

decision. The AAT varied the original decision in respect of certain documents, but otherwise

held that the remaining were exempt under the ground contained in subsection 16(2).



As in Collie, the case of Corrs highlighted a number of principles on the interpretation of the term

“respecting the affairs of another person” under subsection 16(2) of the Income Tax Assessment Act 1936.


• The “affairs” of a person need not be their taxation affairs, but may include the personal,

professional or business concerns of the person.

• The relevant test for determining whether information should be protected on the basis that it

respects the affairs of another person is whether or not the recipient or a person viewing the

information would know more about the other person if the information were disclosed.

• In relation to both an individual or corporate entity, “matters” may include, for example, the

amount the person earns, how the person makes money, interactions between the person

and others and the relations of a corporation with its employees and the public.

• Information may fall within the scope of subsection 16(2) even if it is not identifying

information or information respecting an identifiable person.

Prince Jefri Bolkiah v KPMG (a firm) [1999] 1 All ER 517

Summary

In relation to litigation, the use of Chinese walls within an accounting firm was considered and

whether the actions of the accounting firm were enough to discharge their duty not to allow a

conflict of interest to arise between the interests of multiple clients.

Keywords: accountant; duty of confidentiality; conflict of interest; information barriers; Chinese

walls; consent.


This case related to confidential information about the assets and financial affairs of the former

chairman of an investment agency (plaintiff), which were acquired and held by a firm of

accountants retained to provide litigation support services in the course of private litigation in

which the plaintiff was engaged whilst he was the chairman of an investment agency. Following

the plaintiff’s dismissal, the client of the investment agency (the Brunei government) commenced

an investigation into the conduct of the affairs of the agency and for that purpose sought to

engage the same firm of accountants previously retained by the plaintiff.


The firm accepted the retainer and, on account of the confidential information held, erected an

information barrier around the department providing the service on behalf of the government. This

barrier entailed arrangements to ensure that nobody in possession of the confidential information

could undertake work on the investigation and steps to avoid the risk of that information later

becoming available to the staff assigned to the investigation. However, the firm neither informed

nor sought the consent of the plaintiff prior to accepting the assignment.

The firm submitted that a voluntary undertaking not to disclose or use information acquired in the

course of the previous litigation work was sufficient to protect the plaintiff’s interests. The plaintiff

successfully appealed against a discharge of an injunction to restrain the firm from continuing the

work on the basis that the firm had not discharged its duty to preserve the confidentiality of the

information.


The case of Prince Jefri establishes a number of principles relevant to the scope of the duty of

confidentiality owed by accountants to their clients, in particular the measures required to be

adopted to protect against disclosure of confidential information.


• Akin to a solicitor’s professional obligation, an accountant owes a duty to a former client to

maintain the confidentiality of information acquired during the course of the professional

relationship, which continues beyond the termination of that relationship.

• To comply with the duty, an accountant must actively preserve the confidentiality of the

information and it is not sufficient merely to take reasonable steps to do so.

• The duty of confidentiality extends to an obligation not to misuse confidential information.

• Where an accountant is in receipt of confidential information, they must take effective

measures to ensure not only against deliberate disclosure but that there was no risk of the

information being unwittingly, inadvertently or negligently disclosed to other persons.

• A risk of subsequent disclosure may arise where, for example, the accountant later accepts

instructions to act for another client with an adverse interest in a matter to which the confidential

information is, or may be, relevant.

• Where confidential information is held by a section/department within a firm, it will be

presumed (in the absence of cogent evidence to the contrary) that the information was being

imparted across the firm.

• To eliminate the risk of disclosure of confidential information within sections of a firm, the firm

must implement special measures as part of its broad organisational arrangements (as

opposed to ad hoc measures).

• The principles of confidentiality apply equally to all forms of employment that involve

confidential relationships between persons and clients with whom they do business.


• Following the termination of a professional relationship, the duty of confidentiality requires

that there be no risk of disclosure (not merely an insubstantial one). However, to warrant

restraint a risk must be a “real one, and not merely fanciful or theoretical.”

Li and Tax Practitioners Board [2014] AATA 299

Summary

Termination of registration, imposition of a non-application period of three years and rejection of

application for renewal of registration considered in relation to breaches of the Code in the TASA and

ceasing to meet the registration requirement of being a fit and proper person.

Keywords: registration as tax agent; termination of registration and prohibition on applying for

registration for 3 years; refusal to renew registration; whether fit and proper person; breaches of

the Code of Professional Conduct; unwitting involvement in fraud by third parties; failure to keep

client information confidential; failure to take reasonable care in establishing client’s

circumstances; failure to provide tax agent services competently.


Between about mid-August 2011 and about 19 September 2011, the tax agent prepared and

lodged (or attempted to lodge) 454 tax returns on behalf of taxpayers based on the instructions

of intermediaries. The taxpayers had not authorised the intermediaries to arrange preparation

and lodgment of their tax returns, and about 400 of those tax returns contained salary, wages

and tax instalment deduction amounts that did not match those recorded on payment summaries

lodged by the taxpayers’ employers.

The agent did not (a) meet or request to meet or make direct contact with any of the taxpayers,

or (b) use the ATO tax agent portal to check information and did not use the pre-filling function to

assist with lodging returns. In preparing the returns, the agent printed the unsigned returns on

‘recycled paper’ (paper previously used to print other returns) and provided them to the

intermediaries to have them signed by the relevant taxpayer. 33 of the tax returns that had been

printed on ‘recycled paper’ contained information about 85 other taxpayers, of which two were

taxpayers that were not connected with the intermediaries.

The AAT held that the agent had breached subsection 30-10(6) of the Code by printing tax

returns on ‘recycled paper’ which contained confidential information on the reverse – noting that

the agent had admitted to doing this as part of his usual practice.

The AAT held that the agent had breached subsections 30-10(7) and 30-10(9) of the Code by

failing to seek verification that the information provided by the intermediaries was legitimate or

authorised in circumstances where he ought to have made further enquiries including failing to

request substantiation for deductions claimed and speaking with any taxpayers to satisfy himself

that expenses were incurred.


In affirming the TPB’s decision to terminate the agent’s registration and impose a non-

application period of three years, the AAT noted that there had been numerous serious

breaches of the Code and there had been loss and inconvenience to taxpayers. There had been

evidence of incompetence and negligent, if not willful, breach. Whilst the agent had expressed

remorse, he had sought to minimise his role and the extent of his responsibility. Finally, whilst it

was noted that the agent would suffer hardship from being unable to practice, there was no

evidence to suggest that the agent could not find alternative employment until the period of

disqualification ended. For the AAT, the public interest favoured termination and a sufficiently

lengthy disqualification to ensure that the agent properly reflected on his conduct, the public was

protected from harm and other tax agents were deterred from engaging in similar conduct.


The AAT considered that the following factors identified by Santow J in ASIC v Adler163 were

relevant to determining the appropriateness of a termination and the imposition of a non-

application period:

“(i) Banning orders are designed to protect the public from harm; (ii) The banning order is protective against present and future breach; (iii) A banning order has a motive of personal deterrence, though it is not punitive; (iv) The objects of general deterrence are also sought to be achieved; (v) In assessing the fitness of a person to be permitted to provide tax agent services, they

have an understanding of their role and obligations; (vi) In assessing an appropriate length of prohibition, consideration has been given to the

degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;

(vii) Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;

(viii) It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;

(ix) A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;

(x) It is necessary to assess matters such as the character of the person, the nature of the breaches, risks to others from the continued registration of the person;

(xi) Factors which lead to the imposition of the longest periods of disqualification include large financial losses, high propensity for the person to engage in similar conduct and lack of contrition or remorse.”

163 (2002) 42 ACSR 80; [2002] NSWSC 483 at [55]-[56].


7. You must ensure that a tax agent service provided on your behalf is

provided competently

Su and Tax Agents’ Board of South Australia [1982] AATA 127

Summary

Fitness and propriety of registered tax agent considered in relation to:

• convictions and fines relating to considerable delays and failure to lodge personal income tax

returns

• failure to remit group tax instalments in his capacity as an employer

• failure to furnish return of company of which he was director

• failure to disclose convictions in annual notices to the board.

Keywords: fit and proper; cancellation of registration; convictions; personal income tax affairs; relationship with the Board and Commissioner.


Refer to the facts outlined above under the case summaries for Principle 2 of the Code.


• While particular acts or omissions by a tax agent may not be enough, viewed separately, to

warrant removal from the register, it is possible for multiple less serious matters, if sufficient in

number, to provide a basis for a board to determine that a tax agent was not fit and proper.

• In addition, the failure of a tax agent to comply with their own taxation obligations is relevant

to fitness and propriety as it may result in adverse treatment of the clients of that agent and

the Commissioner will have reduced confidence in the competence with which those returns

were prepared.

• Certain offences are so inconsistent with performing the role of a tax agent that conviction for

these offences will render a person not fit and proper to be a registered tax agent. The AAT

highlighted offences involving tax evasion to be an example of such an offence.

• In relation to the failure to accurately complete the annual returns to the Board, someone

incapable of accurately completing a simple yet important notice “is not a person of sufficient

competence and integrity to hold the privilege of acting for clients in the preparation and

lodgment of their income tax returns.”



Summary














application period:

“(i) Banning orders are designed to protect the public from harm; (ii) The banning order is protective against present and future breach;

(iii) A banning order has a motive of personal deterrence, though it is not punitive; (iv) The objects of general deterrence are also sought to be achieved; (v) In assessing the fitness of a person to be permitted to provide tax agent services, they








164 (2002) 42 ACSR 80; [2002] NSWSC 483 at [55]-[56]



Summary









shortcomings.







Burnett and Tax Practitioners Board [2014] AATA 687 Summary








and lodged competently.


agent’s conduct.

Keywords: fit and proper; good fame, integrity and character; application for renewal of registration;

honesty and integrity; competence; reasonable care to ascertain a client’s state of affairs; reasonable

care to ensure that taxation laws are applied correctly; relationship with the Board, the Commissioner

and the AAT; contrition; knowledge of the taxation laws; appreciation of responsibilities and obligations

of a registered tax practitioner; excessive and unsupported claims in clients’ tax returns.




• A registered tax practitioner’s diligence in providing tax agent services, current knowledge of the

relevant legal frameworks (including income tax laws) and competence and professionalism in

dealing with both clients and the ATO are relevant to assessing whether the registered tax

practitioner possesses the integrity and competence required of a registered tax practitioner, such

that others may entrust their taxation affairs to their care.

• These qualities are also relevant to whether the registered tax practitioner is a fit and proper

person to be registered under the TASA. This is particularly so in a self-assessment tax regime, in

which inaccuracies in returns generally only come to light during random audits and penalties for

inaccurate claims and late lodgments can be imposed on taxpayer clients, who rely on the

registered tax practitioner to properly advise, guide and lodge accurate and timely returns and

other tax documents with the Commissioner on their behalf.

• To ensure that a tax agent service is provided competently, a registered tax practitioner is

expected to keep up to date with developments in taxation laws to maintain a proper knowledge

of these laws. This may involve research and other enquiries to confirm the application of any

relevant ATO policies and guidelines to the circumstances of the client. A registered tax

practitioner is also expected to ask sufficient and pertinent questions of their client to enable them

to be reasonably satisfied of the accuracy of claims they prepare and lodge on the client’s behalf.

This may include sighting specific and necessary evidence to substantiate the claims.



Summary




• failing to ensure that tax agent services were provided competently • failing to maintain PI insurance as required by the TPB


Keywords: fit and proper; application for renewal of registration; compliance with taxation laws in the

conduct of personal affairs; competence; relationship with the Board and the Commissioner;

appreciation of responsibilities and obligations of a registered tax practitioner; requirement to maintain

PI insurance.




• Evidence of the following matters relating to a registered tax practitioner’s dealings with a client,

among other things, are relevant to determining whether the registered tax practitioner has failed to

ensure that a tax agent service they provided, or that was provided on their behalf, was provided

competently:

o not providing a client with a means of contact, or remaining inaccessible to a client for an

unreasonable period of time

o causing an inappropriate delay in the preparation and lodgment of a tax return or other

taxation document on behalf of a client

o not providing a tax agent service that is requested by a client, despite accepting payment

of a fee of this service from the client

o not returning source documentation to a client, despite a reasonable request to do so (for

example, when the client engages another registered tax practitioner who requires the

information to provide tax agent services to the client)

• not forwarding relevant ATO correspondence relating to a client’s taxation obligations, liabilities

and entitlements, as necessary, to the client.


8. You must maintain knowledge and skills relevant to the tax agent

services you provide

Leo Comino and Tax Agents Board of New South Wales 2009 AATA 766

Summary

Fitness and propriety of applicant for tax agent re-registration considered in relation to:

• failure to lodge quarterly BAS

• prior convictions for failure to lodge income tax returns

• failure to lodge personal tax returns.

Keywords: fit and proper; personal income tax affairs; whether special circumstances exist;

meaning of ‘special circumstances’; diligence and professionalism.


This was a review by the AAT of a decision by the Tax Agents’ Board of NSW to refuse an agent’s

application for re-registration on the ground that the agent was not fit and proper person to prepare

income tax returns. The AAT affirmed the board’s decision to refuse the application.

Among the other facts in this case, the applicant had five previous convictions for failure to lodge

quarterly BAS’s in 2006 and 2007. The applicant also had two prior convictions for failing to lodge

income tax returns and was late in lodging his personal income tax returns in four different tax

years.


• It is essential that a tax agent keeps up to date with the changes in the income tax laws.

• Maintaining this knowledge requires a level of diligence and professionalism.

• Given the importance of a tax agent maintaining knowledge and skills in the areas within

which they provide tax agent services, an admission by an agent that they are unable to

keep abreast of these changes reflects adversely on the agent’s fitness to provide those

services competently.

• At [34] the AAT said:

• “Mr Comino acknowledged that he had experienced problems with the introduction of

the GST and that this had been a factor in the late lodgment of business activity

statements. Given the importance of tax agents keeping up to date with the relevant law

in order to fulfil their responsibilities in properly advising clients, Mr Comino’s

acknowledgement, while a frank admission, does not give the AAT confidence in his

ability to keep abreast of changes in the law, especially since the problems with

business activity statements occurred in 2006/7, and the introduction of GST took place

in 2000.”


9. You must take reasonable care in ascertaining a client’s state of

affairs, to the extent that ascertaining the state of those affairs is

relevant to a statement you are making or a thing that you are

doing on behalf of the client


Summary

The High Court considered whether the legal firm had breached its duty of care to the executor of

a testatrix estate for their failure to take positive steps to inform the executor of the contents of the

will, a document which only the solicitor was aware of.

Keywords: solicitor; duty of care; standard of care; reasonable care; damages.


This case involved an appeal from a decision of the New South Wales Court of Appeal to dismiss

an action for breach of an alleged contract and a duty of care owed by a firm of solicitors

(respondent) to the appellant as executor of a testatrix’s estate. The action arose following a

failure by the respondent to take positive steps to locate and disclose to the executor the

existence of the will of the testatrix during a period of more than six years after her death. The

failure resulted in such losses as the deterioration of the house property (being the principal

asset in the estate) and the loss of rent and income that might have otherwise been derived

from the house.

The High Court allowed the appeal on the basis that the respondent had, as a matter of fact,

breached its duty of care to the appellant in failing to take such positive steps to avoid the

damage.

In arriving at its decision, the Court placed particular emphasis on the responsibility undertaken

by the respondent for the custodianship of the testatrix’s will after her death and the

foreseeability of a risk of damage if the respondent simply retained the will.


• The general standard of care owed by a professional to a client is that of “due care, skill and

diligence.” This does not require an extraordinary degree of skill and competence, but rather,

that the professional exercise the competence and skill that is “usual” among qualified and

careful persons in the practice of the profession.

• Reasonable care means what is reasonable in the circumstances. This will depend on a

range of factors including the scope of the services provided and the client’s level of

professional knowledge and experience.


Martinazzo and Commissioner of Taxation [2009] AATA 61

Summary

In relation to an administrative penalty imposed by the Commissioner of Taxation, the AAT

considered whether the tax agent’s client’s false and misleading statement to the Commissioner

was caused by a failure to take reasonable care on the part of the agent.

Keywords: tax agent; penalty; standard of care; failure to take reasonable care; knowledge,

education, experience and skill of agent.


This case concerned the question of whether amounts purportedly paid to the applicant as

“advances in the nature of loans” were in fact income and should have been reported as such in

his tax return. The ATO had imposed an administrative penalty under the Tax Administration Act 1953 for making a false and misleading statement to the Commissioner. The amount of that

penalty was determined by whether the shortfall in tax was caused by a failure to take

“reasonable care to comply with a taxation law” on the part of the taxpayer or the registered tax

agent.

The matter went on appeal to the AAT. In this case the AAT found that the agent should clearly

have included the amounts in assessable income.

On this and other grounds the decision to impose the penalty was therefore affirmed.


• To take reasonable care, in the context of making a statement to the Commissioner, means

giving appropriate serious attention to complying with the obligations imposed under a

taxation law. It requires an entity to take the same care in fulfilling their tax obligations that

could be expected of a reasonable ordinary person in their shoes.

• The standard of care is measured objectively (the actual intentions of the entity are not

relevant) but takes into account subjective factors such as the entity’s knowledge, education,

experience and skill.

• A professional person with specialist tax knowledge will be subject to a higher standard of

care that reflects the level of knowledge and experience a reasonable person in their

circumstances will possess.

• The appropriate benchmark is the level of care that would be expected of an ordinary and

competent practitioner practising in that field and having the same level of expertise.


Reeders v Federal Commissioner of Taxation 2001 ATC 2334

Summary

In relation to a disallowed claimed deduction and penalty imposed by the Commissioner of

Taxation, the AAT considered whether the taxpayer entity and tax agent had demonstrated

reasonable care in relation to the claim.

Keywords: Claimed deduction; penalty; reasonable care; knowledge, education, experience and

skill of agent.


In this case the Commissioner had disallowed a claimed deduction for self-education expenses,

being the cost of obtaining a pilot’s license. The Commissioner also imposed a penalty under

s226G of the ITAA 1936 which allowed a penalty to be imposed where the tax shortfall had been

caused by the failure of the taxpayer or of a registered tax agent to take reasonable care to

comply with the Act or the regulations and the taxpayer was therefore liable to pay the penalty.

In this case the taxpayer objected to the penalty and the case came before the AAT sitting as the

Small Taxation Claims Tribunal.

The taxpayer had consulted an accountant before lodging the claim for the deduction and the tax

agent had made some inquiries before advising that the deduction was allowable. One of the

questions before the AAT was whether there was any indication of a want of care by the tax agent.


• More might be expected of a tax agent than a taxpayer completing his or her own return.

• The tax agent must act reasonably having regard to the agent’s knowledge,

education, experience and skill.

• Making reasonable inquiries of a client to determine the nature of certain claims for

deductions made by the client and the basis on which those claims were being made

would be considered taking reasonable steps to ascertain a client’s state of affairs.


Summary















application period:

“(i) Banning orders are designed to protect the public from harm; (ii) The banning order is protective against present and future breach;

(iii) A banning order has a motive of personal deterrence, though it is not punitive; (iv) The objects of general deterrence are also sought to be achieved; (v) In assessing the fitness of a person to be permitted to provide tax agent services, they








165 (2002) 42 ACSR 80; [2002] NSWSC 483 at [55]-[56]



Summary









shortcomings.








Summary










agent’s conduct.




and the Tribunal; contrition; knowledge of the taxation laws; appreciation of responsibilities and

obligations of a registered tax practitioner; excessive and unsupported claims in clients’ tax returns.















• To take reasonable care in ascertaining a client’s state of affairs that is relevant to a tax agent

service, a registered tax practitioner is expected to ask sufficient and pertinent questions of their

client to enable them to be reasonably satisfied of the accuracy of claims they prepare and lodge

on the client’s behalf. This may include sighting specific and necessary evidence to substantiate

the claims.


10. You must take reasonable care to ensure that taxation laws are applied

correctly to the circumstances in relation to which you are providing

advice to a client


Summary

The High Court considered whether the legal firm had breached its duty of care to the executor of

a testatrix estate for their failure to take positive steps to inform the executor of the contents of the

will, a document which only the solicitor was aware of.

Keywords: solicitor; duty of care; standard of care; reasonable care; damages.




Whilst Hawkins provides direct authority for the content of a solicitor’s duty to their client, a

number of principles on the standard of care required to be exercised by professionals generally

can be distilled from the case.


• The general standard of care owed by a professional to a client is that of “due care, skill and

diligence.” This does not require an extraordinary degree of skill and competence, but rather,

that the professional exercise the competence and skill that is “usual” among qualified and

careful persons in the practice of the profession.

• Depending on the circumstances of the case, a duty of care may extend beyond a mere

obligation to take reasonable care in performing a function which, in the absence of such

care, might cause loss to the client.


• Circumstances that are relevant in determining the scope of a duty and whether an obligation

to take positive and prompt steps should be imposed include the following:

• the nature of the work undertaken

• the assumption of active responsibility by the person undertaking the work for the matter

for which the steps are required

• the general nature and contents of the agreement between the parties

• the purpose for the undertaking accepted by the person

• the nature of the foreseeable consequences arising from a failure to take the steps, and

• contemporary community standards (particularly where liability for a breach would

unduly outweigh the risk that a person undertaking the work could reasonably be

expected to bear).

• The standard of care owed by a person performing professional work to a client extends

beyond that contained in the express or implied terms of their agreement.

Keitac Pty Ltd ATF McNamara Property Development Trust and Commissioner of Taxation [2007] AATA 1206; (2007) 68 ATR 61

Summary

In relation to a penalty imposed by the Commissioner of Taxation for an input tax credit in a BAS,

the AAT considered whether the tax agent and accountant had taken reasonable care, when

acting for their client.

Keywords: tax agent; input tax credit penalty; whether penalty was lawfully imposed; whether

penalty should be remitted; standard of care; reasonable care.


Keitac involved an application to the AAT for review of an assessment by the Commissioner of

Taxation of a penalty for failure to take reasonable care to comply with a taxation law.

The matter arose in relation to a purchase of land, in respect of which the applicant as purchaser

engaged accountants and tax agents to prepare the BAS. Following the preparation of a draft

contract which had been viewed and advised on by the accountants, a condition was mistakenly

inserted (of which the applicant was unaware) which disentitled it from an input tax credit. The

accountants then requested the “key terms” of the contract and the applicant only provided the

first page (without the condition). As the accountants had provided earlier advice on the contract,

they thought it unnecessary to request the remainder before attesting to it. As a result, a credit

was claimed in relation to the purchase.


The applicant successfully claimed for a reduction of the penalty on the basis of a lack of

reasonable care by the accountants and tax agents.

Keitac established the following principles on the interpretation of “reasonable care” in the context

of work undertaken by accountants and tax agents:

• The greater the value of a transaction, the higher the standard of care that may be required,

in particular, the level of enquiries required in following up the provision of information by a

client.

• “Reasonable care” imposes an obligation on an accountant or tax agent to follow up

or pursue ostensibly inadequate responses to requests for nformation.


Summary










agent’s conduct.




and the Tribunal; contrition; knowledge of the taxation laws; appreciation of responsibilities and

obligations of a registered tax practitioner; excessive and unsupported claims in clients’ tax returns.
















• To take reasonable care to ensure that taxation laws are applied correctly to the circumstances of

a client, a registered tax practitioner is expected to keep up to date with developments in taxation

laws to maintain a proper knowledge of these laws, and to ask sufficient and pertinent questions

of their client to enable them to be reasonably satisfied of the accuracy of claims they prepare and

lodge on the client’s behalf. This may include sighting specific and necessary evidence to

substantiate the claims.

11. You must not knowingly obstruct the proper administration of the

taxation laws

Scanlan v Swan 82 ATC 4402

Summary

In relation to a conviction for obstructing or hindering an officer in the discharge of their duties

under the ITAA 1936, the District Court considered whether a temporary denial of access on

reasonable grounds constitutes an obstruction.

Keywords: Income Tax Assessment Act 1936; obstruction; temporary denial of access;

reasonable grounds; reliance on common law right.


This case related to an appeal to the District Court of Queensland from a conviction of the

appellant in the Magistrates Court of the offence under section 232 of the ITAA 1936 of

obstructing or hindering an officer in the discharge of their duties under that Act or the Income Tax Regulations 1936.

The conviction arose after two officers of the Commissioner sought access to documents in the

appellant’s business premises in the course of an interview with the appellant pursuant to section

263 of the ITAA 1936, which facilitates full and free access to all buildings, places, books,

documents and other papers (and the making of copies) for the purposes of that Act. As one of

the officers attempted to have access to a file on the appellant’s desk, the appellant placed his

hand on the file to prevent access by the officer.

The appellant argued against the finding in relation to section 232 on the basis that he was

exercising a common law right, being the right to obtain legal advice. The District Court allowed

the appeal and set aside the conviction and other orders made by the magistrate.


The District Court summarised the following principles on the meaning of the word “obstruct” in the

context of the exercise by officers of their statutory duties and powers:

• “Obstruction” is a word of common and everyday usage in the English language. Therefore,

an obstruction” in a given case is not capable of specific definition but must be measured in

accordance with relevant tests.

• A temporary denial of access, on reasonable grounds, will not amount to an obstruction.

• What constitutes a temporary denial of access and reasonable grounds must be determined

according to all the circumstances of the case.

• The assessment of whether something amounts to an obstruction is one of reasonableness.

• In general, a short delay for the purpose of obtaining legal advice may be considered a

reasonable ground. However, this result may not be reached in every single case and all will

depend on the relevant circumstances.

• Reliance on a common law right is a relevant factor in determining whether a person has

acted reasonably. This does not require the assertion of a common law right before the issue

of reasonableness can be raised and considered.

• Conversely however, there may be reasonable grounds not involving the assertion of a

common law right. By the same token, the assertion of a common law right may, in some

circumstances, be considered unreasonable and amount to an obstruction (e.g. where a

person claiming a right to obtain legal advice is “spurious and unreasonable” and their

conduct in asserting the right is “truly obstructive”).

Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 101 ALR 407

Summary

In relation to convictions under the Industrial Relations Act 1988 for hindering or obstructing

officers from carrying out an inspection of certain records, the Federal court considered the

meanings of ‘hinder’ and ‘obstruct’.

Keywords: industrial law; inspection and interview by authorised officer of organisation; whether

deferral of decision to allow inspection amounts to hindrance or obstruction; temporary denial of

access.


This case related to an appeal to the Federal Court from a decision of a single judge convicting

the appellant of two offences under section 306(a) of the Industrial Relations Act 1988 of

hindering or obstructing two authorised officers of the respondent from carrying out an

inspection of certain records for the purpose of ensuring observance of certain awards in

accordance with that Act.


The conviction arose after the officers who attended the appellant’s premises were told by an

officer of the appellant that their “application” to enter and inspect the records would be

considered but that no response would be granted that day.

The Federal Court dismissed the appeal on the basis that the appellant’s action amounted to a

hindrance or obstruction within the terms of the Act.


The Federal Court outlined the following principles on the meanings of “hinder” and “obstruct” in

the context of the administration of a statutory function:

• An obligation to not hinder or obstruct an officer’s exercise of their powers of access does not

imply a general positive duty to provide assistance to exercise the power.

• A person’s action/s may amount to an obstruction even if no positive conduct is involved.

• A temporary refusal of access may amount to an obstruction in circumstances where it is

apparent that access will be denied for an indefinite period or where no indication is given of

when the officer/s will be informed whether or not access will be granted.

• The possibility that a person may need to obtain legal advice before permitting access may

not be raised as an excuse for an obstruction if the relevant statute does not provide a right

to defer access pending legal advice or if the person does not claim legal professional

privilege.

12. You must advise your client of the client’s rights and obligations under

the taxation laws that are materially related to the tax agent services

you provide

Re Warne and Defence Force Retirement and Death Benefits Authority (1989) 18 ALD 662

Summary

In relation to a determination of eligibility for an invalidity benefit the AAT considered the phrase

‘materially aggravated’.

Keywords: invalidity benefit; materially connected; whether condition was not materially

aggravated by service.


This case involved consideration of section 28 (1) of the Defence Force Retirement and Death Benefits Act 1973. Specifically, this case considered the meaning of the words ’materially

aggravated’. In the context of the TASA it provides an example of the interpretation of when

something is ‘materially’ connected with something else.



For something to be ‘materially’ connected with something else, a connection is required

between those things that is of substance rather than being so tenuous as to be immaterial or

ignored.


Summary









shortcomings.







13. You must maintain professional indemnity insurance that meets the

Board’s requirements


Summary










PI insurance.




The failure by a registered tax practitioner to maintain PI insurance as required by the TPB during any

period after these requirements became effective (1 July 2011 for registered tax agents and BAS

agents and 1 January 2017 for all registered tax (financial) advisers)) amounts to a breach of

subsection 30-10(13) of the TASA. This PI insurance requirement serves to protect clients in the event

that they are made liable for additional tax or penalties as a result of the conduct of a registered tax

practitioner. As such, it ‘is in the public interest that tax [practitioners] are adequately insured’ and a breach of this requirement ‘has the potential to undermine confidence and credibility in the regulatory regime’.


14. You must respond to requests and directions from the Board in a timely,

responsible and reasonable manner

Re Cowlishaw and Ors and Tax Agents’ Board of Queensland [1999] AATA 412

Summary

Fitness and propriety of registered tax agents considered in relation to:

• the excessive claiming of deductions on behalf of clients

• failure to respond to ATO telephone calls and correspondences

• failure to act on substantiation requests by the ATO despite being granted extensions of time

• failure to respond to board correspondence

• failure to file clients’ income tax returns

• failure to pass on ATO correspondences to clients

• shifting of blame for delays by agents on to clients

• staff and client complaints regarding failure to pass on refunds.

Keywords: fit and proper; excessive claiming of deductions; failure to respond to Board and ATO

correspondences; relationship with the Board and Commissioner; failure and delay in filing clients’

income tax returns; misrepresentations to clients; failure to pass on ATO correspondences; failure

to pass on tax refunds; shifting of blame onto clients and staff.




• A lack of cooperation with the Commissioner officers and failure to treat the board with

proper respect amount to a serious breach of the proper conduct of a tax agent business.

• The following matters may be considered to be misconduct as a tax agent such that an agent

engaged in this conduct will not be a fit and proper person to prepare income tax returns or

transact business on behalf of taxpayers in income tax matters:

• failing to file tax returns within a reasonable time or in some cases at all

• failing to respond to telephone calls and correspondence

• failing to pass on correspondence from the Commissioner to clients

• misleading clients by informing them that returns had been filed with the Commissioner

when they had not

• blaming clients for delays

• blaming staff for delays

• providing money to clients to keep them quiet and to stop them from complaining to any

official body.


Pappalardo v Tax Agents' Board of Victoria [2003] AATA 990

Summary

Fitness and propriety of registered tax agent considered in relation to:

• failure to lodge personal income tax returns

• failure to adequately respond to board correspondence

• lack of contrition and agent’s submission of confused and misleading evidence to the

AAT.

Keywords: fit and proper; cancellation of registration; personal income tax affairs; failure to

respond to Board correspondences; relationship with the Board and Commissioner; lack of

contrition; submission of confused and misleading evidence.




• Inaccurate or misleading statements/submissions to a board or the AAT can in

circumstances reflect an inability to clearly think about the relevant issues and consequently

may be relevant to evaluating competence and fitness and propriety in general.

• Failure to return board and client correspondences reflects adversely on fitness and

propriety to be registered as it demonstrates a serious neglect of the business of a tax agent

and a lack of appreciation of the significance of completely and promptly responding to

requests from a regulatory authority.

Grosfeld and Tax Practitioners Board [2014] AATA 100 Summary










PI insurance.





• A failure by a registered tax practitioner to respond to a TPB request for information within the

requested time frame, without reasonable explanation, or to provide a response that sufficiently

addresses the TPB request, constitutes a breach of the requirement under subsection 30-10(14) of

the TASA that the registered tax practitioner respond to requests and directions from the TPB in a

timely, responsible and reasonable manner.

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Explanatory Paper TPB(EP) 06/2014

Continuing professional education policy requirements for registered tax (financial) advisers

This Tax Practitioners Board (TPB) explanatory paper (TPB(EP)) provides a detailed explanation of the TPB’s

continuing professional education (CPE) requirements for registered tax (financial) advisers from 1 July 2014.

Further, it explains the TPB’s interpretation of the provisions in the Tax Agent Services Act 2009 (TASA)

relating to the CPE requirement, translating these provisions into practical principles that can be applied by

the profession.

The principles, explanations and examples in this paper do not constitute legal advice.

Currency of details of the CPE requirement

The TPB intends to review the details of its CPE requirements periodically, with a view to making any

necessary refinements for the future. The TPB reserves the right to amend its CPE requirements at any point,

including before any formal review, if it becomes necessary to do so.

Key terms

The Key terms section lists a number of key terms and the meaning they have in this TPB(EP).

Document history

The TPB released this EP on 30 June 2014.

On 7 November 2016 the TPB updated this TPB(EP) to incorporate a reference to TPB CPE and to

recognised tax (financial) adviser associations, to provide further clarity in regard to acknowledging

recognised professional association CPD, and to delete an obsolete footnote reference to draft regulations.

Issue date: 30 June 2014

Last updated: 12 July 2017

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Table of contents Overview .................................................................................................................... 3

Objective .................................................................................................................. 3

Legislative background ............................................................................................. 4

CPE principles ........................................................................................................... 5

What does this mean for tax (financial) advisers?..................................................... 6

What does this mean for consumers? ...................................................................... 6

CPE requirements and examples ............................................................................. 7

CPE for tax (financial) advisers ................................................................................ 7

CPE for conditional advisers .................................................................................... 7

CPE for certain categories of conditional advisers .................................................... 8

What is relevant CPE? ............................................................................................. 8

CPE activities ......................................................................................................... 10

Recognition of other CPE ....................................................................................... 11

Recording CPE activities ........................................................................................ 12

Extenuating circumstances ..................................................................................... 13

Compliance with the Code of Professional Conduct ............................................... 14

Key terms ................................................................................................................. 15

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Overview 1. This Tax Practitioners Board (TPB) explanatory paper (TPB(EP)) sets out the

TPB’s continuing professional education (CPE) requirements for tax (financial) advisers who will be able to register with the TPB from 1 July 2014. Further, it provides guidance to registered tax (financial) advisers on meeting their obligations under the Tax Agent Services Act 2009 (TASA), including the Code of Professional Conduct (Code).1

2. The TPB considers that CPE is the process of maintaining and improving a professional’s knowledge and skills. CPE is also a means by which registered tax (financial) advisers maintain and build upon their primary qualifications, used to gain initial registration under the TASA. It is imperative that a registered tax (financial) adviser’s knowledge and skills adapt and improve as the law, society and their individual practice changes. Further, it is a requirement for all individual registered tax (financial) advisers to have, upon renewal of registration, completed CPE that meets the TPB’s requirements.

3. The TPB recognises that CPE is also commonly referred to by professional associations as continuing professional development (CPD). The term CPE is used in this TPB(EP) as this is how the concept of professional development is referred to in the TASA, the Tax Agent Services Regulations 2009 (TASR) and the

Explanatory Memorandum to the Tax Agent Services Bill 2008.2

Objective

4. Businesses increasingly operate in a globalised setting subject to continuous change. The TASA acknowledges this reality in the following ways:

(a) The object of the TASA is to ensure that tax agent services3 are provided to the public in accordance with appropriate standards of professional and ethical conduct.4 Therefore, the TASA has a consumer protection imperative. The completion of relevant CPE will assist registered tax (financial) advisers to ensure that their knowledge and skills are maintained for the benefit of their clients and the broader community.

(b) Paragraph 20-5(1)(d) of the TASA imposes a mandatory obligation on all registered tax (financial) advisers to have completed CPE that meets the TPB’s requirements to renew their registration.5

(c) Section 30-10 of the TASA, containing the Code, regulates the personal and professional conduct of registered tax (financial) advisers, and includes obligations relating to maintaining knowledge and skills and taking reasonable care.6

1 It is noted that relevant amendments to the TASA relating to the regulation of tax (financial) advisers by the

TPB did not commence until 1 July 2014. Accordingly, all references to the TASA in this TPB(EP) should be taken to read the TASA as applying from 1 July 2014. 2 See also paragraphs 35 to 38 of this TPB(EP) for further information in relation to recognition of other CPE /

CPD. 3 The definition of tax agent service includes a tax (financial) advice service. See the key terms section of this

TPB(EP). 4 Section 2-5 of the TASA.

5 See also paragraph 7(a) of this TPB(EP).

6 See paragraph 7(b) of this TPB(EP) for further information on the items of the Code.

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5. The TASA reinforces the view that it is essential for registered tax (financial) advisers to maintain their knowledge and skills throughout their professional life. This includes completing more significant CPE during periods of legislative change and to account for changes to a registered tax (financial) adviser’s individual circumstances. The principles contained in this TPB(EP) will therefore assist registered tax (financial) advisers to meet their obligations under the TASA as described above.

Legislative background

6. This TPB(EP) provides guidance on the application of the renewal of registration requirement contained in paragraph 20-5(1)(d) of the TASA and elements of the Code set out in section 30-10 of the TASA.

7. All registered tax (financial) advisers are required to comply with:

(a) paragraph 20-5(1)(d) of the TASA which requires registered tax (financial) advisers to, upon renewal of registration, demonstrate that they have completed CPE that meets the TPB’s requirements; and

(b) section 30-10 of the TASA which relevantly requires that:

‘(8) You must maintain knowledge and skills relevant to the *tax agent services that you provide.…7

(10) You must take reasonable care to ensure that *taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client.…

(12) You must advise your client of the client’s rights and obligations under the *taxation laws that are materially related to the *tax agent services you provide’.

8. Paragraphs 3.45 and 3.46 of the Explanatory Memorandum to the Tax Agent Services Bill 2008 relevantly state that:

‘… Keeping up-to-date with developments in the relevant taxation laws and tax administration may require agents to undergo a certain minimum number of hours of tax related continuing professional education per year as determined by the Board.

3.46 The Board may issue a guideline listing the training that is available in the market (including face-to-face training courses, distance learning and online courses) as being sufficient for continuing professional education purposes for this principle of the Code. For this purpose, any person or organisation can make a recommendation to the Board to have their training courses listed. The courses are not restricted only to those offered by recognised professional associations, recognised BAS agent associations, tax agents or BAS agents.’8

7 Use of a ‘*’ in the TASA indicates that the term is defined in the dictionary (Division 90) of the TASA.

8 Paragraphs 3.45 and 3.46 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.

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9. Further, the Explanatory Memorandum to the Tax Laws Amendment (2013 Measures No. 3) Bill 2013 provides that the amendments make it a registration requirement for individuals seeking to renew their registration to have met the TPB’s CPE requirements. This ensures that registered individuals maintain their skills and knowledge for the benefit of their clients.9

CPE principles 10. The legislative principles and provisions described above recognise that registered

tax (financial) advisers must complete relevant CPE to renew their registration, and

also to assist in complying with their obligations under the Code.

11. CPE refreshes and updates the core body of knowledge that is essential to the

services provided by each registered tax (financial) adviser, building upon and

maintaining the relevance of a registered tax (financial) adviser’s educational

background.

12. The following principles underpin the TPB’s CPE requirements:

(a) It is a registration renewal requirement for registered tax (financial) advisers

to have completed CPE that meets the TPB’s requirements.10

(b) CPE contributes to the maintenance of contemporary and relevant

knowledge and skills required of registered tax (financial) advisers to comply

with the Code.11

(c) The Courts have previously indicated in a number of cases that continued

registration requires that registered individuals be competent. The

maintenance of competence by a registered tax (financial) adviser requires

continuing awareness, understanding and up-to-date knowledge of relevant

technical, legal and business developments. A registered tax (financial)

adviser who has maintained their knowledge and skills is better equipped to

advise their clients and apply the taxation laws to individual circumstances

and therefore to comply with the Code.12 In Stasos v Tax Agents’ Board [1990] FCA 379, Hill J stated at paragraph 49:

‘once registered, however, the tax agent must keep up to date with the massive changes to the income tax law, no easy task in the present time, so that he can properly advise and represent his clients. That is a responsibility which comes with the privileged position in which he is placed.’13

9 Paragraph 3.116 of the Explanatory Memorandum to the Tax Laws Amendment (2013 Measures No. 3) Bill

2013. 10

See paragraph 20-5(1)(d) of the TASA. 11

Section 30-5 of the TASA provides that the Code applies to all registered tax agents, BAS agents and tax (financial) advisers. If, following an investigation under Subdivision 60-E of the TASA, the TPB is satisfied that a registered tax agent, BAS agent or tax (financial) adviser has failed to comply with the Code, it may impose one or more administrative sanctions under section 30-15 of the TASA. Sanctions the TPB can impose include a written caution, a period of suspension, termination of registration or an order to take specified actions. The severity of a sanction will depend on the TPB’s consideration of the nature and extent of the breach and the circumstances of each case. 12

See in particular subsections 30-10(8), 30-10(10) and 30-10(12) of the TASA. 13

See further Comino v Tax Agents Board of NSW [2009] AATA 766 at paragraph 34 and Re Su and Tax Agents’ Board of South Australia 82 ATC 4284.

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(d) The TPB acknowledges that the scope of services provided by registered tax

(financial) advisers is narrower than those provided by tax agents, as tax

(financial) advice services are a subset of tax agent services. Therefore, the

minimum level of relevant CPE that should be completed by tax (financial)

advisers14 is 60 hours over three years.

(e) Under the TASA a tax (financial) adviser may be registered as a conditional

adviser,15 that is a tax (financial) adviser who has a condition imposed on

their registration in respect of the subject area in which the tax (financial)

adviser may provide tax (financial) advice services. The TPB recognises that

this category of tax (financial) adviser may not provide a broad range of tax

(financial) advice services. The TPB is of the view that this category of tax

(financial) adviser should complete a minimum of 45 hours of relevant CPE

over three years.

What does this mean for tax (financial) advisers?

13. This TPB(EP) provides guidance on the application of the TASA from 1 July 2014, particularly in relation to the requirements as to CPE. Registered tax (financial) advisers unfamiliar with professional regulation will benefit most from this guidance.

14. The TPB anticipates that its CPE requirements will also instigate and drive the future development of CPE activities by various associations and organisations for the registered tax (financial) adviser profession. The TPB does not intend to provide regular CPE activities. However, the TPB may conduct webinars, road-shows or other activities from time to time which may qualify as relevant CPE.

15. For clarity, it is noted that at this time the TPB does not propose to accredit or approve CPE activities. Registered tax (financial) advisers should exercise their professional judgment in selecting relevant CPE activities to be completed.

What does this mean for consumers?

16. The TPB expects that its CPE requirements will assist in maintaining, and where necessary, raising standards within the registered tax (financial) adviser profession and help promote consumer protection. When engaging a tax (financial) adviser to provide tax (financial) advice services, the TPB encourages the public to ask whether the adviser is registered with the TPB. Using a registered tax (financial) adviser should ensure that the adviser maintains appropriate standards of professional and ethical conduct.

14

See the Key terms section of this TPB(EP). 15

See the Key terms section of this TPB(EP).

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CPE requirements and examples CPE for tax (financial) advisers

17. Registered tax (financial) advisers should complete a minimum of 60 hours of CPE over three years. CPE completed should be relevant to the tax (financial) advice services provided by the registered tax (financial) adviser.

18. The TPB recognises that for various reasons the number of hours of CPE completed by a tax (financial) adviser in a given year may vary. To allow for flexibility in these situations, tax (financial) advisers are able to complete their CPE over a three year period, and generally in line with the adviser’s registration period.

19. This means that a tax (financial) adviser must ensure that at the end of their CPE period (three years) a minimum of 60 hours of CPE has been completed. The TPB considers that not less than seven hours of relevant CPE should be completed in any given year of a registered tax (financial) adviser’s CPE period.

20. A tax (financial) adviser’s CPE period will begin on the date the tax (financial) adviser is registered and ends on the date the tax (financial) adviser’s registration expires in respect of that registration (generally three years). If a tax (financial) adviser’s registration period is for a period other than three years, the tax (financial) adviser should complete CPE on a pro-rata basis.

21. The TPB acknowledges that there will be many tax (financial) advisers who are members of professional associations that have their own CPE requirements. Further, these CPE requirements may be administered on a points-based system where certain activities attract two or more points. In these circumstances, the TPB is of the view that one hour of relevant CPE completed will be considered one hour of CPE for the purposes of the TPB’s CPE policy, irrespective of how many points the same CPE activity attracts for any other purpose.

Example 1

Allison is a registered tax (financial) adviser. Her registration is from 1 October 2016 to 30 September2019.

During the first year of her registration (from 1 October 2016 to 30 September2017), Allison completes seven hours of relevant CPE. In her second year (from 1 October 2017 to 30 September 2018), Allison completes nine hours of relevant CPE.

In her third year (from 1 October 2018 to 30 September 2019), Allison will be required to complete at least 44 hours of relevant CPE to meet the TPB’s CPE renewal of registration requirement.

CPE for conditional advisers

22. A conditional adviser should complete a minimum of 45 hours of CPE over three years. CPE completed should be relevant to the tax (financial) advice services provided by the conditional adviser.

23. The TPB recognises that for various reasons the number of hours of CPE completed by a conditional adviser in a given year may vary. To allow for flexibility in these situations, conditional advisers are able to complete their CPE over a three year period.

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24. This means that a conditional adviser must ensure that at the end of their CPEperiod (three years) a minimum of 45 hours of CPE has been completed. Aconditional adviser should complete no less than five hours of relevant CPE in anygiven year of their CPE period.

25. A conditional adviser’s CPE period will begin on the date the conditional adviser isregistered and ends on the date the conditional adviser’s registration expires inrespect of that registration (generally three years). If a conditional adviser’sregistration period is for a period other than three years, the conditional advisershould complete CPE on a pro-rata basis.

Example 2

Blake is a tax (financial) adviser who is registered under the TASA as a conditional adviser. Blake may only provide a service that is a tax (financial) advice service under section 90-15 of the TASA in respect of the various taxation laws relating to, for example, insurance.

Blake should complete 45 hours of CPE over his CPE period relevant to the type of tax (financial) advice services he provides. Blake is not required to complete CPE in relation to other types of tax (financial) advice services which he does not provide.

CPE for certain categories of conditional advisers

26. The TPB recognises that there may be certain categories of conditional advisersfor which the minimum level of CPE, set out above, is not appropriate. In these cases, the TPB may consider a reduced minimum hours requirement for the relevant category of conditional advisers.

What is relevant CPE?

27. The TPB considers relevant CPE to be the maintenance of contemporary andrelevant knowledge and skills.

28. CPE completed by registered tax (financial) advisers should be relevant to the tax(financial) advice services they provide and the development of their relevantpersonal knowledge and skills. Further, CPE activities should be provided bypersons or organisations with suitable qualifications and/or practical experience inthe relevant subject area.

29. The TPB does not intend to be prescriptive regarding particular topics for CPEactivities which should be completed. Registered tax (financial) advisers shouldexercise their professional judgment in selecting relevant CPE activities to becompleted.16

Example 3

Mitch is a registered tax (financial) adviser. Mitch attends a training session provided by Slick Software. Mitch uses the Deluxe Slick software package to assist him in providing tax (financial) advice services to clients.

The TPB considers that while this training session is indirectly relevant to the tax (financial) advice services Mitch provides, it will be considered as relevant CPE because effective and accurate use of the software package impacts on the skills Mitch needs to competently provide tax (financial) advice services to clients.

16 See paragraph 32 of this TPB(EP) for examples of relevant CPE activities.

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Example 4

Nick is a registered tax (financial) adviser. Nick attends a two hour seminar regarding a new financial product that he intends to sell as part of the tax (financial) advice services he provides. The seminar includes a 15 minute discussion regarding the various taxation implications concerning the financial product.

As the financial product is relevant to the tax (financial) advice services that Nick provides, Nick can claim his attendance at the seminar as relevant CPE. The TPB considers that Nick can claim the full two hours as relevant CPE, despite the seminar covering topics other than taxation.

Example 5

Klay is a registered tax (financial) adviser. Klay uses web-based applications to support him in providing tax (financial) adviser services to his clients. Klay completes a cyber-security awareness training package.

The TPB considers this training package as relevant CPE because effective and prudent use of the web-based applications impacts on the skills Klay needs to competently provide tax (financial) advice services to clients.

30. The completion of a primary course of education which has been used for thepurpose of gaining initial registration as a tax (financial) adviser, or renewing suchregistration, will not generally constitute a CPE activity. However, a subsequent orhigher level of course relevant to the tax (financial) advice services provided maybe acceptable.

31. During periods of legislative change or where changes occur to a registered tax(financial) adviser’s professional practice, registered advisers should completesufficient CPE to meet their knowledge and skill requirements. It is essential forregistered tax (financial) advisers to maintain their knowledge and skills in order toprovide competent and contemporaneous services to clients.

Example 6

Clarke is a registered tax (financial) adviser. Clarke completes a unit of study through the Smart State TAFE that deals with the provisions of the TASA, including the Code, and its practical application for tax (financial) advisers and their practice.

This unit of study may count as CPE because Clarke is enhancing his knowledge of the regulatory regime in which he operates. Having knowledge of a registered tax (financial) adviser’s obligations under the TASA will benefit Clarke in providing tax (financial) advice services to the public.

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CPE activities

32. Examples of relevant CPE activities include:

(a) seminars, workshops, webinars, courses and lectures

(b) structured conferences and discussion groups (including those completed by telephone or video conference)

(c) tertiary courses provided by universities, registered training organisations (RTOs), other registered higher education institutions or other approved course providers (including distance learning)17

(d) other educational activities, provided by an appropriate organisation

(e) research, writing and presentation by the registered tax (financial) adviser of technical publications or structured training

(f) peer review of research and writing submitted for publication or presentation in structured training

(g) computer/internet-assisted courses, audio or video packages

(h) attendance at structured in-house training on tax related subjects by persons or organisations with suitable qualifications and/or practical experience in the subject area covered

(i) attendance at appropriate TPB and/or ATO seminars and presentations

(j) relevant CPE activities provided to members and non-members by a recognised professional association

(k) a unit of study or other CPE activity on the TASA, including the Code.

Example 7

Amy is a registered tax (financial) adviser who works for a major financial services firm. Amy is required by her employer to attend CPE provided by a director of the firm, who specialises in superannuation. The director presents a session on the taxation of complying superannuation funds, approved deposit funds, pooled superannuation trusts and providers of retirement savings accounts governed by Part 3-30, Division 295 of the Income Tax Assessment Act 1997 (ITAA 1997), followed by an interactive discussion and consideration of a complex hypothetical case study.

As the CPE activity is structured and provided by a suitably qualified person, Amy may count this session as CPE.

33. The TPB expects that not more than 25 per cent of CPE over a registered tax (financial) adviser’s CPE period should be completed through relevant technical or professional reading.

34. The provision of a tax (financial) advice service will not, of itself, constitute a CPE activity.

17

See also paragraph 30 of this TPB(EP).

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Recognition of other CPE

35. The TPB acknowledges the CPE or CPD18 requirements imposed on registered

tax (financial) advisers who are members of a relevant recognised professional

association19 (recognised tax (financial) adviser association or recognised tax

agent association) as a condition of their membership. Where a registered tax

(financial) adviser is a member of a recognised tax (financial) adviser association

or recognised tax agent association, the TPB will accept the registered tax

(financial) adviser’s compliance with their association’s CPE / CPD requirements,

subject to the following:

• the activities completed must be relevant to the tax (financial) advice

services provided

• the activities completed must be provided by persons or organisations with

suitable qualifications and/or practical experience in the subject area

• the CPE / CPD completed meets the minimum level of CPE as specified in

paragraphs 17 to 25 of this TPB(EP).

Example 8

Tim is a member of a recognised tax (financial) adviser association. As a member, Tim is required to complete 90 hours of CPE over three years. Tim’s practice primarily deals with superannuation and life insurance matters.

Tim attends a CPE seminar provided by the association in relation to its potential merger with an international accounting association.

As this seminar is not relevant to the tax (financial) advice services provided by Tim, the seminar would not be considered to be relevant CPE by the TPB.

36. The TPB recognises that members of a recognised professional association may have a different CPE period as compared to the three year period under the TPB’s CPE requirements. Further, registered tax (financial) advisers may have a different CPE period for the purposes of compliance with relevant provisions of the Corporations Act 2001.

37. The TPB expects that at the end of a registered tax (financial) adviser’s CPE period, a registered adviser who is relying on the CPE completed for a recognised professional association, or for compliance with the Corporations Act 2001, should be able to demonstrate that they have complied with their CPE obligations with the recognised professional association and/or the Corporations Act 2001. In doing so, they will also comply with their current TPB CPE obligations.

38. In any case, the TPB considers that not less than seven hours of relevant CPE by tax (financial) advisers, and not less than five hours of relevant CPE by conditional advisers, should be completed in any given year.

18

The term CPE is used in this TPB(EP) as this is how the concept of professional development is referred to

in the Tax Agent Services Act 2009, the Tax Agent Services Regulations 2009 and the Explanatory Memorandum to the Tax Agent Services Bill 2008. 19

See the Key terms section of this TPB(EP).

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Recording CPE activities

39. The TPB considers that an important aspect of maintaining knowledge and skills involves recording and reflecting on CPE completed. Effective record keeping allows a registered tax (financial) adviser to ensure that an appropriate amount and type of CPE is completed in relation to the areas in which a registered tax (financial) adviser practises.

40. Registered tax (financial) advisers should ensure that a contemporaneous record and evidence of their completed CPE activities is maintained.

41. To assist, the TPB has developed and made available on its website at www.tpb.gov.au an appropriate CPE log for registered tax (financial) advisers to use. The TPB does not expect that an additional CPE log or record be maintained where a record is already maintained to satisfy the registered tax (financial) adviser’s membership requirements of a recognised professional association, or where an appropriate record is maintained to satisfy relevant obligations under the Corporations Act 2001.

42. Records should be kept for a period of six years, unless the registered tax (financial) adviser is a member of a recognised professional association in which case records should be kept in accordance with the requirements of the relevant association.

43. The TPB will require confirmation of CPE completed upon renewal of registration as a tax (financial) adviser. This verification may be in the form of registered tax (financial) advisers having to provide a record of their CPE activities (such as a CPE log) with their renewal application form, or such other form of verification (that is, declaration) that the TPB considers appropriate.

44. In addition, the TPB may from time to time request evidence or confirmation of CPE completed by registered tax (financial) advisers during their period of registration.20

Example 9

Rashard attends a seminar provided by a recognised professional association in relation to changes to aspects of the capital gains tax regime. Rashard records the particulars of the course (name, date and time) and course provider on his electronic CPE log.

As Rashard receives a brochure of the seminar and email confirmation of his enrolment, he keeps these records as evidence of CPE completed. The TPB considers that Rashard has taken the appropriate steps to record his CPE.

Alternatively, if Rashard enrolled in the seminar but did not attend it, Rashard would not be able to count the seminar as a completed CPE activity.

20

The TPB acknowledges that a registered tax (financial) adviser may be audited by a recognised professional association of which they are a member. The TPB may consider the outcome of such an audit as evidence of CPE completed.

http://www.tpb.gov.au/

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Extenuating circumstances

45. The TPB acknowledges that there may be extenuating circumstances where a registered tax (financial) adviser is unable to complete the minimum level of CPE in their CPE period, or in any given year of their CPE period. Registered tax (financial) advisers should exercise their professional judgment in this regard and should keep appropriate contemporaneous records of such circumstances.

46. Examples of situations where it might not be possible for a registered tax (financial) adviser to complete the minimum level of CPE include:

(a) illness and/or disability

(b) financial or other hardship

(c) natural disaster

(d) other relevant circumstances.

47. In these types of circumstances, the TPB will consider appropriate relief from the minimum level of CPE for registered tax (financial) advisers, provided the registered tax (financial) adviser can demonstrate that they have attempted to use the flexibility of their CPE period to manage any extenuating circumstances to comply with the TPB’s CPE requirements.

Example 10

Mya is a registered tax (financial) adviser running a sole practice in the Brisbane suburbs. In early 2015, Mya is involved in a car accident and sustains serious injury. Mya is unable to work for six months and manages to complete only three hours of CPE for that year.

Mya completes 30 hours of CPE in the second year and 27 hours of CPE in the third year.

In this case, the TPB will have appropriate regard to Mya’s personal circumstances and accept that Mya has completed CPE that meets the TPB’s requirements, despite Mya not having completed the minimum seven hours of CPE in the first year.

48. The TPB notes that while the minimum amount of CPE may not, in certain circumstances, be met, registered tax (financial) advisers should be mindful that their obligation under the Code to maintain knowledge and skills relevant to the tax (financial) advice services provided cannot be abrogated. Therefore, registered tax (financial) advisers may use the flexibility of their CPE period (three years) to manage any extenuating circumstances. Registered tax (financial) advisers should also be mindful of the prescribed relevant experience requirements for renewal of registration.

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Example 11

Hank is a registered tax (financial) adviser residing in Coober Pedy, South Australia. He provides tax (financial) advice services predominantly to individuals who work in opal mines.

Hank rarely has time to travel to Adelaide to attend face-to-face training and only makes a modest income. However, Hank is careful to maintain his knowledge and skills by completing online learning packages and participating in online discussion groups as well monitoring updates on the ATO website and completing technical reading.

During a typical CPE period Hank completes two face-to-face seminars (total of seven hours), participates in structured online discussion groups (total of 36 hours), completes one internet assisted course (total of two hours) and undertakes 15 hours of technical reading.

The TPB considers that Hank has completed the minimum level of CPE.

Compliance with the Code of Professional Conduct

49. Completion of at least the minimum level of relevant CPE outlined in this TPB(EP) will be considered by the TPB as one of the factors which would evidence compliance by a registered tax (financial) adviser with relevant items of the Code, contained in section 30-10 of the TASA.

50. It is noted that if the TPB is satisfied, after conducting an investigation under Subdivision 60-E of the TASA, that a registered tax (financial) adviser has failed to comply with the Code, the TPB may, among other things, give the tax (financial) adviser an order under section 30-20 of the TASA to take specified actions. This may include completing a course of education or training.

51. For further information in relation to compliance with the TASA, including the Code, visit the TPB’s website at www.tpb.gov.au.

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Key terms

BAS agent This term refers to an entity registered by the TPB as a BAS agent under section 20-25 of the Tax Agent Services Act 2009. To be registered as a BAS agent the entity must, among other things, meet the requirements relating to qualifications and experience listed in Part 1 of Schedule 2 to the Tax Agent Services Regulations 2009.

BAS service This term has the meaning given to it in section 90-10 of the Tax Agent Services Act 2009. A BAS service is a ‘tax agent service’ - see ‘tax agent service’ in this section.

Code of Professional Conduct (Code) The Code is contained in section 30-10 of the Tax Agent Services Act 2009. It sets out standards of professional and ethical conduct with which registered tax agents, BAS agents and tax (financial) advisers must comply.

Conditional adviser This term refers to a registered tax (financial)

adviser who has a condition imposed on their registration under subsection 20-25(5) of the Tax Agent Services Act 2009. The condition will relate to the subject area in which the tax (financial) adviser provides tax (financial) advice services.

CPE Continuing professional education (CPE) is also commonly referred to by professional associations as continuing professional development.

CPE period A registered tax financial adviser’s CPE period is generally three years. A registered tax financial adviser’s CPE period will begin on the date the adviser is registered and ends on the date the adviser’s registration expires in respect of that registration.

Recognised professional association A recognised professional association is an organisation that applies to the TPB for recognition and the TPB decides to recognise the association (as a recognised tax agent association, recognised BAS agent association and/or recognised tax (financial) adviser association) under the Tax Agent Services Regulations 2009.

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Tax agent This term refers to an entity registered by the TPB as a tax agent under section 20-25 of the Tax Agent Services Act 2009. To be registered as an individual tax agent the entity must, among other things, meet the requirements relating to qualifications and experience listed in Part 2 of Schedule 2 to the Tax Agent Services Regulations 2009.

Tax agent service This term has the meaning given to it in section 90-5 of the Tax Agent Services Act 2009. The definition of tax agent service includes BAS services and tax (financial) advice services.

Tax (financial) advice service This term has the meaning given to it in section 90-15 of the Tax Agent Services Act 2009. A tax (financial) advice service is a ‘tax agent service’ - see ‘tax agent service’ in this section.

Tax (financial) adviser This term refers to an entity registered by the TPB as a tax (financial) adviser under section 20-25 of the Tax Agent Services Act 2009.

Related documents Explanatory papers

TPB(EP) 04/2012: Continuing professional education policy requirements for registered tax and BAS agents from 30 June 2013

www.tpb.gov.au 1

Information sheet

Disclaimer

This is a Tax Practitioners Board (TPB) Information sheet (TPB(I)). It is intended to be for information only. While it seeks to provide practical assistance and explanation, it does not exhaust, prescribe or limit the scope of the TPB’s powers in the Tax Agent Services Act 2009 (TASA).

In addition, please note that the principles and examples in this TPB(I) do not constitute legal advice and do not create additional rights or legal obligations beyond those that are contained in the TASA or which may exist at law. Please refer to the TASA for the precise content of the legislative requirements.

Document history

The TPB released this document as a draft Information sheet in the form of an Exposure draft on 24 September 2014. The TPB invited comments and submissions in relation to the information in it. The closing date for the submissions was 24 October 2014. The TPB considered the submissions made and published the TPB(I) on 23 December 2014.

On 26 March 2018, the TPB updated this TPB(I) to:

• delete obsolete references to different registration pathways and corresponding timeframes (including notification and transitional options)

• provide additional guidance for Australian financial services licensees.

Issued: 23 December 2014

Last updated: 26 March 2018

TPB Information Sheet TPB(I) 23/2014 Sufficient number requirement for partnership and company registered tax (financial) advisers

www.tpb.gov.au 2

Introduction

1. All partnerships and companies seeking registration or renewal of registration as a tax (financial) adviser need to meet the sufficient number requirement. This means that these entities will need to have a sufficient number of individuals, being registered tax agents or registered tax (financial) advisers, to provide tax (financial) advice services to a competent standard, and to carry out supervisory arrangements.1

2. This TPB Information Sheet (TPB(I)) has been prepared by the TPB to assist entities in understanding the TPB’s approach to the sufficient number requirement.

3. Whether a particular partnership or company satisfies the sufficient number requirement is a question of fact. This means that each application for registration or renewal will need to be considered on a case-by-case basis having regard to the entity’s facts and circumstances.

Sufficient number requirement


4. Partnerships and companies seeking registration or renewal of registration as a tax (financial) adviser will need to meet all the standard eligibility criteria under section 20-5 of the Tax Agent Services Act 2009 (TASA).

5. Under subparagraphs 20-5(2)(c)(iii) and 20-5(3)(d)(iii) of the TASA, one of these standard eligibility criteria is that the partnership or company has:

(iii) in the case of registration as a registered tax (financial) adviser—taking into account the requirements of paragraphs 912A(1)(d) to (f) of the Corporations Act 2001, a sufficient number of individuals, being registered tax agents or registered tax (financial) advisers, to provide tax (financial) advice services to a competent standard, and to carry out supervisory arrangements.

1 It is noted that partnerships and companies do not need to meet the sufficient number requirement for the purposes of

registration under the notification option or transitional option under Items 49 and 50 in Schedule 1 to the Tax Laws Amendment (2013 Measures No. 3) Act 2014 respectively.

www.tpb.gov.au 3

6. Paragraphs 912A(1)(d) to (f) of the Corporations Act 2001 provide that2:

(1) A financial services licensee must:

(a) …

(d) unless the licensee is a body regulated by APRA--have available adequate resources (including financial, technological and human resources) to provide the financial services covered by the licence and to carry out supervisory arrangements; and

(e) maintain the competence to provide those financial services; and

(f) ensure that its representatives are adequately trained, and are competent, to provide those financial services; and

(j) …

Who can form the sufficient number?

7. The registered individual tax agents and tax (financial) advisers that a company or

partnership is required to have, for the purpose of satisfying the sufficient number requirement, is unique and can be wide-ranging having regard to the company or partnership’s particular circumstances. The individuals may include partners, directors, employees, contractors and staff provided under a service trust arrangement3. Further, these individuals may also include the financial services licensee’s representatives,4 responsible managers, compliance officers and regional/line managers.

Meaning of ‘competent standard’ and ‘supervisory arrangements’ 8. The phrases ‘competent standard’ and ‘supervisory arrangements’ are not defined in the

TASA. As a result they take on their ordinary meaning and are broadly considered to be arrangements aimed at directing, overseeing and checking the tax (financial) services performed on behalf of a registered tax (financial) adviser to ensure those services are provided competently.

Competent standard 9. The Macquarie Dictionary (2009) provides the following definition:

Competent

1. Properly qualified; capable

2. Fitting, suitable or sufficient for the purpose; adequate.

2 For more information in relation to the requirements under subsection 912A(1) of the Corporations Act 2001, refer to the

Australian Securities and Investment Commission’s Regulatory Guide RG105 Licensing: Organisation competence.

3 See paragraph 2.56 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.

4 ‘Representatives’ has the meaning given by paragraph (a) of the definition of that expression in section 910A of the

Corporations Act 2001.

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_services_licensee

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#body_regulated_by_apra

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#body_regulated_by_apra

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s880b.html#adequate

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761a.html#provide

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_service

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601waa.html#licence

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#arrangement



http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s960.html#representative

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s880b.html#adequate



www.tpb.gov.au 4

10. Further, the Code of Professional Conduct contained in section 30-10 of the TASA provides some guidance in relation to the meaning of competence. In particular, subsections 30-10(7) to (10) of the TASA, which all fall under the key principle of ‘competence’, require that tax (financial) advisers must:

• ensure the tax (financial) advice services they provide, or are provided on their behalf, are provided competently

• maintain knowledge and skills relevant to the tax (financial) advice services they provide

• take reasonable care to ascertain clients’ state of affairs

• take reasonable care to ensure that taxation laws are applied correctly.

Supervisory arrangements

11. The Macquarie Dictionary (2009) provides the following definitions:

Supervise 1. to oversee (a process, work, workers, etc) during execution or performance;

superintend; have the oversight and direction of.

Supervision

1. the act or function of supervising; oversight; superintendence.

12. Further, the TPB is of the view that the following considerations may be relevant in

determining whether there are appropriate supervisory arrangements in place:

• the level and depth of oversight over the provision of tax (financial) advice services by staff. While it is not necessary that all work or client interviews be monitored, a substantial degree of oversight (which may or may not include physical)5 of the staff and what they do is necessary and this will vary according to the skills and experience of the staff and the complexity of the tax (financial) advice service being provided

• periodic and ‘spot’ checks of relevant financial advice material, such as Statement of Advice, prepared by staff

• quality assurance mechanisms such as conducting regular audits of work performed or undertaken by staff

• the degree of control exercised by a tax (financial) adviser over the way in which staff carry out their work.

5 This recognises those practices that may be geographically dispersed and where face-to-face supervision will not always be a

viable option.

www.tpb.gov.au 5

Determining the ‘sufficient number’

13. There is no set formula for determining the sufficient number of registered individual tax agents or tax (financial) advisers a partnership or company is required to have to satisfy this requirement.

14. However, the TPB will take into account the requirements of paragraphs 912A(1)(d) to (f) of the Corporations Act 2001, which relate to:

• having available adequate resources (including financial, technological and human resources) to provide the financial services covered by the license and to carry out supervisory arrangements

• maintaining the competence to provide those financial services

• ensuring that its representatives are adequately trained, and are competent, to provide those financial services

15. In addition to those requirements under the Corporations Act 2001, the TPB will also take into account other factors, including:

• size of the business (for example, turnover, number of clients and number of relevant staff)

• the types of tax (financial) advice services being offered

• number of qualified and experienced staff

• the frequency of appropriate training and development activities for all relevant staff

• the level (and type) of technology or software used

• the supervisory arrangements (for example, quality control practices and escalation procedures) in place

• any conditions imposed by the TPB on the entity’s registration based on the qualifications and experience of its staff.6

6 Some of these factors are taken from paragraph 2.56 of the Explanatory Memorandum to the Tax Agent Services Bill 2008.

www.tpb.gov.au 6

16. The TPB recognises that the business models and structures in the financial services industry are different to those commonly found with tax and BAS agents. This is in part due to the licensing requirements under the Corporations Act 2001. Existing business models and structures in the financial services industry that the TPB is aware of include:

• licensees with multiple practices operating under one licence

• licensees operating with authorised representatives only (which may include corporate authorised representatives and/or individual authorised representatives), employee representatives only or a combination of both

• licensees with a small number of representatives operating a salaried advice business

• corporate authorised representatives authorised by one of the above licensee structures

• authorised representatives, often as sole traders, operating a financial planning business under the license of a larger licensee.

17. Taking into account the different business models and structures outlined in paragraph 16 and the numerous combinations in relation to the factors listed in paragraph 15, the TPB is of the view that it is ultimately a matter for the partnership or company to satisfy the TPB that it meets the sufficient number requirement. In particular, the TPB is of the view that partnerships and companies are best placed to assess how many registered individual tax agents or tax (financial) advisers their business requires to ensure that tax (financial) advice services are provided competently and to ensure there are supervisory arrangements in place.7

7 The requirement for a partnership or company to demonstrate to the TPB that it meets the sufficient number requirement

applies even if all employees of the partnership or company are registered because the TPB will still require details of each of

the employees.

www.tpb.gov.au 7

18. However, the TPB provides the following additional guidance for AFS licensees:

a. AFS licensee operates under a corporate authorised representative or individual authorised representative business model only

An AFS licensee’s sufficient number requirement will be met where every entity under that licensee that is required to be registered with the TPB is registered. This means every corporate authorised representative and every individual authorised representative that provides tax (financial) advice services for a fee or reward is registered with the TPB8. In this situation, each individual authorised representative and those individuals who make up the sufficient number requirement for their respective corporate authorised representative will form and satisfy the AFS licensee’s sufficient number requirement.

This is because all those individuals should already be registered with the TPB as they are providing tax (financial) advice services for a fee or reward.

This approach should not result in the AFS licensee having to register more individuals to assist in satisfying their sufficient number requirement.

Example ABC Pty Ltd is an AFS licensee and operates a business model which comprises of five corporate authorised representatives and three sole trader individual authorised representatives (all of which provide tax (financial) advice services for a fee or reward). ABC Pty Ltd does not have any employee representatives.

In this situation, ABC Pty Ltd’s sufficient number requirement will be met through all of:

• the individuals that make up the corporate authorised representatives sufficient number; and

• the sole trader individual authorised representatives9.

Given who will comprise the sufficient number requirement for ABC Pty Ltd, ABC Pty Ltd should not have to register any additional individuals to assist in satisfying their sufficient number requirement. However, should one of ABC Pty Ltd.’s corporate authorised representatives or sole trader individual authorised representatives no longer be registered with the TPB (and continue to provide tax (financial) advice services, on behalf of ABC Pty Ltd, for a fee or reward), ABC Pty Ltd will no longer meet the sufficient number requirement. In that case, the AFS licensee must notify the TPB of this and advise how they will meet the sufficient number requirement going forward. This information will then be considered by the TPB.

8 This does not include individuals who are not providing tax (financial) advice services in their own right, but instead are

providing, under a supervisory model, tax (financial) advice services on behalf of another registered tax (financial) adviser.

9 As these authorised representatives are sole trader individuals, they do not need to meet the sufficient number test for their

own registration (regardless of whether they have employees or not). However, the sole trader individuals will form the sufficient

number requirement for their AFS licensee only.

www.tpb.gov.au 8

b. AFS licensee operates under a business model that includes employee

representatives and authorised representatives (individuals and/or including corporate authorised representatives) Where an AFS licensee operates a business model that includes employee representatives and/or authorised representatives (individuals and/or including corporate authorised representatives) that are not all registered with the TPB, the sufficient number requirement for the AFS licensee must be met through individuals within the AFS licensee structure itself.

Example 123 Pty Ltd is an AFS licensee and operates a business model which comprises of 20 employee representatives and four sole trader individual authorised representatives. The employee representatives all provide tax (financial) advice services on behalf of 123 Pty Ltd and the sole trader individual authorised representatives also provide tax (financial) advice services for a fee or reward.

In this situation, 123 Pty Ltd.’s sufficient number requirement will need to be met through individuals within the AFS licensee structure itself. This includes partners, directors, employees, contractors and staff provided under a service trust arrangement. Further, these individuals may also include the AFS licensee’s employee representatives, responsible managers, compliance officers and regional/line managers. However, these individuals must meet the ‘competent standard’ and ‘supervisory arrangements’ requirements as referred to in paragraph x and y.

The fact that the four sole trader individual authorised representatives are already registered with the TPB with a relevant considering in determining how many individuals within 123 Pty Ltd’s structure will make up the licensee’s sufficient number requirement.

19. Having regard to the information in this TPB(I) (particularly paragraphs 15 and 16), when a partnership or company seeks registration or renewal of registration with the TPB, we will ask the applicant the following types of questions on their application form:

• Does your company/partnership have a sufficient number of registered individual tax agents or tax (financial) advisers to provide tax (financial) advice services to a competent standard and to carry out supervisory arrangements?

• How many registered individual tax agents or tax (financial) advisers does your company/partnership have?

• Provide details of supervisory arrangements in place for ensuring tax (financial) advice services are provided competently, for example: size of practice, number and experience of relevant staff (including representatives), how supervision and control is conducted.

20. We will then review the responses to the above questions, and in most cases, accept the information provided by the applicant. However, where a potential issue or discrepancy arises, we will contact the applicant for further information.

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Explanatory Paper TPB(EP) 05/2014

Professional indemnity insurance requirements for tax (financial) advisers

This Tax Practitioners Board explanatory paper (TPB(EP)) is intended as information only. It provides a

detailed explanation of the TPB’s professional indemnity (PI) insurance requirements for tax (financial)

advisers. Further, this TPB(EP) explains the TPB’s interpretation of the provisions in the Tax Agent Services

Act 2009 (TASA) relating to the PI insurance requirements, translating these provisions into practical

principles that can be applied by the profession.

Currency of details of the PI insurance requirement

The TPB’s PI insurance requirements for tax (financial) advisers will commence from 1 July 2014. The TPB

intends to review the details of its PI insurance requirements five years after the finalisation of the TPB’s

revised requirements, with a view to making any necessary refinements for the future. However, the TPB

reserves the right to amend the requirements at any point before any formal review if it becomes necessary.

Key terms

There is a table at the end of the document which lists a number of key terms and the meaning they have in

this document. Please refer to page 21 for the key terms table.

Document history

The TPB released this document as a draft explanatory paper in the form of an Exposure draft on 7

March 2014. The TPB invited comments and submissions in relation to the information in it. The

closing date for submissions was 16 April 2014. The TPB considered the submissions made and now

publishes the following TPB(EP).

Issued: 30 June 2014

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Table of contents

Overview ............................................................................................................................................. 3

The requirement to maintain professional indemnity (PI) insurance that meets the TPB’s

requirements ........................................................................................................................................ 3

The legislative framework .................................................................................................................... 5

Background: regulation of financial advisers who provide tax advice ................................................. 7

Policy objective .................................................................................................................................... 7

The TPB’s PI insurance requirements ............................................................................................. 8

The TPB’s general approach ............................................................................................................... 8

Adequate PI insurance cover ............................................................................................................ 12

What is ‘adequate’ ............................................................................................................................. 12

Assessing adequacy .......................................................................................................................... 13

Compliance systems ......................................................................................................................... 15

Authorised insurers ............................................................................................................................ 15

What the policy should cover and include ......................................................................................... 15

Applications for alternative arrangements to be considered as meeting the TPB’s PI insurance

requirements ...................................................................................................................................... 18

Key terms ......................................................................................................................................... 21

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Overview

The requirement to maintain professional indemnity (PI) insurance that meets the TPB’s requirements

Section 20-5 of the Tax Agent Services Act 2009 (TASA) provides an eligibility requirement for

registration and renewal of registration that applicants ‘maintain, or will be able to maintain, PI insurance

that meets the Board’s requirements’. The TASA provides that:

Paragraph 20-5(1)(c)

the individual maintains, or will be able to maintain, professional indemnity insurance that meets the Board’s requirements

Paragraph 20-5(2)(d)

the partnership maintains, or will be able to maintain, professional indemnity insurance that meets the Board’s requirements.

Paragraph 20-5(3)(e)

the company maintains, or will be able to maintain, professional indemnity insurance that meets

the Board’s requirements.

Furthermore, subsection 30-10(13) of the Code of Professional Conduct (Code) in the TASA provides:

You must maintain professional indemnity insurance that meets the Board’s requirements.

Summary of the TPB’s PI insurance requirements

The TPB’s PI insurance requirements are outlined in this document. The TPB notes that:

The primary purpose of the TPB’s PI insurance requirements is to ensure tax (financial)

advisers that are registered with the TPB have PI insurance that meets the TPB’s requirements

for the tax (financial) advice services they provide.

In determining the TPB’s PI insurance requirements, the TPB has given detailed consideration

to the compensation requirements imposed on Australian Financial Services (AFS) licensees by

the Australian Securities and Investments Commission (ASIC). In doing so, the TPB has,

wherever possible, adopted a significant number of ASIC requirements to avoid duplication.

However, there are two key differences between the TPB and ASIC’s requirements:

o The TPB requires PI insurance coverage to include tax advice. ASIC’s requirements do

not extend to tax advice.

o The PI insurance requirements under the TASA apply to all entities that are registered

with the TPB, not just to AFS licensees.

The TPB understands that generally AFS licensees are required to have adequate

compensation arrangements (which is generally PI insurance cover) under section 912B of the

Corporations Act 2001. However, the TPB considers that an extension of the existing PI

insurance held by AFS licensees who are tax (financial) advisers, so that the PI insurance held

covers the provision of tax advice, will generally meet the TPB’s minimum requirements.

Accordingly, provided that such PI insurance cover also covers the provision of tax advice, the

tax (financial) adviser does not need to have a separate policy or multiple policies to meet the

TPB’s requirements.

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Further, the TPB will approve certain self-insurance arrangements1 as PI insurance that meets

its requirements, in a manner consistent with that adopted by ASIC.

The TPB specifically considered the application of its PI insurance requirements to tax

(financial) advisers who derive a low turnover. Turnover means the total amount of fees from

the provision of services, excluding GST. The TPB considers that it is important for consumer

protection that tax (financial) advisers maintain adequate PI insurance cover that covers the

provision of tax (financial) advice services to clients, regardless of turnover.2

Tax (financial) advisers who do not provide tax (financial) advice services for a fee or other

reward are not required to have PI insurance cover in order to meet the TPB’s PI insurance

requirements.

In relation to charging or receiving a fee for providing tax (financial) advice services, a tax

(financial) advice service is taken to be provided for a fee even if the fee for the service is

bundled with other fees for other services (for example, financial planning services or advice).

Tax (financial) advisers who only receive an honorarium (or honorary reward) for tax (financial)

advice services will not be required to have PI insurance in order to meet the TPB’s

requirements.3

A tax (financial) adviser will meet the TPB’s PI insurance requirements if they do not hold their

own PI insurance policy but they are adequately covered under a policy held by another

registered tax (financial) adviser entity.

If an employee is providing in-house tax (financial) advice services to their employer, the

employee will not be required to have PI insurance in order to meet the TPB’s requirements.

It is important to note that TPB’s PI insurance requirements in no way affect or modify an AFS

licensee’s or authorised representative’s requirements to have adequate compensation

arrangements in place for the purposes of their licensing with ASIC.

The TPB also understands that AFS licensees are required to have internal dispute resolution

(IDR) procedures and to be members of an ASIC-approved external dispute resolution (EDR)

scheme, under the Corporations Act 2001. The TPB’s regulatory function does not seek to

replicate or duplicate the requirements relating to IDR and EDR, nor does it apply independently

from the dispute resolution processes in the Corporations Act 2001.

Implementation arrangements

The TPB’s objective

The TPB will administer the PI insurance requirement to maximise its potential to achieve the policy

objective.

The PI insurance requirement will improve the standard of compensation arrangements in place in the

profession by establishing a general requirement for PI insurance cover for all registered tax (financial)

advisers.

The TPB’s approach to implementation

To achieve its objective, the TPB will take a staged approach to administering these requirements,

including a period of implementation. This is because when any new regulatory requirement is

introduced, there will necessarily need to be a period of adjustment. The TPB understands that

insurance policies are generally written for one year periods. Time will be required for existing policies to

lapse and new policies or products to be developed and agreed upon.

1 ASIC’s Regulatory Guide 126: Compensation and insurance arrangements for AFS licensees provides that ‘self-insurance’

relates to setting aside a calculated amount of money to form a source of compensation for potential claims. 2 Lengyel and Tax Practitioners Board [2012] AATA 134.

3 An honorarium includes an honorary reward for voluntary services or a fee for professional services voluntarily rendered.

For example, the voluntary provision of tax (financial) advice services for a not-for-profit entity.

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Table 1: Staged approach

PI insurance implementation period

1 July 2014 – 31 December 2016

PI insurance long-term requirements

From 1 January 2017

Any new policies taken out by tax (financial) advisers who are subject to the TPB’s PI insurance requirement must meet the TPB’s requirements.

If a tax (financial) adviser has a current PI insurance policy that does not meet the TPB’s requirements, the policy can continue during the implementation period. However, upon lapse of that policy or by 1 January 2017, whichever occurs first, a tax (financial) adviser must obtain a policy that complies with the TPB’s requirements.

By 1 January 2017 all tax (financial) advisers who

are required to have PI insurance cover must have

PI insurance cover that complies with the TPB’s

requirements.

What this means for tax (financial) advisers

Upon commencement of the implementation period, which is 1 July 2014, if a tax (financial) adviser

already has PI insurance cover, they may maintain that cover until the end date of the policy. After the

current policy lapses, the tax (financial) adviser will then need to obtain PI insurance cover that meets

the TPB’s requirements, in preparation for the long-term requirement.

Any registered tax (financial) adviser who is obtaining PI insurance cover (for the first time or renewing

their policy) during the period 1 July 2014 to 31 December 2016 (implementation period) will be required

to obtain PI insurance cover that meets the TPB’s requirements.

Therefore, from the commencement of the TPB’s requirement on 1 July 2014, all registered tax

(financial) advisers will be required to have PI insurance cover that meets the TPB’s requirements,

unless their existing policy is continuing during the implementation period.

What this means for consumers of tax (financial) advice services

The approach the TPB has adopted to administering the PI insurance requirement means that all tax

(financial) advisers will generally need to have some form of PI insurance coverage from 1 July 2014 in

respect of the provision of tax (financial) advice services. As a result, consumers should have greater

protection against losses than they did before the commencement of the PI insurance requirement, to

the extent that any tax (financial) advisers may not have had such cover for the tax (financial) advice

services being provided.

The legislative framework

What ‘maintain’ means

The TPB will consider a registered tax (financial) adviser who is required to have PI insurance as

maintaining PI insurance that meets the TPB’s requirements if:

the tax (financial) adviser holds a PI insurance policy that meets the minimum requirements set

out in this TPB(EP);

the tax (financial) adviser is covered by a PI insurance policy that meets the minimum

requirements set out in this TPB(EP), that is held by another tax (financial) adviser; or

the tax (financial) adviser has an alternative arrangement that has been approved by the TPB,

as described in this TPB(EP).

As noted earlier, if a tax (financial) adviser is covered by existing PI insurance to meet the adequate

compensation arrangements obligations under section 912B of the Corporations Act 2001, the tax

(financial) adviser will not need a separate PI insurance policy in order to meet the TPB’s requirements,

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as long as the PI insurance covers the provision of tax advice and otherwise meets the TPB’s minimum

requirements.

Further, the TPB understands that, generally, an AFS licensee will hold PI insurance that covers their authorised representatives. If a tax (financial) adviser who is an authorised representative does not hold its own PI insurance but is covered by the PI insurance that meets the TPB’s requirements held by an AFS licensee, the authorised representative will meet the TPB’s PI insurance requirements.

What ‘will be able to maintain’ means

The purpose of the wording ‘will be able to maintain’ is to accommodate those new applicants who are

applying for registration but who, at the time of applying for registration, do not maintain PI insurance

that meets the TPB’s requirements. 4

The following example illustrates the purpose of the words ‘will be able to maintain’:

Ted applies to the TPB for registration as a registered tax (financial) adviser. In addition to

having to satisfy the TPB that he is a fit and proper person and that he can meet the registration

requirements (prescribed by the regulations), Ted will need to satisfy the TPB that he will be

able to maintain PI insurance that meets its requirements as soon as he is registered.

Assuming that the TPB grants Ted‘s application and he becomes a registered tax (financial)

adviser, three years later Ted applies to the TPB to renew his registration.

As Ted already has PI insurance, he need only satisfy the TPB that this insurance meets its

requirements.

In circumstances where an applicant for registration does not maintain PI insurance that meets the

TPB’s requirements at the time of applying for registration and indicates to the TPB that they will be able

to maintain PI insurance once registered, the TPB will consider the applicant to meet its PI insurance

registration requirement.

If the applicant is granted registration, the TPB will generally require that the now registered tax

(financial) adviser provides the TPB with details of how they meet the TPB’s requirements within 14 days

from the date that the tax (financial) adviser receives notification that their application for registration has

been granted.

What are the TPB’s requirements for tax (financial) advisers who do not receive a fee or other

reward?

The TPB understands that some tax (financial) advisers do not receive a fee or other reward for the tax

(financial) advice services that they provide, for example:

employee tax (financial) advisers who provide tax (financial) advice on behalf of their employer

registered tax (financial) adviser;

employee tax (financial) advisers who provide in-house tax (financial) advice services to their

employers; or

contractor tax (financial) advisers who provide tax (financial) advice services on behalf of

another registered tax (financial) adviser.

4 See example 3.16 in the Explanatory Memorandum to the Tax Laws Amendment (2013 Measures No. 2) Bill 2013, which amended the PI

insurance requirements in the TASA from 30 June 2013.

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The TPB will consider employee and contractor registered tax (financial) advisers (as described above)

who do not, in their own right, receive a fee or other reward for the tax (financial) advice services that

they provide as meeting the TPB’s requirements if they do not hold their own PI insurance policy, but are

covered by another registered tax (financial) adviser’s policy.

Background: regulation of financial advisers who provide tax advice

The TPB has considered the PI insurance requirements that all tax (financial) advisers will need to meet

in order to be eligible for registration under the TASA, and to comply with subsection 30-10(13) of the

Code.

In any industry or profession, from time to time, clients might suffer loss due to an act, error or omission

by a service provider. In relation to tax (financial) advisers, there needs to be a mechanism to ensure

that funds are likely to be available to compensate clients who may suffer loss due to tax (financial)

advice services provided by a tax (financial) adviser.

Paragraph 2.57 of the Explanatory Memorandum to the Tax Laws Amendments (2013 Measures No. 3)

Bill 2013 explains the purpose of introducing the PI insurance requirement for tax (financial) advisers:

Certainty and consumer protection would be enhanced under this model, as there is a proposed requirement that financial advisers ensure that their professional indemnity insurance (PI insurance) will cover them not only for the financial advice that they provide, but also for their tax advice.

The TPB has developed the policy objective for its PI insurance requirements (which is set out below) on

the basis of the above principle, as far as it relates to the provision of tax advice by tax (financial)

advisers.

Policy objective

The TPB’s policy objective is:

The Tax Practitioners Board’s professional indemnity insurance requirements for tax (financial)

advisers are to reduce the risk that a client’s losses (due to the provision of tax advice) are not

compensated, due to the tax (financial) adviser having inadequate financial resources or for any

other reason, as far as this is practically possible.

The policy objective complements the object of the TASA which is to ensure that tax (financial) advice

services are provided to the public in accordance with appropriate standards of professional and ethical

conduct.5

5 Tax Agent Services Act 2009 (TASA), section 2-5.

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The TPB’s PI insurance requirements The TPB’s general approach

The TPB’s objective

The objective of the TPB’s PI insurance requirements is to ensure those entities that are registered with

the TPB have adequate PI insurance cover for the tax (financial) advice services they provide.

What this means for tax (financial) advisers registered during the notification period (from 1 July

2014 to 31 December 2015)

The notification period runs from 1 July 2014 to 31 December 2015.

Once an entity is registered during the notification period, the requirement to maintain PI insurance that

meets the TPB’s requirements is an ongoing registration requirement, and newly registered tax

(financial) advisers will be required to provide the TPB with details of how they meet the TPB’s PI

insurance requirements.

See the TPB’s implementation approach for further details about how the TPB’s PI insurance

requirements will apply during this period.

What this means for tax (financial) advisers registered in the transitional and standard period

(from 1 January 2016)

The transitional period runs from 1 January 2016 to 30 June 2017. In order to be eligible for registration

under the TASA from 1 January 2016, all applicants (including AFS licensees and representatives6)

must meet the eligibility requirements contained in the TASA, including maintaining, or being able to

maintain, PI insurance that meets the TPB’s requirements.

In order to meet the PI insurance eligibility requirement when applying for registration, an AFS licensee

or representative will need to satisfy the TPB that the AFS licensee or representative maintains PI

insurance, or that the AFS licensee or representative will be able to maintain PI insurance cover that

meets the TPB’s requirements once registered.

The requirement to maintain PI insurance that meets the TPB’s requirements is an ongoing requirement

for tax (financial) advisers, and the TPB may require a tax financial adviser to provide a Certificate of

Currency or other evidence in relation to their PI insurance at renewal or when requested, to satisfy the

TPB that they meet the ongoing PI insurance requirement.

Summary of how the PI insurance requirements will apply

Table 2 provides a summary of how the TPB’s PI insurance requirements will apply during the notification, transitional and standard periods.

6 Section 910A of the Corporations Act 2001 defines representatives of an AFS licensee as an authorised representative of

an AFS licensee, an employee or director of an AFS licensee, an employee or director of a related body corporate of an

AFS licensee or any person acting on behalf of the AFS licensee.

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Table 2: How the PI insurance requirements will apply

Eligibility for registration Ongoing requirement once

registered

Notification period

(registered during 1 July 2014

to 31 December 2015)

Not applicable. There are no PI

insurance eligibility requirements

for registration.

You must maintain PI insurance

that meets our requirements

within 14 days from being

notified that you are registered,

and for the period of your

registration.

Note: our requirements during

the notification period allow you

to be covered by an existing

policy until it lapses.

Transitional and Standard

period

(apply for registration during 1

January 2016 to 30 June 2017)

You must maintain, or will be

able to maintain PI insurance

that meets the TPB’s

requirements in order to be

eligible for registration.

You must maintain PI insurance

that meets our requirements

within 14 days from being

notified that your registration has

been granted, and for the period

of your registration.

What this means for consumers of tax (financial) advisers

It is important to recognise the limitations of PI insurance as a consumer protection mechanism. PI

insurance protects consumers indirectly and it is not a guarantee that compensation will in fact be paid.

PI insurance protects the tax (financial) adviser against the risk of financial losses arising from acts,

errors, omissions and other misconduct by the tax (financial) adviser in the provision of tax (financial)

advice services. This might occur where the tax (financial) adviser is otherwise unable or unwilling to

compensate a client in respect of a loss caused by the tax (financial) adviser and there is or would be a

liability to do so.

The PI insurance cover required by the TPB is not necessarily intended to cover what a client might

perceive as a loss in every circumstance.

Providing evidence of PI insurance cover to the TPB

When applying for registration under the TASA, other than during the notification period, tax (financial)

advisers will need to satisfy the TPB that they have PI insurance cover that meets the TPB’s

requirements, or that they will maintain PI insurance cover that meets the TPB requirements upon

becoming registered.

When applying for registration (including renewal of registration) under the TASA during the transitional

and standard period, applicants for registration will need to satisfy the TPB that they maintain PI

insurance or that they will maintain PI insurance that meets the TPB’s requirements upon becoming

registered.

Additionally, tax (financial) advisers will be required on an annual basis to provide the TPB with evidence

that they have maintained PI insurance cover that meets the TPB’s requirements.

Further, the TPB may require a tax (financial) adviser to provide a Certificate of Currency in relation to

their PI insurance at renewal or when requested.

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If a tax (financial) adviser cannot or does not comply

From 1 January 2016, if an applicant for registration does not satisfy the TPB that they have PI

insurance cover that meets the TPB’s requirements, or declare that they will maintain PI insurance cover

that meets the TPB’s requirements upon becoming registered under the TASA, the TPB will not grant

the applicant registration under the TASA. This is because the applicant will not meet the eligibility

requirements.

Once registered, if a tax (financial) adviser fails to maintain PI insurance cover that meets the TPB’s

requirements during the period of the tax (financial) adviser’s registration, the TPB may terminate the tax

(financial) adviser’s registration on the basis that the tax (financial) adviser ceases to meet a registration

requirement.7.

Alternatively, if a tax (financial) adviser fails to maintain PI insurance that meets the TPB’s requirements

during the period of their registration, the TPB may sanction the tax (financial) adviser for a breach of the

Code under subsection 30-10(13) of the TASA. Depending on the circumstances, the sanctions

available to the TPB range from cautions to suspension or termination of a tax (financial) adviser’s

registration.

Compliance during the implementation period (1 July 2014 to 31 December 2016)

During the implementation period (1 July 2014 to 31 December 2016), if a tax (financial) adviser already

has PI insurance cover, they may maintain that cover until the end date of the policy. After the current

policy lapses, the tax (financial) adviser will then need to obtain PI insurance cover that meets the TPB’s

requirements, in preparation for complete operation of the requirement.

Any registered tax (financial) advisers who obtain PI insurance cover during or after the implementation

period of 1 July 2014 to 31 December 2016 will be required to have PI insurance cover that meets the

TPB’s requirements.

7 See Part 4 of the Tax Agent Services Act 2009.

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Key principles

Table 3 sets out the key principles of the TPB’s PI insurance requirements.

Table 3: Key principles

Principle 1: Fit to achieve the policy objective

Adequate cover is cover that will:

(i) satisfactorily indemnify a tax (financial) adviser against civil liability that may arise in the tax (financial) adviser’s provision of tax (financial) advice services; and

(ii) which meets the policy objective of reducing the risk that client losses are not compensated by the tax (financial) adviser due to the tax (financial) adviser having inadequate financial resources or for any other reason.

Principle 2: Responsibility of tax (financial) adviser to assess adequacy

It is the basic responsibility of each tax (financial) adviser to determine what is ‘adequate’ PI insurance cover for them having regard to the risks that are associated with the provision by them of tax (financial) advice services. Additional insurance cover, to that needed to satisfy TPB obligations, is to be obtained where such additional adequate cover is required.

Principle 3: Practical availability An element of adequacy is what is practically available at any given time.

Principle 1: Fit to achieve the policy objective

PI insurance is a way of reinforcing a tax (financial) adviser’s ability to meet any client losses caused by

an act, error, or omission of the tax (financial) adviser by making funds available to the tax (financial)

adviser under the terms of a PI insurance policy. PI insurance protects the tax (financial) adviser against

certain risks, and indirectly protects consumers, however it is not a guarantee that compensation will be

paid to consumers. PI insurance is an agreement between an insurance company and a tax (financial)

adviser; consumers will not be a party to these insurance policies.

The concept of what is ‘adequate’ is an important element of the TPB’s overall requirements for PI

insurance for tax (financial) advisers. The TPB will consider what is ‘adequate’ with reference to the

minimum requirements, set out in Table 5 of the TPB (EP). For further guidance, see the Adequate PI

insurance cover section of this TPB (EP).

Principle 2: Responsibility of tax (financial) adviser to assess adequacy

The TPB considers that compliance with the PI insurance requirement should form part of the tax

(financial) adviser’s overall risk management processes.

The TPB accepts that different tax (financial) advisers will have very different businesses and risks,

which will impact on what PI insurance arrangements are adequate for them. Therefore, subject to

certain minimum requirements of the TPB, the TPB considers that tax (financial) advisers should

undertake their own analysis of what is an adequate level of insurance for them.

Minimum PI insurance standards set by ASIC for AFS licensees, as well as other relevant industry and

professional bodies, might also provide a guide for tax (financial) advisers in this process. However,

compliance with ASIC and/or industry standards will not necessarily mean that a tax (financial) adviser

meets the PI insurance requirements of the TPB. The TPB requires an objective assessment of the

adequate scope and level of cover for the business and risks of a particular tax (financial) adviser.

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Some tax (financial) advisers might find it helpful to engage external consultants, actuaries, brokers or

advisers to undertake a risk assessment of their business and provide advice on the amount and terms

of cover that they should obtain. The TPB encourages this, provided that the TPB’s minimum

requirements are met.

Principle 3: Practical availability

One of the considerations relevant to the assessment of the adequacy of PI insurance cover is what is

practically available at any given time.

The TPB is aware that the nature and extent of coverage of PI insurance may be limited from time to

time by what the PI insurance market will provide in a fluctuating market and that there may be times

where PI insurance is less freely available (for example, during a future ‘hard’ insurance market). This

can have a material impact on the scope and effectiveness of PI insurance cover and therefore PI

insurance cover that achieves the policy objective may sometimes be more difficult to achieve.

The TPB has considered these factors in the formulation of its PI insurance requirements and in the

setting of the minimum requirements set out in Table 5 of this exposure draft. The TPB believes that its

minimum requirements are reasonable and should generally be able to be achieved by tax (financial)

advisers. The TPB will continue to monitor and consider what is practically available in the insurance

market and how that will affect the TPB’s PI insurance requirements.

Adequate PI insurance cover

What is ‘adequate’

Tax (financial) advisers must at all times maintain adequate PI insurance cover which complies with the

TPB’s requirements. Adequate cover is cover that will:

adequately indemnify a tax (financial) adviser against any civil liability that may arise in the tax

(financial) adviser’s provision of tax (financial) advice services; and

which meets the policy objective of reducing the risk that client losses are not compensated by

the tax (financial) adviser due to the tax (financial) adviser having inadequate financial

resources or for any other reason.

The TPB requires that tax (financial) advisers hold PI insurance that is ‘adequate’, having regard to the

nature of the tax (financial) adviser’s business, including:

the volume of business in terms of turnover (see the Key terms section of this exposure draft)

the number and kind of clients

the kind or types of tax advice provided

the number of representatives

the degree of risk.

This is not an exhaustive list of the factors that tax (financial) advisers need to take into account in

assessing what PI insurance cover is adequate in their circumstances.

Amount of cover

To be adequate overall, a PI insurance policy must have a sufficient amount of cover that at least meets

the TPB’s minimum requirements and covers a reasonable estimate of clients’ potential losses (see step

2 in Table 4 and amount of cover in Table 5 below).

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Further, the TPB requires that tax (financial) advisers obtain PI insurance cover that provides legal and

defence ‘costs exclusive’ or ‘costs in addition’ amount of cover.

Scope of cover

The TPB’s PI insurance requirements require that the insurance must cover civil liability arising from any

act, error or omission in the provision of tax (financial) advice services.

Terms and exclusions

If exclusions in a PI insurance policy undermine the policy objective, the cover may not be adequate.

This applies especially to exclusions that directly affect the minimum requirements set out in Table 5

below. If an exclusion removes a minimum requirement, the cover will not be adequate.

Deductibles, excesses and the tax (financial) adviser’s financial resources

Consideration of the financial resources of the tax (financial) adviser seen through the size of the

business of the tax (financial) adviser is a necessary element in assessment of the adequacy of PI

insurance cover.

The TPB is aware that there is generally an excess on insurance policies. All tax (financial) advisers who

are insured need to consider how they will cover the excess.

To meet the TPB’s minimum requirements, tax (financial) advisers must ensure that any excess under

the PI insurance policy is at a level that the business can confidently sustain as an uninsured loss taking

into account the tax (financial) adviser’s financial resources.

Tax (financial) advisers should retain records of this assessment of their excess level. These records

should indicate how the financial resources were calculated using capital, cash flow, overdraft or support

from a parent company.

Assessing adequacy

Whether a particular PI insurance policy or cover is adequate for a particular tax (financial) adviser

depends on all the facts and circumstances, including the nature, scale and complexity of the tax

(financial) adviser’s business, and their other financial resources. Therefore, it is the responsibility of

each tax (financial) adviser to determine what is adequate PI insurance cover for them and to obtain the

required PI insurance cover, ensuring that it at least meets the TPB’s minimum requirements.

Table 4 gives guidance on the processes the TPB recognises that tax (financial) advisers should go

through to determine what is adequate PI insurance cover for them. However, the TPB will not generally

‘approve’ a tax (financial) adviser’s PI insurance arrangements on a case by case basis unless, in the

TPB’s discretion, there is reason to do so.

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Initial assessment

The TPB suggests that tax (financial) advisers use the assessment process in Table 4 to determine what

will be adequate PI insurance cover.

Table 4: Initial assessment process

Step 1: Assess the business Review the business, taking into account any proposed changes to the business. Review the claims history (if any) and risk management procedures.

Note: the tax (financial) adviser should have regard to the factors listed under the ‘What is adequate’ section of this document, to assess the nature of the tax (financial) adviser’s business.

Step 2: Assess potential liability Determine ‘the maximum liability that has, realistically, some liability potential to arise’. The TPB suggests a tax (financial) adviser does this by making a reasonable estimate of the following factors:

the maximum exposure to any single client (‘worst case scenario’ per client)

the number of claims that could arise from a single event (potential for multiple claims)

the number of claims that might be expected during the policy period.

Step 3: Approach insurers/brokers Ask insurers or insurance brokers for a list of key policy features, insurers/brokers exclusions and available extensions (based on full disclosure of your assessment in steps 1 and 2).

Step 4: Assess amount of cover Consider whether the amount of cover is adequate. It should at least meet the TPB’s minimum requirements set out in Table 5 below.

Step 5: Assess scope of cover Consider whether the scope of cover is adequate. It must at least meet the TPB’s minimum requirements.

Step 6: Review policy terms and exclusions

Review the policy features having regard to the TPB’s minimum requirements set out in Table 5. Identify any exclusions and gaps in cover.

Step 7: Consider financial resources Check that you have the financial resources to pay the excess, the estimated number of claims, and cover any gaps and legal costs.

Consider how these claims will be covered and retain records of the assessment, for example, through capital, cash flow, overdraft, support.

Ongoing assessment

The TPB requires tax (financial) advisers to review their PI insurance cover at least annually to ensure it

continues to be adequate, for example, when their existing policy is due for renewal.

Tax (financial) advisers should also review the adequacy of their PI insurance coverage in light of any

major changes in their business, for example, if they start providing new services or engage more

representatives.

Once obtained, tax (financial) advisers must maintain PI insurance cover for as long as they are

registered with the TPB, although this need not be done through the same insurer or insurers.

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Compliance systems

The TPB holds tax (financial) advisers accountable for ensuring that their PI insurance policies are

renewed when required, that premiums are paid on time and that their policies or other compensation

arrangements continue to be adequate.

Authorised insurers

Generally, the cover needs to be from an insurer regulated by the Australian Prudential Regulation

Authority (APRA), or operating under an exemption within the Insurance Act 1973 or the Insurance

Regulations 2002. The TPB will advise tax (financial) advisers on a case by case basis if it determines

some alternative source of cover is acceptable.

What the policy should cover and include

Minimum requirements for adequate PI insurance cover

Table 5 sets out the TPB’s view on the features a PI insurance policy should have in order for it to be

‘adequate’. The table includes what is considered to be the minimum requirements for these features.

Additional factors tax (financial) advisers should consider when determining what is adequate,

depending on their business and individual circumstances, are also suggested in the notes set out in the

table.

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Table 5: Features of adequate PI insurance cover and minimum requirements

Policy feature Minimum requirements and factors to consider

Amount of cover The TPB requires that tax (financial) advisers have a minimum amount of cover of $2 million for any one claim and in the aggregate for tax (financial) advisers

with total revenue of $2 million or less. For tax (financial) advisers with total revenue greater than $2 million, the TPB requires cover to be approximately equal to actual or expected revenue (up to a maximum limit of $20 million).

Further, a tax (financial) adviser must assess their own PI insurance requirements by considering their own business and risk circumstances and obtain PI insurance that is appropriate for them, factoring in legal or defence costs. If the results of the assessment are that less cover may be required, a tax (financial) adviser must nevertheless have cover to at least the minimum amount of cover.

The TPB encourages tax (financial) advisers to discuss their particular business circumstances with an insurance provider to assist in determining what is adequate PI insurance cover for a tax (financial) adviser.

Please note that what is an appropriate amount of cover for a tax (financial) adviser may in fact be more than what is set as the minimum requirement.

Scope of cover The policy must include civil liability arising from any act, error or omission in the provision of tax (financial) advice services as defined in the TASA.

Persons covered The policy must cover:

the tax (financial) adviser, directors, principals, partners, representatives and employees who provide tax (financial) advice services on behalf of the tax (financial) adviser,

contractors who provide tax (financial) advice services on behalf of the tax (financial) adviser (refer to Note 2 below),

any other individuals or entities that provide tax (financial) advice services on behalf of the tax (financial) adviser.

Note 1: Tax (financial) advisers need to take into account all of their employees

and representatives who are occupied in the provision of tax advice when considering the type and extent of cover that will be adequate. A client will generally have the same remedies against the tax (financial) adviser as it has against its employees and representatives of the tax (financial) adviser.

Note 2: The tax (financial) adviser’s policy does not need to indemnify the tax

(financial) adviser for acts of its contractors and or representatives if such acts are adequately covered by the contractors’ or representatives’ own PI insurance cover.

Factors to consider

Are there many employees or representatives geographically dispersed? If so, the limit of indemnity might need to be higher to manage this risk.

Note: Experience suggests that the greater the number of employees or

representatives that are working for a tax (financial) adviser and the more geographically dispersed they are, the greater may be the potential for client losses to occur. The number and distribution of employees and representatives might affect the tax (financial) adviser’s ability to adequately supervise its employees and representatives, and a tax (financial) adviser with a greater number of employees and representatives is likely to provide services to a greater number of clients.

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Exclusions The policy must not have the effect of excluding cover for the work of contractors if the result is that there is no cover for the tax (financial) advice services that are provided to the client.

Note: A policy may include a term prohibiting the tax (financial) adviser from

admitting liability for any claim, loss or demand.

Excess/deductibles Tax (financial) advisers must ensure that any excess under the PI insurance policy is at a level that the business can confidently sustain as an uninsured loss taking into account the tax (financial) adviser’s financial resources.

Note 1: A business with a lower cash flow available to meet claims might require

a larger amount of cover or cover with a lower excess or both. If there is a limited asset base available to meet claims, a policy with a lower excess might be preferable. The TPB is aware that available PI insurance policies generally have an excess. Therefore, the TPB considers that whether a tax (financial) adviser has sufficient cash flow to meet the excess for a reasonable estimate of claims is a relevant consideration in determining whether a PI insurance policy is adequate for that tax (financial) adviser.

Note 2: If the excess is significant relevant to the limit of indemnity, tax

(financial) advisers should seek approval from the TPB as an alternative arrangement as we consider this kind of arrangement to be effectively self-insurance rather than PI insurance.

Insurance provider The TPB requires that the PI insurance cover must be provided by:

an APRA approved insurer

an insurer who is not APRA approved but otherwise permitted to provide insurance in Australia under the Insurance Act 1973

an unauthorised foreign insurer if they are providing insurance in accordance with Part 2 of the Insurance Regulations 2002, or

other insurance providers as approved by the TPB.

Legal/defence costs Defence costs must be ‘in addition’ to the minimum limit or the level of cover must be sufficiently increased to take into account these costs.

Retroactive cover If the tax (financial) adviser had an immediately previous PI insurance policy, the policy must provide retroactive cover to the earlier of:

the retroactive date specified in the most recent PI insurance policy; or

the commencement date of the first PI insurance policy in the series of continuous policies.

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TPB recommendation on additional features of PI insurance cover and extensions

There are some features of the PI insurance cover and extensions to PI insurance cover which the TPB

recommends tax (financial) advisers obtain. These are set out in Table 6 below.

Table 6: TPB recommendations on additional PI insurance features and extensions

Policy feature TPB recommendation

Fraud/dishonesty/fidelity The TPB recommends that tax (financial) advisers have:

innocent party fidelity cover in respect of the actions of employees or partners/directors (except sole practitioner tax (financial) advisers), and

innocent party fraud/dishonesty cover in respect of the actions of employees or partners/directors (except sole practitioner tax (financial) advisers).

Note: A policy may include a term prohibiting the tax (financial) adviser

from admitting liability for any claim, loss or demand.

Run-off cover The TPB recommends that a tax (financial) adviser obtain run-off cover if the tax (financial) adviser proposes to cease providing tax (financial) advice services.

Applications for alternative arrangements to be considered as meeting the TPB’s PI insurance requirements

The TPB will generally consider that applications for alternative arrangements meet the TPB’s PI

insurance requirements for operations where it can be demonstrated that there are satisfactory

arrangements for compensation of clients of tax (financial) advisers, having regard to the policy objective

and the requirements set out in this document.

Further, the TPB considers that self-insurance arrangements are alternative arrangements which require

TPB approval in order to be considered as meeting the TPB’s PI insurance requirements.

How to make an application for alternative arrangements

Tax (financial) advisers who wish to apply to have alternative arrangements considered as meeting the

TPB’s PI insurance requirements will need to lodge an application.

An application to the TPB for alternative arrangements, to be considered as meeting the TPB’s PI

insurance requirements, should address the following issues:

1. Which tax (financial) advisers and representatives will be covered by the alternative

arrangements, for example, will the alternative arrangements cover a group of related tax

(financial) advisers or an industry sector?

2. How the compensation arrangements that the applicant has in place do and do not meet the

criteria for assessing adequate PI insurance in accordance with the TPB’s PI insurance

requirements (see the Adequate PI insurance cover section of this TPB (EP)).

3. Any benefits, risks, or costs to clients arising from the tax (financial) adviser using alternative

arrangements as opposed to the TPB’s general PI insurance requirements.

4. Any circumstances particular to the tax (financial) adviser or the industry sector which make

these arrangements more appropriate than the TPB’s general PI insurance requirements.

5. Confirm that the tax (financial) adviser will advise the TPB if the alternative arrangements are

cancelled, varied or become unavailable for any reason.

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6. Whether the compensation arrangements have been approved by ASIC in accordance with RG

126, under paragraph 912B(2)(b) of the Corporations Act 2001.

The TPB will generally ask for an expert’s report, for example an actuarial report, to be submitted with

the application to assess whether the alternative arrangements provide a satisfactory level of

compensation to the clients of the tax (financial) adviser, having regard to the policy objective and the

requirements set out in this document.

Tax (financial) advisers who wish to maintain arrangements that were already in place before 1 July

2014 must address the same criteria as for new applications for alternative arrangements.

Applications must be made in writing and sent to the Secretary of the TPB, either by email to

[email protected], or by post to:

Tax Practitioners Board

GPO Box 1620SYDNEY NSW 2001

How the TPB will assess applications for alternative arrangements

The TPB will assess each application on its merits. The TPB may, if appropriate, give priority to group

applications, for example, for an industry sector or sub-sector.

The TPB will only approve an application for alternative arrangements to be considered as meeting the

TPB’s PI insurance requirements where it can be demonstrated that there are satisfactory arrangements

for compensation of clients of tax (financial) advisers, having regard to the policy objective and the

requirements set out in this document. The TPB recognises that some alternative arrangements may in

fact provide a higher level of cover.

In considering applications, the TPB will take into account the factors used to assess adequacy of PI

insurance in accordance with the TPB’s PI insurance requirements. This means that any alternative

arrangements must also be adequate having regard to:

the volume of business in terms of turnover

the number and kind of clients

the kind or kinds of business

the number of employees and representatives, and

the degree of risk.

These factors together with any additional factors considered to be relevant should be addressed in the

application made to the TPB.

An important feature of PI insurance is that it is provided by a third party, which offers some security that

the arrangements will be enforceable in the event of fraud by tax (financial) advisers or their officers.

Therefore, one factor that the TPB will consider in assessing alternative arrangements is the degree to

which the arrangements are provided on arm’s length terms.

mailto:[email protected]

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Example: Self-insurance

Approval of self-insurance will depend on the amount of compensation that would be available for clients

and having regard to the size and risk of the tax (financial) adviser’s business. When considering an

application for self-insurance to be approved by the TPB as meeting its PI insurance requirements, the

TPB will also take into account whether ASIC has approved the arrangement.

Compensation arrangements during the assessment process

The process for consideration of an application for alternative arrangements to be considered to meet

the TPB’s PI insurance requirements may be time consuming to assess. Until notified of the decision,

tax (financial) advisers applying for approval of an application should continue to hold any PI insurance

cover they have previously obtained or keep in place any other compensation arrangements they have

previously implemented.

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Key terms The following is a list of key terms and their meaning in this document.

Alternative arrangement An alternative arrangement is an arrangement that is not a

contract of PI insurance, but which the TPB may approve as

adequate to satisfy the TPB’s PI insurance requirements.

Amount of cover The amount of cover is the maximum amount of money the

insurer has agreed to provide for payment of claims made against

a tax (financial) adviser.

APRA The Australian Prudential Regulation Authority.

ASIC The Australian Securities and Investments Commission.

Civil liability Civil liability is liability of one party to another arising out of civil

law, as opposed to criminal law. There are generally four

branches of civil law:

1. tort law (such as the common law torts of negligence,

nuisance, and defamation)

2. contract law (breach of contract)

3. statutory law (for example, the Competition and

Consumer Act 2010)

4. equity (a system of law based on the principle of ‘fairness’

designed to furnish remedies for wrongs which were not

legally recognised or for which no adequate remedy was

provided by the common law).

A civil liability wording ordinarily covers all four branches of civil

law. However, the policy only responds to civil liability for claims

arising from the conduct by the insured of the nominated

professional services stated in the policy schedule.

Code of Professional

Conduct (Code) The Code is contained in section 30-10 of the Tax Agent Services

Act 2009 (TASA). It sets out standards of professional and ethical

conduct with which tax (financial) advisers must comply.

Costs exclusive (or costs in

addition) Legal/defence costs cover does not form part of the amount of

cover that is used to pay a claim as opposed to costs inclusive

where the legal/defence costs cover forms part of the same

amount of cover that is used to pay a claim.

Cover/coverage Tax (financial) advisers are only required to have PI insurance

cover to meet the TPB’s requirements. This may mean that they

do not actually hold their own PI insurance policy, but rather are

covered by the PI insurance policy of someone else. For example,

an individual tax (financial) adviser who is an employee of a

registered company tax (financial) adviser would likely be covered

by the PI insurance policy held by the employer registered

company tax (financial) adviser, therefore the individual would not

have to have their own PI insurance policy in order to meet the

TPB’s PI insurance requirements.

Excess (also known as

deductible) The first part of a loss, which is borne by the insured. The insured

is responsible for the loss up to the deductible/excess amount and

the insurer pays the remainder of the loss up to the policy limit.

The excess can be inclusive or exclusive of costs and expenses.

Exclusion A provision of an insurance policy that precludes coverage in

particular circumstances.

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Fraud/dishonesty cover Covering claims made against an innocent insured for

compensation resulting from fraudulent, dishonest or criminal acts.

Cover will not extend to the perpetrator of such fraudulent,

dishonest or criminal act.

Innocent party Some cover, such as fidelity and fraud/dishonesty cover, will only

extend to the insured tax (financial) adviser if they were an

innocent party, that is, they were not responsible and had had no

prior knowledge of the conduct that led to the claim.

Insured Any person who is covered by the PI insurance policy.

Insurer The entity providing the PI insurance policy.

Legal/defence costs The costs associated with defending a claim for civil liability.

Minimum requirements Minimum requirements means the amount and terms of cover that

the TPB requires to be included in the insurance coverage of a

registered tax (financial) adviser, as specified by the TPB from

time to time.

PI insurance Professional indemnity insurance.

PI insurance requirements The overall description of the TPB’s PI insurance requirements

that are set out in this document.

Run-off cover Professional indemnity policies are usually on a claims made and

notified policy basis. This means that in order to trigger the policy

the claim must be made against the insured and reported to the

insurer during the policy period. Tax (financial) advisers,

companies or individuals ceasing business still have exposure to

claims being made after their business ceases arising from their

previous business activities.

Run off cover provides cover for unknown claims made and

reported following expiration of the PI insurance policy arising out

of acts, errors or omissions occurring during the period of run-off

insurance cover.

Some PI insurance policies will provide automatic run-off cover up

until the end of the policy period of insurance should the policy be

cancelled during the policy period.

Self-insurance Setting aside a calculated amount of money to form a source of compensation for potential claims (this could include large institutional entities).

Scope of cover The scope of cover defines the terms and conditions under which

indemnity is provided or excluded under the insurance policy.

Sole practitioner tax

(financial) advisers

A sole practitioner tax (financial) adviser is a tax (financial) adviser

who operates on their own with no partners, employees,

representatives or contract staff. Certain areas of cover, such as

fidelity and fraud/dishonesty cover, are not required of sole

practitioner tax (financial) advisers, nor would it be available as

the insured tax (financial) adviser could not be an innocent party if

they operate their business on their own.

Turnover The total amount of business revenue received by the tax

(financial) adviser excluding GST.

TPB Information Sheet

TPB(I) 24/2015

Relevant experience for tax (financial) advisers

Disclaimer

This is a Tax Practitioners Board (TPB) Information sheet (TPB(I)). It is intended to be for information only.

While it seeks to provide practical assistance and explanation, it does not exhaust, prescribe or limit the scope

of the TPB’s powers in the Tax Agent Services Act 2009 (TASA) and the Tax Agent Services Regulations

2009 (TASR).

In addition, please note that the principles and examples in this TPB(I) do not constitute legal advice and do

not create additional rights or legal obligations beyond those that are contained in the TASA or which may

exist at law. Please refer to the TASA for the precise content of the legislative requirements.

Document history

The TPB released this document as a draft Information Sheet in the form of an Exposure draft on 12 January

2015. The TPB invited comments and submissions in relation to the information in it. The closing date for the

submissions was 26 February 2015. The TPB considered the submissions made and now publishes the

following TPB(I).

Issued: 17 April 2015

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Relevant experience for tax (financial) advisers

Introduction

1. From 1 January 2016, entities1 will be able to seek registration (including renewal of registration) as a tax (financial) adviser under the ‘standard option’.

2. The eligibility requirements for registration as a tax (financial) adviser under the standard application option are contained in section 20-5 of the Tax Agent Services Act 2009 (TASA). One of these eligibility requirements for individual applicants is that the individual has been engaged in the equivalent of between 12 months and six years of full-time relevant experience.2

3. The purpose of this Tax Practitioners Board (TPB) Information Sheet TPB(I) is to assist individuals to understand the TPB’s approach to the meaning of ‘relevant experience’ for the purpose of registration as a tax (financial) adviser under the standard application option.

Relevant experience


4. ‘Relevant experience’ is defined in Item 305 of Schedule 2, Part 3, Division 2 of the Tax Agent Services Regulations 2009 (TASR) to mean work by an individual:

(a) as a registered tax (financial) adviser; or

(b) as a registered tax agent; or

(c) under the supervision and control of a registered tax (financial) adviser; or

(d) under the supervision and control of a registered tax agent; or

(e) of another kind approved by the Board; and

that included substantial involvement in one or more of the types of tax (financial) advice services described in section 90-15 of the TASA, or substantial involvement in a particular area of taxation law to which one or more of those types of tax (financial) advice services relate.

5. There is no definitive listing of the types of experience that will constitute relevant experience, recognising that there is significant variation in the types and descriptions of work undertaken by individuals in the financial services profession. For example, the experience that a para planner accrues may constitute relevant experience where the para planner is involved in the provision of a tax (financial) advice service. On the other hand, a para planner who merely assists a representative, by undertaking background research, would not necessarily be able to count that experience towards meeting the relevant experience requirement.

1 An ‘entity’ for the purposes of this TPB(I) means an individual (including an individual in the capacity as trustee of a trust), partnership or

company (including a company in the capacity as trustee of a trust). 2 The precise amount of relevant experience will vary depending on which of the four items in Schedule 1, Part 3, Division 1 of the TASR

the individual is seeking to rely on for the purpose of meeting the qualifications and experience requirement. See also paragraph 21 of this TPB(I).

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6. Ultimately, whether an individual satisfies the relevant experience requirement is a question of fact to be determined by the TPB on a case-by-case basis having regard to the individual’s circumstances and the extent to which they are involved in the provision of a tax (financial) advice service3.

(a) Meaning of work ‘as a registered tax (financial) adviser’

7. Relevant experience includes providing the service of a tax (financial) adviser registered under

the TASA.

8. This includes registration as a tax (financial) adviser under the ‘notification option’4, ‘transitional application option’5 and the ‘standard application option’.

(b) Meaning of work ‘as a registered tax agent’

9. A registered tax agent means an individual registered as a tax agent under the TASA, or the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010.

10. Recognising that tax (financial) advice services are a subset of tax agent services, this element allows the TPB to count relevant experience accrued as a tax agent, including before 1 July 2014. This will be particularly useful for those individuals providing tax (financial) advice services who registered as a tax agent prior to 1 July 2014 despite the then carve out for certain Australian financial services (AFS) licensees and their authorised representatives from the tax agent services regime.6

(c) Meaning of work ‘under the supervision and control of a registered tax (financial)

adviser’

11. Relevant experience includes work by an individual under the supervision of a registered tax

(financial) adviser.

12. The requirement for supervision and control includes an employer-employee relationship. It may also include services which are provided under a contract for service, depending on the circumstances.7

3 For more information on the meaning of ‘tax (financial) advice service’, see TPB(I) 20/2014 What is a tax (financial) advice service?

available at www.tpb.gov.au. 4 Registration as a tax (financial) adviser under the ‘notification option’ means registration under Item 49 in Schedule 1, Part 3 of the Tax

Laws Amendment (2013 Measures No. 3) Act 2013. 5 Registration as a tax (financial) adviser under the ‘transitional application option’ means registration under Item 50 in Schedule 1, Part 3

of the Tax Laws Amendment (2013 Measures No. 3) Act 2013. 6 See sub-regulation 13(2) of the TASR.

7 For more information on adequate supervisory arrangements, see TPB(I) 23/2014 Sufficient number requirement for partnership and

company registered tax (financial) advisers, available at www.tpb.gov.au.

TPB(I)%2020/2014%20What%20is%20a%20tax%20(financial)%20advice%20service?%20available%20at%20www.tpb.gov.au


http://www.tpb.gov.au/TPB/Publications_and_legislation/Board_policies_and_explanatory_information/TPB/Publications_and_legislation/I/0648_TPB_I__23_2014_Sufficient_number_requirement_for_partnership_and_company_TFAs.aspx

http://www.tpb.gov.au/TPB/Publications_and_legislation/Board_policies_and_explanatory_information/TPB/Publications_and_legislation/I/0648_TPB_I__23_2014_Sufficient_number_requirement_for_partnership_and_company_TFAs.aspx

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(d) Meaning of work ‘under the supervision and control of a registered tax agent’

13. Relevant experience includes work by an individual under the supervision of a registered tax

agent.

14. Again, recognising that tax (financial) advice services are a subset of tax agent services, this element allows the TPB to count relevant experience accrued under the supervision of an entity registered with the TPB as a tax agent.

15. As outlined in paragraph 12 above, the requirement for supervision and control includes an employer-employee relationship. It may also include services which are provided under a contract for service, depending on the circumstances.8

(e) Meaning of work ‘of another kind approved by the Board’

16. The TPB has the discretion to recognise other types of experience which do not meet the above

elements. This includes relevant experience that individuals gained prior to 1 July 2014.9

17. For the purpose of this element, for AFS licensees and authorised representatives, the TPB will count relevant experience accrued by these entities prior to 1 July 2014 that would have required the AFS licensee and/or authorised representative to register with the TPB as a tax agent but for the various carve outs that existed for these entities from 1 March 2010 to 30 June 2014. The TPB will also consider experience gained prior to the commencement of the tax agent services regime in March 2010 as relevant where tax advice has been provided in the context of financial advice.

18. The TPB will also count relevant experience accrued during the notification period (that is 1 July 2014 and 31 December 2015) by an AFS licensee or representative who is not registered with the TPB, provided the AFS licensee or representative uses or used the relevant disclaimer.10 This recognises that AFS licensees and representatives can, in certain circumstances, continue to provide tax (financial) advice services for a fee or other reward up to 31 December 2015 without registering with the TPB as a tax (financial) adviser or tax agent.

19. The TPB may also count other relevant experience accrued by an individual, depending on the circumstances. In these cases, the onus will be on the individual to satisfy the TPB why it should count the relevant experience. In this regard, the individual will need to include a written submission with their application for registration outlining the relevant experience and the reasons why they believe it should be approved as ‘relevant experience’.

8 For more information on adequate supervisory arrangements, see TPB(I) 23/2014 Sufficient number requirement for partnership and

company registered tax (financial) advisers, available at www.tpb.gov.au. 9 See Explanatory Statement to Select Legislative Instrument No. 115, 2014.

10 For more information on the requirements of the relevant disclaimer, see sub-item 49(4) of the Tax Laws Amendment (2013 Measures

No. 3) Act 2013.

TPB(I)%2023/2014%20Sufficient%20number%20requirement%20for%20partnership%20and%20company%20registered%20tax%20(financial)%20advisers,%20available%20at%20www.tpb.gov.au

TPB(I)%2023/2014%20Sufficient%20number%20requirement%20for%20partnership%20and%20company%20registered%20tax%20(financial)%20advisers,%20available%20at%20www.tpb.gov.au

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Meaning of ‘substantial involvement’

20. The required work experience must have included substantial involvement in one or more of the types of tax (financial) advice services described in section 90-15 of the TASA, or substantial involvement in a particular area of taxation law to which one or more of those types of tax (financial) advice services relate.11

21. The TPB is of the view that ‘substantial involvement’ means ample or considerable involvement. It requires more than simply being involved from time to time in the provision of one or more types of tax (financial) advice services. By way of example, this could include regular and frequent involvement in the taxation aspects relating to statements of advice.

22. Given that the substantial involvement must be in one or more types of tax (financial) advice services, or substantial involvement in a particular area of taxation law, the TPB will not accept work done in providing financial services that does not involve, or relate to, providing tax advice.

Amount of relevant experience required

23. The amount of relevant experience required will vary depending on which of the following four items in Schedule 1, Part 3, Division 1 of the TASR the individual is seeking to rely on for the purpose of meeting the qualifications and experience requirement:

Regulation Item

Qualification Amount of relevant experience

301 Tertiary qualification Equivalent of 12 months full-time in the preceding 5 years

302 Diploma or higher award Equivalent of 18 months full-time in the preceding 5 years

303 Work experience Equivalent of 3 years full-time in the preceding 5 years

304 Membership of professional association

Equivalent of 6 years full-time in the preceding 8 years

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For more information on the meaning of ‘tax (financial) advice service’, see TPB(I) 20/2014 What is a tax (financial) advice service? available at www.tpb.gov.au.



Who needs to register as a tax (financial) adviser?

All Australian financial services (AFS) licensees and their representatives that provide tax (financial) advice services for a fee or other reward must be registered with the Tax Practitioners Board (TPB). If you advise your clients about the tax consequences of the financial advice you provide, you are providing a tax (financial) advice service.

‘Representative’ includes:

• an authorised representative of the licensee, which may be:

o an individual

o a body corporate (also known as corporate authorised representative (CAR)

o a partnership

o a group of individuals and/or bodies corporate that are the trustees of a trust

• an employee or director of the licensee

• an employee or director of a related body corporate of the licensee

• any other person acting on behalf of the licensee.

Does my CAR need to be registered?

If your corporate authorised representative (CAR) provides a tax (financial) advice service for fee or reward, part or all of which is payable via a third party, your CAR will also need to be registered. Whether a CAR provides a tax (financial) advice service will depend on the nature of the ASIC authorisations that the CAR has.

In most cases a CAR is considered to provide tax (financial) advice services if they have an ASIC authorisation to provide financial product advice or to deal with a financial product.

What is a tax (financial) advice service?

In most cases, if you advise your clients about the tax consequences of the financial advice you provide, you are providing a tax (financial) advice service.

A tax (financial) advice service consists of five key elements:

1. a tax agent service (excluding representations to the Commissioner of Taxation)

2. provided by an Australian financial services (AFS) licensee or representative (including individuals and corporates) of an AFS licensee

3. provided in the course of advice usually given by an AFS licensee or representative

4. relates to ascertaining or advising about liabilities, obligations or entitlements that arise, or could arise, under a taxation law

5. reasonably expected to be relied upon by the client for tax purposes.

For further information and examples of services visit Tax (financial) advice services

Registration exemptions

There are limited situations where you do not need to register as a tax (financial) adviser. You do not need to be registered if you are:

• registered as a tax agent (with no conditions or have a financial planning condition imposed on your registration). This is because your existing tax agent registration already includes the provision of tax (financial) advice services.

• an employee or contractor of a registered tax agent or tax (financial) adviser and you do not provide tax (financial) advice services in your own right. However, if you are working for a company or partnership which charges or receives fees for tax (financial) advice services, the company or partnership might need you (as an individual) to be registered so that it has a sufficient number of registered individual tax (financial) advisers.

• a legal practitioner providing tax (financial) advice services as a legal service under a state or territory Legal Profession Act that regulates legal practice.

Penalties for unregistered tax (financial) advisers

There are significant penalties for anyone found to be providing tax (financial) advice services for a fee or reward or advertising tax (financial) advice services while unregistered.

The Tax Agent Services Act 2009 includes civil penalty provisions for providing a tax (financial) advice service for a fee or reward or advertising tax (financial) advice services while unregistered.

The Federal Court can impose severe penalties for breach of these civil penalty provisions.

https://www.tpb.gov.au/tax-agent-services

https://www.tpb.gov.au/tax-agent-service

http://www.asic.gov.au/for-finance-professionals/afs-licensees/

https://www.tpb.gov.au/tax-financial-advice-services

https://www.tpb.gov.au/terms-explained#S

https://www.tpb.gov.au/terms-explained#S

For further information refer Civil penalties under the tax agent services regulatory regime

For consumers - checking your tax (financial) adviser is registered

To check if a tax (financial) adviser is registered search the TPB Register.

https://www.tpb.gov.au/tax-financial-advisers-civil-penalties-under-tax-agent-services-regulatory-regime

https://www.tpb.gov.au/tax-financial-advisers-civil-penalties-under-tax-agent-services-regulatory-regime

https://www.tpb.gov.au/search-register