At a glance
- Tax regulator assures accountants the focus of the new determination is systemic wrongdoing, not minor mistakes.
- Rising complexity of compliance is a major drag on productivity but also reinforces the importance of accountants for helping SMEs navigate the landscape effectively.
On Thursday, IPA Technical Policy General Manager Tony Greco led a panel discussion about professional obligations in a shifting regulatory landscape, highlighting that accountants are navigating a shift from a principle-based code to something more prescriptive.
“We’ve given the minister unilateral power to do what he wants,” he said. “The first use of that power [the Tax Agent Services (Code of Professional Conduct) Determination 2024] scared the living daylights out of us.”
“We’ve now got mandatory obligations going against our code of conduct obligations to protect our clients.”
Tax Practitioners Board (TPB) Chair Peter de Cure AM took a reassuring tone, emphasising that the brief and client reporting obligations around false and misleading statements are focused on issues of material significance and aberrant behaviour.
“I’m not sending our investigative team out there to look for an instance where you didn’t self-report a breach, or to look for an instance where you should have reported a client’s false or misleading statement,” he said.
“And with false and misleading statements, you’ve got to give clients an opportunity to correct the statement. You’ve got to have concluded that it was deliberate or reckless.”
“The TPB is looking for systemic risk – the high-risk matters in the system. We’re looking for the scheme promoters, the people that steal refunds, the people the ATO refers to us consistently over claims without proper substantiation.”
Judgment calls
Greco queried de Cure on exactly how far accountants needed to go to untangle related entities, giving the example where an accountant might be asked to work with a family group, but determines one of the children is a bad apple.
“It’s pretty tough when the controlling mind of a family organisation says, ‘You do all the kids or you do nothing’,” de Cure said.
“But I think you sit down with them and say ‘Unless you can control that, I can’t help you’.
“I don’t want to be an impractical regulator, but I’ve got to ask you, is it really worth the whole of your business to have that one family client? Because if the controlling mind attitude is one-in, all-in and you can clearly demonstrate that one’s doing the wrong thing, then I think you’ve got to start to question the controlling mind and whether he’s prepared to play on a fair playing field.
Meanwhile, De Cure said if an accountant does feel the need to notify the TPB, extensive details were not required.
“We don’t need chapter and verse, or a brief of evidence. We just need a sensible notification that you believe X, Y and Z is going on, and this agent is the perpetrator,” he said.
“If we want something more, we’ll come back to you.
“If you can use whistleblower protection, use it; if you can’t, tell us that you want it to be confidential and we will do everything we can to keep it confidential.”
Productivity problems
Australian Small Business and Family Enterprise Ombudsman Bruce Billson said the rising tide of regulation was tanking Australian productivity.
“It is terrifying small businesses. It’s gumming up our economy,” he said.
“Too many [small business owners] are wondering why they bother. They are exhausted and overwhelmed. The processes that impact them don’t seem to take account of their needs.
“46 per cent of small businesses in the last full tax year weren’t profitable. 75 per cent of self-employed full-time people took home less than the average in total weekly wages.”
That problem, Billson said, also represents opportunities.
“One of the fastest growing areas of the economy are people obliged to seek expertise to navigate this evermore burdensome compliance and regulatory environment,” he said.
“Small and family businesses particularly rely incredibly hard on you.
“I champion you every day, because you are the best asset the ATO has, and they should treat you that way, with appropriate arrangements, with counsel, with advice, with forewarning, so that you are trusted, because you know the mind of the tax office, and therefore can provide quality advice.”
Billson said beyond the headwinds created by regulatory compliance, the most common complaint his office encountered was not getting paid, with payment disputes accounting for 40 per cent of the matters it handles.
TPB investigation advice
De Cure offered some final advice for any accountant who found themselves receiving a call from a TPB investigator.
“Think about the paradigm of the person who is calling you. Their job – seven-and-a-half hours a day, five days a week – is to investigate poor behavior,” he said.
“So they’re coming from a particular perspective. Treat them with a bit of humility and responsiveness. Talk to them openly and you’ll be surprised how well they respond.
“If you tell them, ‘Get in the real world, this is how things work,’ they might get their back up.”
Want to learn more about the latest developments and issues affecting the accounting landscape which was discussed at the 2024 National Congress? Read the next article in the 2024 National Congress series: ATO targets small business tax debt
