The Coalition will seek to reverse a set of new and highly controversial rules for tax practitioners, arguing they will impose unnecessary red tape on accountants and bookkeepers.
A hotly contested legislative instrument, signed by Assistant Treasurer Stephen Jones, imposes eight new rules for tax practitioners on top of their existing obligations under the sector’s Code of Professional Conduct.
The rule change comes as part of the government’s response to the PwC scandal, and its mission to ensure trust and integrity in the tax profession.
The measures were meant to apply from August 1.
But industry leaders argued the directive, which was only revealed in July, would strain the relationship between smaller tax practitioners and their clients.
The directive also required accountants to disclose “any matter” that could influence a client’s decision to use their services, a measure that industry lobbyists said was too vague.
A requirement to flag “false, incorrect or misleading” statements made by a client to the Commissioner of Taxation or the Tax Practitioners Board drew further ire from industry lobbies, which feared it could contradict existing client confidentiality rules.
In light of those concerns, the Assistant Treasurer agreed to push the rule changes into 2025 in an updated version of the legislative instrument, while continuing consultations with affected parties through the Tax Practitioners Board (TPB).
The Coalition argues that concession does not go far enough.
In a joint statement on Tuesday, Shadow Treasurer Angus Taylor, Shadow Assistant Treasurer Luke Howarth, and Shadow Competition Minister Dean Smith confirmed the Coalition will move to disallow the directive entirely.
“This isn’t the right approach in a cost of living and cost of doing business crisis,” said Shadow Treasurer Taylor.
“Local accountants and bookkeepers have been blindsided by this new red tape yet Labor has refused to listen to community feedback.”
Shadow Assistant TreasurerHowarth said the “unwarranted” measures would amount to a “pile of new red tape”.
Senator Smith called on crossbench senators to support the Coalition’s push to disallow the new ministerial directive, to “reverse the regulatory burden and uncertainties that will fall on accountants, bookkeepers, and other financial professionals at a time when they can least afford it”.
Although the directive technically came into effect on August 1, there are now 15 Senate sitting days in which the Coalition can try to reverse the rule change.
Professional organisations, including the Institute of Certified Bookkeepers, seek the removal of rules requiring the disclosure of false or misleading statements made by a client.
They also want a narrowing of the rule requiring practitioners to disclose “any matter” that could influence a client’s decision to use their services.
For its part, the government says guidance under development by the TPB will help accountants and bookkeepers understand and comply with the rules before they come into effect.
Preliminary guidance from the TPB already cuts against some of the worst fears presented by the accounting sector, namely that the requirement to disclose “any matter” to clients is unnecessarily broad.
“The obligations requiring disclosure to clients of relevant matters relates only to matters that could significantly influence a reasonable client’s decision to engage the tax practitioner to provide tax agent services,” the TPB said, emphasis their own.
“Despite some commentary in media, the obligation is an objective test and does not apply to insignificant matters, nor matters that do not relate to a practitioner being a competent and fit or proper person to provide tax agent services.”
The TPB has already clarified that new record-keeping rules for tax practitioners will not be treated as a one-size-fits-all solution, and that complying with the rules won’t require much extra work beyond what is already expected.
“The new obligations were developed to recognise different business models of a small practice and a large firm,” it said.
“What is required from each practitioner will turn on their individual circumstances.
“For example, a system of quality management for a sole practitioner will be fairly streamlined, simple and straightforward, because that practitioner is unlikely to require much more to be confident that they are compliant with the Code in providing tax agent services.”
As the Coalition pushes to scratch the entire ministerial directive, the TPB has confirmed it will “seek initial feedback and input from professional associations” before releasing further draft guidance.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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