ATO Commissioner Heferen says tax agent “fairness test” goes beyond the law alone

Australia’s tax experts must not just adhere to the law, but heightened community expectations of the profession, says Australian Taxation Office Commissioner (ATO) Rob Heferen.

Heferen delivered a keynote speech to the Tax Institute’s Tax Summit on Thursday, reflecting on the symbiotic relationship between the ATO and tax professionals.

Trust between both sides is vital for the tax system to operate effectively, Heferen said.

“After all, there is little benefit to a tax office that doesn’t work collaboratively with those who interact with us,” he told attendees of the Sydney event.

But Heferen’s speech arrives in the fallout of a crisis that severely tested the relationship between the ATO and tax professionals: the PwC scandal, in which senior consultancy staff provided clients with tax details gleaned in confidential briefings with the Treasury.

The federal government responded to that crisis with a suite of measures designed to clamp down on poor conduct in the tax profession, including a new set of ethics rules for tax agents, on top of their existing Code of Professional Conduct.

Industry representatives, including the Tax Institute, argued some of those requirements went too far and could hurt local accountants; in light of those concerns, the government this week agreed to further rework the rules before they come into effect in 2025.

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In light of that back-and-forward, Heferen reminded tax professionals that they must not only adhere to legal standards, but community standards.

“The unfolding of the PwC scandal over the past 18 months, arising from 2016, has made it abundantly clear that public acceptance of behaviours that seek to game the tax system or circumvent taxes owed under Australian law, particularly by those seen as powerful or on the ‘inside’ will not be tolerated,” he said.

Political, media, and social media commentary about breaches of confidentiality in the PwC matter “should be taken as shorthand for a range of community concerns,” Heferen continued.

“The standard is a lot higher than just not breaching a confidentiality agreement or general ethical duties of confidentiality.

“It is a standard of contributing to laws in the best interests of the Australian public.”

Failing to meet that standard can have significant consequences, beyond those spelled out in the law.

“While these scandalous and deceitful behaviours were likely to only belong to a small subset, such behaviours have the potential to impact the community’s confidence in the tax profession as a whole,” he said.

“As regulators, we have a long memory, but of course, the Australian public has an even longer one.”

While finding the right balance of trust and regulation is still a live issue, Heferen expressed his thanks to the countless tax professionals committed to fair and ethical conduct.

“The fairness test for all of us is ultimately in how we respond to the expectations of the people we serve,” he said.

“And since commencing as Commissioner, I’ve seen a genuine willingness across your profession to respond with integrity, and I want to thank you for that.”

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