Accountants and bookkeepers have welcomed a last-minute reprieve from eight new obligations scheduled to begin in August, but feel more should be done to shield small practices from further ‘red tape’.
A legislative instrument signed by Assistant Treasurer Stephen Jones, containing eight new obligations for tax practitioners on top of the existing Code of Professional Conduct, came into effect on Thursday.
The Assistant Treasurer says all eight obligations were shared with industry practitioners in a draft consultation period, and that a transitional period was always built into the rule change.
Nevertheless, the directive — revealed just weeks before the rules came into effect — appeared to surprise accountants and bookkeepers already dealing with the tax-time rush.
Tax practitioners expressed particular anxiety about measures requiring accountants to flag “any matter” that could influence a client’s decision to engage them, and to disclose “false, incorrect or misleading” statements from their clients to the Tax Practitioners Board (TPB).
The requirement for bolstered record-keeping practices also raised alarm bells among some practitioners.
Following public opposition from both industry giants and mum-and-dad operators, the Assistant Treasurer on on July 31 agreed to postpone the new measures.
These obligations will now come into effect on January 1, 2025, for large tax practitioners, and on July 1, 2025, for firms with fewer than 100 employees.
Amending the directive to clearly outline the transitional period will “provide certainty for industry” as the TPB finalises guidance for tax practitioners, Jones said last week.
Now, the sector hopes meaningful consultation will address its underlying concerns before the rule changes come into play.
Despite initial guidance from the TPB saying its new disclosure rule “relates only to matters that could significantly influence a reasonable client’s decision to engage the tax practitioner”, peak organisations have lingering fears about the scope of disclosures to clients.
Industry leaders are also questioning what problems the rule change — initiated as part of the government’s broad response to tax practitioner misconduct and the PwC scandal — is designed to solve.
The Institute of Certified Bookkeepers is now calling upon its members to voice their concerns to the Assistant Treasurer and the TPB, arguing that delaying the rules is not enough.
In a statement, the organisation said the incoming rules will require tax practitioners to “dob in” their clients if they make a statement to the ATO that is later found to be incorrect.
The section requiring the disclosure of “any matter” that could influence a client’s decision to engage a tax practitioner is another key sticking point.
“We continue to seek the withdrawal of the Determination for further consultation and co-design so that the law can be implemented effectively to achieve the desired outcomes,” the organisation said.
Earlier, Matthew Addison, executive director of the Institute of Certified Bookkeepers, said tax practitioners understand the need to address the “bad behaviour of a few” actors.
“Ethics, integrity and honesty are essential elements of us being in community and business is no exception or exclusion,” he said in a statement.
But the ability for accountants and bookkeepers to guide their clients towards tax compliance could be compromised by the rules as they stand, Addison continued.
“In a period of time when every statistic and survey says small business owners are struggling, they need to seek advice and they need to be open and honest without fear of it instantly becoming a reportable offence with consequences.”
Enhanced record-keeping requirements will further constrain tax practitioners, driving up the costs they hand down to clients, Addison added.
“At a time where the cost of doing business is a significant impact on the increasing failure rates and those closing their doors, yet another increase in costs and red tape is not justified.”
Other leading industry groups have welcomed the extended timeline, and hope it will provide an opportunity for the sector to explain its concerns in detail.
While welcoming the deferral, The Tax Institute intends to push for changes to rules requiring accountants to report clients who do not correct false or misleading statements within a reasonable timeframe, senior advocate Robyn Jacobson said on social media.
Notwithstanding the existing TPB guidelines, the Tax Institute will also seek changes to the rule requiring tax practitioners to alert their clients of “any” matter that could influence their decision to engage a practitioner.
Ram Subramanian, interim head of policy and advocacy at CPA Australia, shared a similar view.
“The additional requirements were introduced without adequate consultation and the legitimate concerns we had raised previously were not addressed,” he said in a statement.
“We are pleased that the Assistant Treasurer has now committed to engaging with us and other stakeholders over our concerns.”
The TPB says fresh consultations will open in early August, with final guidance products rolling out between late September and early November.
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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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