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Digital Certificates/Tax Agent Registration
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Tax Agent Registration - 23 February 2007 update 
 
At the ATO Tax Practitioner Forum (ATPF) meeting on 23 February 2007, the ATO advised that the Tax Agents' Boards will be issuing Guidance on the registration of trust/trustee on their website. 
 
Further, the ATO sees limited value in forming a formal working group until the Exposure Draft on the proposed new regulatory framework for tax agent services is released. The ATO has been advised that the Exposure Draft may be released in March 2007. 
 
Digitial Certificates/Tax Agent Registration - 10 November 2006 update 
 
A number of questions regarding the registration of trusts as tax agents, were put to the ATO at the ATO Tax Practitioner Forum (ATPF) meeting on 10 November 2006. The draft agenda containing these questions can be viewed here. 
 
The ATO proposed to commence a working group to deal with the tax agent registration, digital certificate and trust issues in the new year. However, this will depend on the status of the proposed new legislative framework for tax practitioners as the new framework would have an impact on some of these issues. 
 
Digital certificates/Tax Agent Registration - 19 May 2006 update 
 
There was some discussion on the digital certificate project at the ATO Tax Practitioner Forum (ATPF), which took place on Friday 19 May 2006. Please refer to the minutes of the meeting which can be found at the following link, and, in particular, consider agenda item 9 and 10 and the associated ATO responses.  
 
In summary, the ATO advised that the Chairs of the Tax Agents Boards met on 30 and 31 March 2006 and, inter alia, considered the issue of the registration of trusts. It was unanimously agreed that the law does not allow the registration of trusts but it was acknowledged that a trustee for the trust, whether a corporate trustee or a natural person, may be registered as a tax agent in their own right. Thus far no incidents of registration of a trust as a tax agent have been found. However, please note that a trust structure may be still be used provided the condition set out in the 24 February update are satisfied. 
 
A number of possible business structures for tax agent practices were also considered. One such structure was a partnership of corporate trustees which the chairs of the Board unanimously found to be unsupported by the law.  
 
Members who are considering a new practice structure are strongly recommended to seek Board Approval before taking any irresponsible steps. 
 
On a separate note and in response to a specific agenda item, the ATO confirmed that a pre-requisite for a digital certificate being issued is that the entity in question should be registered on the Australian Business Register.  
 
Digital certificates project - 24 February 2006 update 
 
There were detailed discussions on the digital certificates project at the meeting of the ATO Tax Practitioners Forum (ATPF) on 24 February, with the professional bodies raising a number of issues relating to the trust concerns raised by members, amongst others. The detailed agenda item and draft ATO response can be viewed here.  
 
The ATO indicated that:

  • For companies which are corporate trustees and registered or seeking registration as tax agents, the view is that if the Board can establish sufficient connection between the trustee (which is registered) and the trust, then it can be confident that the registered entity and the individuals in the registered entity who carry responsibility are sufficiently in control of the activities of the trust to allow the business arrangement to continue.  
     
  • It will be meeting with the Tax Agents' Board Chairs at the end of March and will be including this as an item for discussion.
The Institute participates in discussions in relation to Digital certificate migration project 
 
The Institute attended a meeting with the ATO on Friday, 3 February to discuss the move to migrate tax agents to digital certificate access for the Tax Agent Portal. 
 
The ATO outlined that there were many tax agents who had not applied for a digital certificate. Some of the issues faced currently were tax agents trading through an incorrect entity (e.g. registered as an individual but trading through a company), unsupported technology (i.e. tax agents using outdated technology which is no longer supported by the manufacturer or the Tax Office), server and terminal service issues, tax agents trading through a trust and ABN/TAN mismatches.  
 
The ATO is proposing to issue a broadcast to remind tax agents on the cut off dates. Tax agents who are unable to meet these deadlines will be given an opportunity to contact the ATO and to provide an explanation. The broadcast will issue in the near future.  
 
Tax agents who trade through a trust arrangement have been advised they can apply for digital certificates using the ABN of the trust as an interim arrangement to ensure secure access for the tax agent however this is subject to further discussion. This issue has not been fully resolved. The ATO indicated that it will be having meetings with the tax agent board, the professional bodies and tax practitioners to resolve this issue. We will keep you posted on any developments as they unfold. 
 
ATO communication on applying for digital certificates - tax agents trading through trusts (posted 9 December 2005) 
 
Following on from discussions at the ATPF meeting of 25 November 2005, the ATO sent the following electronic communication on 6 December 2005 to tax agents identified as trading through a trust. This is reproduced below. 
 
"We have been consulting with tax agents, who trade through a trust, about how their business structure relates to digital certificate access for the Tax Agent Portal. These discussions indicated that more detailed work needs to be undertaken to address this issue and an interim solution is required while this work is undertaken. This issue was also recently raised at the quarterly ATO Tax Practitioner Forum. 
 
We have decided that those tax agents who currently have their trust’s ABN connected to their tax agent registration can either:
  • quote the ABN of the entity registered as a tax agent when applying for a digital certificate, or 
  • in this interim period, apply for a digital certificate quoting the ABN of the trust entity trading as the tax agent.
This is an interim measure to ensure that registered tax agents who trade through a trust have secure access to the Tax Agent Portal. 
 
Where a tax agent chooses to use the ABN of their trust to apply for a digital certificate, Tax Office systems will be used to confirm the authorised person and connect them to the tax agent registration. Where this is not possible, Tax Office staff will contact the tax agent to clarify details to proceed with the application. 
 
These tax agents will have until 31 March 2006 to complete the digital certificate set-up for themselves and their staff. 
 
Further discussions between the Tax Office, tax agents and professional associations will focus on resolving this issue. 
 
No further action is needed by those tax agents who have received, or have already applied for, their digital certificate quoting the ABN of the entity registered as a tax agent." 
 
The Institute will be involved in the further discussions mentioned in the above ATO communication. 
 
Digital certificates project - an update from ATPF meeting of 25 November 2005 
 
There were detailed discussions on this matter at the meeting of the ATO Tax Practitioners Forum (ATPF) on 25 November 2005, with the professional bodies raising a number of issues in relation to the trust concerns raised by members. The detailed agenda item and draft ATO response can be viewed here. 
 
At the meeting the ATO also indicated that:
  • As the issues surrounding digital certificates and tax agents who trade through a trust continue, an extension to 31 March 2006 will be granted to those agents who are identified as being affected by this issue. A letter will be sent out by the ATO to the tax agents affected.  
  • The ATO will be allowing tax agents to apply for their digital certificate using their trust ABN. This will avoid the need to obtain a second ABN.  
  • The ATO will be speaking to the tax agents' boards about the issue in order to resolve it.
Background (posted 1 November 2005) 
 
The Institute has lodged a submission with the ATO on a confidential discussion paper issued by the ATO in relation to the abovementioned matter. The discussion paper outlines the ATO's proposed strategy to address this matter.  
 
The Institute has also prepared the following two agenda items on this issue, on behalf of the professional bodies, for discussion at the next meeting of the ATO Tax Practitioner Forum: In addition, the following comments from one member were sent to the digital certificate area of the ATO in relation to the above issues log items:  
 
"I had a conversation with somebody at the Tax Agents Board about this matter and the person that I was speaking with informed me that apparently in the last week or so there has been something of "torrent" of tax agents advising the Board that the ABN number that should be linked to their Tax Agent number (for the purpose of the Digital Certificate application) was that of a trust and that apparently the Board was yet to make a decision in terms of the approach here and that what is more, it was highly likely that the Board will need until about the end of December 2005 in which to make a decision on the approach etc.  
 
I replied that this was understandable but the communication that I had received from the Board in relation to the matter ..... indicated that as of 10 October 2005, Tax Agents would not be permitted to have access to the Tax Portal in the absence of a valid digital certificate to which the person responded by saying that the Board "would have to" ensure that access to the Tax Portal continued on past that date until such time as the Board had come to a decision in terms of Tax Agents trading through trusts. When I asked the person whether there was any plan to provide something in writing to this effect (in that all that we have got at the moment is the letter indicating the close-off date of 10 October 2005), he could not say but indicated that the Board would most probably get back in touch with me in about two weeks. It seems to me that this is not all that satisfactory in that past experience that I have had with the ATO suggests to me that something should be in writing here."  
 
Corporate tax agent ownership rules  
 
Although not involving a trust, an additional issue sent to the Professional Associations Liaison Unit for comment, which is not in issues log, is as follows:  
 
"I have had one member inform me that he set up a practice structure about 5 years ago that involved shares held by non-principals of the practice (spouses, &c.). The Tax Agents' Board is now advising him that this structure cannot be registered as a corporate tax agent, because at least 25% of the equity in practice entity is not held personally by the directors.  
 
This would seem to be in line with what is on the Tax Agents' Board website that "Only companies in which qualified director(s) have a substantial interest are eligible for registration [as tax agents]. Qualified director(s) between them must, at all times beneficially own and exclusively control shares that exercise not less than 25% of the voting power of the company. A qualified director is a person who would satisfy the requirements for registration as an Individual tax agent or a nominee." [ITAA 1936 s251BA].  
 
He is concerned that he is faced with substantial costs to restructure and concerned about the tax implications of the re-structure. "  
 
Timetable for conversion to digital certificates  
The professional bodies have concerns with the present timetable for the conversion to digital certificates and believe that there are a number of issues that require resolution before the project can be fully rolled out. These include not only the trading entity issues but also computer software capabilities which are adding to the cost of compliance for many tax agents.  
 
The professional bodies are seeking ATO input on the following questions:
  • Can the ATO please explain what the concern is in accepting trust arrangements as registered tax agents?  
  • The professional bodies believe that the current timetable requires re-consideration in light of the current unresolved issues. In particularly the professional bodies are concerned with the current expiration date to access the tax agent's portal for tax agents who do not have a digital certificate. The professional bodies seek clarity on how the expiration roll out will be managed? Does the ATO consider the present timetable to be realistic in light of the current issues?  
  • The professional bodies would also like the ATO to more widely publicise the help line. Tax practitioners are experiencing problems locating the contact details. Can the ATO please provide an update on how it is managing tax agents who are experiencing computer software incompatibilities? "