Update 30 June 2008- Joint submission on the revised Exposure Draft Tax Agents Services Legislation  
 
The Institute, in conjunction with CPA Australia and NIA, has lodged a joint submission on the revised Exposure Draft Tax Agent Services Legislation and explanatory material. The covering letter and detailed submission are available via these links. 
 
In the submission, the joint accounting bodies acknowledge the numerous amendments and improvements to the policy and drafting evident in the revised legislation and explanatory material.  
 
Our key recommendations are:

• The legislation should be amended to put beyond doubt that work outsourced to a contractor will not breach the legislation if the contractor is remunerated for their services by the agent since no fee has been directly charged by the contractor to the end user client. This will be consistent with the competency requirement which in our view rightly targets the final outcome rather than the commercial process.
 

• The proposed regime replaces the current regime for partnerships to be tax agents and the partners to be the nominees of the partnership, with a requirement for partnerships and sufficient partners therein to be registered tax agents. This approach may require some adjustment as a partnership will include specialists practicing in areas such as R&D or transfer pricing, for whom the proposed tax agent eligibility requirements may be inappropriate.
 

• The two requirements of taking reasonable care in ascertaining the state of affairs and applying the law should be removed, or otherwise redrafted, as we believe the competency requirement is sufficient and more clearly reflects the policy intention of limiting reasonable care and applying the law, to the scope of the engagement or contractual relationship between an agent and a client.
 

• The draft explanatory memorandum requires amendment concerning the management of conflicts of interest to better align with the draft legislation which requires that conflicts be managed, rather than avoided.
 

• To enhance its perceived independence, the secretariat for the Board should not be drawn from the ATO.

• The independence of the Tax Practitioners Board (the Board) from the Commissioner of Taxation has been enhanced by creating a stand-alone Act rather than as part of the Tax Administration Act 1953. The general administration of the provisions would be vested in the Board rather than in the Commissioner. Furthermore, financial independence of the Board has been bolstered by quarantining its funding for its exclusive use. 
  
• The wording of several provisions of the Code of Professional Conduct and the explanations in the explanatory memorandum have been amended to focus more on the ultimate outcome rather than the process employed to reach that outcome. For example, the requirement to supervise and control has been replaced with a requirement to provide tax agent services competently.  
  
• Certain aspects of the tax agent registration system have also changed, including the removal of the requirement to carry on a business. This is considered to make the separate category of ‘nominee’ registration redundant. 
  
• Additional safe harbour from administrative penalty for taxpayers has been introduced for the late lodgement of a document in the approved form resulting from a tax agent’s or a BAS agent’s careless error in certain circumstances.