The Minister for Revenue and Assistant Treasurer, Peter Dutton, announced today that the Government will provide $57.5 million over four years for the implementation of a new national legislative framework for tax practitioners.
The new regime will:
- establish a national Tax Practitioners Board, to replace the existing state Tax Agents Boards;
- create a Code of Practice to govern the provision of tax practitioner services;
- allow a more flexible approach to regulating tax practitioners through a wider range of disciplinary sanctions; and
- provide for a safe harbour from tax shortfall penalties for false and misleading statements for taxpayers where they engage a registered tax agent to prepare their return and take reasonable care to provide that person with all of the information necessary to complete it.
The new regime will also provide for the registration of Business Activity Statement (BAS) service providers and enable the registration of certain types of tax specialists.
‘A national framework will ensure consistency in the registration and regulation of tax practitioners’, the Minister said. The new funding will enable the streamlining of registration and regulation processes, and provide better and more flexible regulation through access to a greater range of sanctions plus an enhanced ability to undertake proactive regulatory work. In addition, the new funding to the ATO will allow it to provide tailored services to a wider range of tax practitioners. Together, these initiatives should ensure that tax practitioner services are high quality and accessible and that taxpayers who use tax practitioners have greater certainty and appropriate protection.
Supporting Information
Why is this important?
- The current regulatory system is out of step with the taxation system.
– The original legislation was introduced in 1943.
– Self-assessment, as well as other reforms to the tax legislation, has lead to an increased reliance on tax practitioners.
– The introduction of GST has resulted in unregulated people providing BAS services. This affects the integrity of the tax system.
Who will benefit?
- Taxpayers will benefit from greater certainty and protection when they use tax agents. Taxpayers who engage tax agents will no longer be liable for tax shortfall penalties if they have taken reasonable care to provide the correct information to their agent.
- Tax practitioners will benefit from consistency in registration and greater regulation. They will also benefit from a wider availability of ATO tailored products.
- The new regime will assist the ATO by increasing the number of accurate returns, reducing enquiries, and reducing audit activity. It is also expected to improve the relationship between tax practitioners and the ATO.
What funding is the Government committing to the initiative?
- $57.5 million over four years with the funding subject to review in October 2008.
What have we done in the past?
- In July 1992, tax professionals, the Tax Agents Board of NSW, the Attorney-General’s Department and the Tax Office agreed to undertake a National Review of Standards for the Tax Profession. In November 1994, a report was issued which recommended a number of improvements to the regulation of tax agents.
- On 6 April 1998, the then Assistant Treasurer announced changes to the regulation of tax agents. However, due to extensive tax changes announced in late 1998, further development of the regime was put on hold, at the request of the tax profession, to allow it time to implement the tax changes.
- Public release of the exposure draft is expected in mid-2006.
When will the initiative conclude?
- Legislation could be introduced in late Spring 2006 or Autumn 2007. However, given the need for time to communicate the changes, a date of effect of no earlier thanFebruary 2008 is likely.