In its submission to Treasury ahead of the TPB review, the Tax Institute has called for the review to consider the conditional registration system currently in place, where 22 possible conditions can be placed on registered tax agents to limit the type of services they can provide.
While acknowledging that conditions on a registration are beneficial in providing assurance to clients that the tax agent has expertise in the area, it may also be problematic to enforce and may also force practitioners who are limited to one specific area to withhold advice on other areas, at a detriment to the client.
“How is a consumer to know whether the registered tax agent has a condition or conditions imposed on their registration if they do not look the tax practitioner up on the Board’s register? In practice, how many consumers do this?” wrote Tax Institute president Tim Neilson in the submission.
“What prevents a tax practitioner with a conditional registration going beyond the boundaries of their conditional registration and providing advice in an area of tax law for which their registration does not permit them to do?
“The review should also ascertain whether the competence requirements of the code are sufficiently adequate, such that when applied in practice they inhibit practitioners from straying outside of their areas of expertise, or would be so if the Board was sufficiently resourced to apply them, or if in fact they require alteration.”
Part-time work discrimination
The submission also noted the need to review the application process as a part-time practitioner, noting that current rules are no longer fit for purpose in today’s flexible work environment.
Current TPB requirements under Tax Agent Services Regulations item 205 and 206 require the equivalent of eight years of full-time relevant experience in the past 10 years.
“If in the past 10 years, an individual worked full-time for five years, took six months parental leave and worked the remaining four and a half years on a three-day-per-week basis, this would equate to 80.4 months of work, which is insufficient to satisfy these requirements,” Mr Neilson said.
“Also, an individual working four days per week who took any period of extended leave, parental or otherwise, would not qualify under these regulations.
“The nature of work has also changed in recent years. Employees work more flexibly and many more employees in the tax profession work part-time. The marketplace is generally recognising that ‘life experience’ is also relevant, and employers are changing their approach to part-time employees. The length of time a person spends in a role is also less and less relevant to when they might be promoted. Rather, what they have actually achieved in that role is the key.
“We submit that the tax agent registration rules are out of step with the modern world in this regard and should be altered to remove the level of discrimination they currently contain against part-time employees.”
Adequately resourced regulator
The Tax Institute also questioned whether the TPB is adequately resourced to enforce the code and carry out its disciplinary functions despite the $20.1 million funding announced in last year’s federal budget.
It noted that out of the approximately 120 TPB staff members, 80 of them are allocated to handling registrations while the remainder are involved in reviews and investigations of registered and unregistered agents.
“If most of the Board’s resources are applied to registering agents and renewing their registration, there is unlikely to be many resources left to enforce the code and apply other penalties and disciplinary sanctions other than to pursue the most egregious cases as the Board does now,” Mr Neilson said.
“If the Board is to strengthen the integrity of the tax system and profession, we query whether the Board is sufficiently resourced to carry out this function.”