The independent review, initiated in early 2019, contains 28 recommendations to the government that seek to increase the independence of the TPB and strengthen its ability to regulate the profession.
A significant recommendation put forward by review chair Keith James includes an expansion of sanctions available to the TPB to address misconduct by tax practitioners.
These new sanctions include permanent disbarment from the tax profession, enforceable undertakings, interim suspensions, quality assurance audits, infringement notices and external intervention to wind up a practice.
The review believes the additional sanctions are necessary to plug a gap in the TPB’s disciplinary powers, which currently only include low-level sanctions such as written cautions and further education or high-level sanctions such as the suspension or termination of registration and civil penalties.
The government has refrained from throwing its support behind the recommendation, noting that the Treasury will instead consult with the profession on the appropriateness of providing new sanction powers to the TPB.
‘Contentious’ new ATO administrative penalty regime
The review has also called on the government to introduce a new administrative penalty regime, administered by the ATO, to impose penalties on tax practitioners who demonstrate an intentional disregard of the taxation laws in making, or being involved in making, a statement to the Commissioner of Taxation.
It argues that the current law only allows the commissioner to impose a penalty for false and misleading statement on the taxpayer, and not the tax agent or unregistered preparer who demonstrated intentional disregard of a tax law.
“This proposal provides a more efficient and potentially more effective means for the ATO to impose sanctions with a view to changing behaviour of a small group of high-risk tax intermediaries,” the review said.
“The proposal also provides low-cost, administrative pathways to deal with any subsequent dispute. The civil penalty regime requires an application to the Federal Court which places an enormous cost and time burden on tax intermediaries as well as the TPB to dispute the claim.”
In response, the government believes additional powers being provided to the TPB should be considered first before considering the need to introduce ATO-administered administrative penalties.
Chartered Accountants Australia and New Zealand tax leader Michael Croker said the proposed ATO penalty regime was contentious and required further scrutiny from the profession.
“Tax practitioners will be relieved that the government has not immediately embraced the report’s contentious recommendation of a new administrative penalty regime, administered by the ATO, which would have seen penalties imposed on tax practitioners who intentionally disregard tax laws in making a statement to the commissioner,” Mr Croker said.
“Instead, the government has instructed the Treasury to consult with stakeholders on the appropriateness of providing new sanction powers to the TPB.”
CPA Australia tax policy adviser Elinor Kasapidis said the professional body would examine each recommendation in detail and engage in consultation with the government to ensure that the changes would not place undue pressure on the profession.
“More consultation is needed on many of the recommendations to ensure the ramifications for the profession are fully understood,” Ms Kasapidis said.
“The challenge ahead is to implement the review recommendations in a way that is workable and doesn’t impose an unnecessary burden on tax professionals.”
More to come.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.