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TASA code of conduct changes ‘open costly can of worms’


“Loosely drafted” legislation means agents will need to err on the side of caution and will incur legal expenses, John Jeffreys says.

By Philip King 14 minute read

Changes to the tax agents’ code of conduct require urgent clarification by the TPB and the additional compliance burden will prove a “very expensive exercise for many accounting firms”, says tax specialist John Jeffreys.

Mr Jeffreys said a webinar he held on the topic this week attracted a huge audience and highlighted a range of unresolved issues with code items 15 and 16, which were added by Treasury Laws Amendment (2023 Measures No. 1) Bill in November.

Item 15 prohibits tax agents from employing or using the services of disqualified entities to provide tax services on their behalf without approval from the TPB.


Item 16 bans tax agents from supplying tax services through arrangements with an entity they know, or should reasonably know, is disqualified.

Mr Jeffreys said the legislation was “loosely drafted” and two TPB draft information sheets on the items left many unanswered questions.

For example, item 15 took in employees, contractors and anyone who shared in the revenue of the tax practice, here or overseas. However, it left a grey area for peripheral employees, such as administrative staff, and that meant tax agents should err on the side of caution.

“Particularly if you're a smaller practice you might think, well, I thought everybody was involved. And maybe that's the case. And so what I say is that if you're in doubt, treat the person as not providing peripheral services solely.”

Questions were also raised by item 15’s use of the phrase “on your behalf” of a tax practitioner, which was explained by the TPB as “people under your supervision” regarding another code item. But again that threw up edge cases, he said.

“Does this apply to advisers of tax agents? You've got a technical matter, and you go along to somebody – a law firm, accounting firm, something like that – and you obtain specialist advice. Now, are those people providing tax agent services on your behalf?”

Mr Jeffreys said specialists employed by tax practices but not acting under supervision, for example, experts in R&D concessions or SMSF auditors, would be encompassed by the code and an agent would need to confirm they were not disqualified.

That requirement meant agents would need to:

  • Inquire if people were disqualified by checking the TPB website.
  • Conduct proof-of-identity checks.
  • Obtain written assurance that the person or entity was not disqualified.
  • Change employment contracts as they fell due.
  • Keep notes on pertinent conversations.

He said the TPB was warning that failure to act in this manner would put an agent in breach of the code.

“The TPB has said you need to do these things, but they have given you no assistance in what to say in these circumstances,” he said.

“Every employment contract – every contract that you have with people that you engage to provide services on tax services on your behalf – needs to change according to the TPB otherwise you are breaching the code of professional conduct.”

Tax agents would need to get legal advice on the implications of these changes and the costs would soon add up.

“Your employment contract must impose an obligation upon that person to tell you if they are ever become a disqualified entity and also to enable you to terminate the contract on the spot if they give you such advice,” he said.

“Now the TPB warns all tax practitioners that you need to take legal advice about that particular clause, that is to summarily dismiss an employee. They do not tell you or give you any assistance on the employment law issues that relate to this. They just say go and get advice from a lawyer.

“This is going to take cost and time and money. It's all a wonderful policy objective, but this is going to be a very expensive exercise for many accounting firms.”

He said another question was whether a client could be a disqualified entity, for example, because they were an undischarged bankrupt or in external administration. 

“The issue is whether the tax agent services being provided to this client breach code item 16 if the client is a disqualified entity.

“In my view, in the plain words of code item 16, it is a breach of this item if tax services are provided to a disqualified entity.  This is due to the very broad definition of ‘arrangement’. However, I am quite sure that this is not the intention of the law.  This matter needs to be clarified by the TPB urgently.”

He said item 16 as it stood would also apply to software providers, which meant tax agents would have an obligation to ask them whether they were disqualified entities.

“I am reasonably certain that the changes to TASA are not supposed to apply to software houses. However, I cannot escape the conclusion that code item 16 can apply to these arrangements.

“The TPB needs to give clarification and make it plain that software providers cannot be within the disqualified entity definition.”

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Philip King

Philip King


Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

You can email Philip on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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