Speaking at the Accounting Business Expo, TPB chair, Ian Taylor said that while comments made by ATO commissioner Chris Jordan last week had rightly caused angst within the community, it was a timely reminder for registered tax agents to remember their obligations set out in the Code of Professional Conduct.
Last week, Mr Jordan said that results of its random enquiry program showed that incorrect claiming was worst in agent-prepared returns as compared to self-prepared returns.
“There has been quite a bit of backlash from practitioners as a result of what Chris Jordan said at the Tax Institute conference in Cairns last week,” said Mr Taylor.
“That's not the first time he's levelled the issue at tax practitioners so the issue is what should we be doing about ensuring we do the right thing in terms of the revenue and in terms of our clients.
“Most people can't quote the [14 principles of the Code] and we don't expect you to but what we do expect you to do is to have a basic understanding of what those items are in the Code.”
In particular, Mr Taylor pointed to Code item 4 — ‘You must act lawfully in the best interest of your client’ — as an example of how tax agents can stop their clients from over-claiming work-related expenses.
“This simply means that you do not necessarily do what your clients want you to do,” said Mr Taylor.
“There could be an argument that if you act in the best interest of your client, you do what your client wants you to do but you can only act in the best interests of your client if what you are doing is lawful.
"So if what the client is proposing is unlawful, or against the law, then you should not be complying with that client’s wishes; you should be challenging the client, saying 'this is not the right way, it has to be done this way', and indeed declining to act for the client,” he added.
“If they insist that they're going to go elsewhere, let them go elsewhere, it's not your problem if they go elsewhere. And if they go elsewhere, and everybody took the right attitude, i.e. the law has to be correctly applied, then ultimately they're not going to get anybody who is going to act for them.”
On the ground
Speaking to Accountants Daily, Mr Taylor further detailed the TPB’s work in combatting rogue agents and the sanctions it can apply.
“We investigate cases where there is significant claiming of work-related expenses; we get those referrals from the ATO,” said Mr Taylor.
“So we don't have our own police on the ground to audit practitioners, the referrals come to us from the ATO, when we get a referral, it goes through the normal process of investigation, the practitioner gets an opportunity to put their case and then the board makes a decision as to whether or not there's been a breach and if there is a breach, then what's the appropriate sanction to be applied.”
According to Mr Taylor, the TPB may issue a written caution, issue an order, suspend a registration, or terminate a registration, for failure to comply with the Code.
New whistleblower laws
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced in Parliament late last year, and if passed, will see a single whistleblower protection regime covering the corporate, financial and credit sectors.
Mr Taylor believes the new legislation will provide tax agents the ability to disclose information on unlawful clients without fear of breaching the TPB code item 6, ‘Unless you have a legal duty to do so, you must not disclose any information relating to a client’s affair to a third party’.
“That's going to provide immunity, if you like, to people who do provide information to government authorities in relation to those people who are not acting within the law and the whistleblower legislation will provide immunity from the TPB taking action against you under the code item for providing information to the relevant authorities,” said Mr Taylor.
“If you were to dob a client in or an ex-client, or to dob in a potential client that you believe is not acting in accordance to the law, then you could have been in breach of the requirement to not disclose information without the client's permission.
“You're obviously not going to ask the client for permission to tell the tax office that they are not doing the right thing.”