EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 117
Issued by authority of the Minister for Revenue
and Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Amendment Regulations 2005 (No. 3)
Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the Regulations is to amend Part 9 of the Income Tax Regulations 1936 relating to the qualification requirements for tax agent registration to permit the Tax Agents’ Boards to recognise membership of new professional associations for the purpose of registration as a tax agent.
The Regulations substitute regulation 156, which prescribes tax agents’ qualifications, and correct a number of other minor deficiencies in the old Regulations. Details of the Regulations are set out in the Attachment.
Consultation for the Regulations took place with the Commissioner of Taxation’s National Tax Liaison Group and the Chairs of the Tax Agents’ Boards in August 2004 and April 2005.
The Act specifies no condition that needs to be satisfied before the power to make the proposed Regulations may be exercised.
The Regulations commenced on the day after registration on the Federal Register of Legislative Instruments.
ATTACHMENT
Details of the Income Tax Amendment Regulations 2005 (No. 3)
Regulation 1 – Name of Regulations
This regulation provides that the title of the Regulations is the Income Tax Amendment Regulations 2005 (No. 3).
Regulation 2 – Commencement
This regulation provides for the Regulations to commence on the day after they are registered.
Regulation 3 – Amendment of Income Tax Regulations 1936
This regulation provides that the Income Tax Regulations 1936 (the Principal Regulations) are amended as set out in the Schedule.
Schedule – Amendments
Item [1] – regulations 155 to 158
Recognising professional associations for the purpose of tax agent registration
Part VIIA of the Income Tax Assessment Act 1936 (ITAA 1936) deals with the registration of tax agents. A person must be a fit and proper person to be registered as a tax agent. Subsection 251BC(1) provides a list of circumstances in which a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. Subparagraph 251BC(1)(b)(ii) of the ITAA 1936 provided that a person is not a fit and proper person if the person does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed.
Part 9 of the Principal Regulations deals in part, with qualifications for registration as a tax agent. Regulation 156 prescribes the necessary academic qualifications and work experience for purposes of qualifying as a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters under section 251BC of the ITAA 1936.
Regulation 156 provides several combinations of academic qualifications and examinations and work experience for the purposes of section 251BC. Both section 251LA of the ITAA 1936 and regulation 156 recognise that voting membership of one of the listed professional associations is one form of evidence that an individual has attained an appropriate level of qualification and maintains a high standard of professionalism. The professional associations listed in regulation 156 were:
- the Australian Society of Accountants (currently known as CPA Australia);
- the Institute of Chartered Accountants in Australia; and
- the National Institute of Accountants.
The recognition of new professional associations would require ongoing amendments to regulation 156 to modify that list. However, there is a mechanism under
section 251LA to recognise professional associations (which are called Recognised Professional Associations or RPAs) using a set of objective criteria. Currently, there are five professional associations which satisfy the criteria for recognition as an RPA under that section:
- CPA Australia;
- the Institute of Chartered Accountants in Australia;
- the National Institute of Accountants;
- the Association of Taxation and Management Accountants; and
- the Taxation Institute of Australia.
The Regulations remake regulation 156, replacing the list of professional associations specified in previous regulation 156 with a more general mechanism for recognising professional associations using the set of criteria under section 251LA of the Act (subregulation 156(5)), together with the following changes.
Recognising certain postgraduate qualifications
Under previous regulation 156, a postgraduate degree or a graduate diploma obtained following a course of study in accountancy of two years full-time duration (or four years part-time duration) did not satisfy the qualification requirements for registration as a tax agent. However, a diploma or certificate obtained following a course of study in accountancy of two years full-time duration (or four years part-time duration), which is a less advanced qualification, was sufficient under subparagraph 156(1)(c)(i).
The Regulation amends regulation 156 to recognise postgraduate degrees and diplomas obtained following a course in accountancy of two years full‑time duration or four years part‑time duration (subregulation 156(4)).
References to equivalent educational institutions
The previous regulation 156 did not recognise new educational institutions that provide academic qualifications equivalent to those already recognised. The Regulation recognises equivalent qualifications from other educational institutions accredited in accordance with the Australian Qualifications Framework developed by the Ministerial Council on Education, Employment, Training and Youth Affairs (subregulations 156(3), (4) and (5)).
References to ‘written examination’
The previous regulation 156 required the completion of a course of study by ‘written examination’ for the purpose of registration as a tax agent. Many educational institutions use forms of assessment other than written examination. The Regulation omits references to ‘written examination’ so that other forms of assessment may be recognised (subregulations 156(3), (4) and (5)).
Communication and lodgement of applications with State Tax Agents’ Boards
The previous regulations provided that all communication and applications be sent to the secretary of the Tax Agents’ Board for the State in which the tax agent is situated. This did not provide the Board with sufficient flexibility. The replacement regulations 155 and 158 provide the Board with the power to specify addresses for correspondence and for lodgement of registration applications.
References to exemptions under section 251L of the ITAA 1936
As part of the introduction of the A New Tax System (Tax Administration) Act (No. 2) 2000, certain exemptions to the operation of section 251L of the ITAA 1936 (which provides that an unregistered tax agent may not charge fees) were removed. Regulation 157 (which related to those exemptions) is redundant and the amendments omit it. The amendments also substitute regulation 158 to remove references to those repealed exemptions.
Item [2] – regulation 162
Item [3] – subregulation 163(1)
Item [4] – subregulation 163(1)
Item [5] – subregulation 164(2)
Item [6] – subregulations 169(1) and (2)
As noted above, as part of the introduction of the A New Tax System (Tax Administration) Act (No. 2) 2000, certain exemptions to the operation of section 251L of the ITAA 1936 (which provides that an unregistered tax agent may not charge fees) were removed. Consequently, regulation 162 (which related to those exemptions) is redundant and the amendments omit it. These items also amend regulations 163, 164 and 169 to remove references to those repealed exemptions.
Item [7] – further amendments – non-discriminatory language
Item [8] – further amendments
These amendments update Part 9 of the ITR 1936 to remove discriminatory and outdated language.