Termination of Tax financial Adviser registrations - June 2018

Overview

The Tax Agent Services Act 2009 (TASA) was enacted by the Parliament of Australia to establish a regulatory framework for tax practitioners, including tax (financial) advisers, ensuring they adhere to professional standards and comply with legislative requirements. The Act aims to protect the public interest by promoting the integrity of the tax profession and ensuring that tax practitioners provide services with competence and diligence. The problem the Act was introduced to address includes the need for a nationally consistent regulatory scheme to oversee the conduct of tax practitioners, prevent misconduct, and maintain public confidence in the tax profession. The policy objective of the Act is to ensure that tax practitioners are competent, ethical, and accountable to the public and to the regulatory authority, the Tax Practitioners Board. This is evidenced by the Board's action to terminate the registration of tax (financial) advisers, as seen in the Gazette, for reasons such as surrender of registration, which highlights the Board's role in enforcing compliance and maintaining the integrity of the profession.

Scope and Application

The Tax Agent Services Act 2009 (TASA) applies to individuals and entities providing tax (financial) advice services within Australia. The Act specifically targets tax practitioners who offer services related to the preparation of tax returns and other tax-related activities. It applies to all such practitioners across the Commonwealth of Australia, ensuring a uniform standard of professional conduct and competence in the provision of tax services. The Act includes explicit exclusions for certain activities, such as those conducted by employees in the normal course of their employment under the direction and supervision of an employer, provided they do not hold themselves out as tax (financial) advisers. The application of the Act can be extended or restricted through subordinate instruments, which may include regulations or guidelines issued by the Tax Practitioners Board. These instruments provide further detail on the interpretation and implementation of the Act's provisions, ensuring that the regulatory framework remains adaptable to changes in the industry and regulatory environment.

Key Provisions

The primary sections of the Tax Agent Services Act 2009 (TASA) that govern the termination of Tax (financial) Advisers' registration are found in Subdivision 40-A (sections 40-40A, 40-45, and 40-50). Section 40-40A (2) allows the Tax Practitioners Board to terminate a registration if it finds that the person is not a suitable and fit person to hold a registration. This can be due to various reasons including professional misconduct, failure to comply with the Tax Agent Services Act or regulations, or if the person has been convicted of a criminal offence. Section 40-45 provides the process for the Board to give notice of its intention to terminate a registration and Section 40-50 outlines the rights of the person to make submissions or representations to the Board before a decision is made. The obligations and requirements imposed by the Act on the parties it governs include maintaining professional standards, adhering to the Code of Professional Conduct, and complying with all relevant laws and regulations. Tax (financial) Advisers must also ensure they hold appropriate professional indemnity insurance and have adequate systems in place to manage client information and funds. The Act requires Advisers to notify the Board of any changes to their business or personal circumstances that may affect their suitability to hold a registration. Additionally, Advisers are required to undertake continuing professional development to maintain their skills and knowledge. Breaches of the Act can result in various civil and criminal consequences. Under Section 131 of the Act, the Board can impose penalties for non-compliance with the Act, including fines of up to $21,000 for individuals and $105,000 for bodies corporate. In more serious cases, the Board can refer matters to the Commonwealth Director of Public Prosecutions (CDPP) for criminal prosecution. If found guilty, individuals can face imprisonment of up to five years, or both fines and imprisonment. For bodies corporate, the maximum penalty can be up to $525,000. Additionally, the termination of registration not only affects the ability to practise but also carries significant reputational damage which can further impact professional and business opportunities.