Purpose

1. The document provides background information regarding the new obligations contained in the Tax Agent Services (Code of Professional Conduct) Determination 2024 (Determination).
2. This document should be read in conjunction with our Information sheets which provide more detailed information about the requirements of the new Code obligations. 

Background

3. The Australian Government recognises the vital role that registered tax practitioners play in the tax system. The government has committed to enhancing the Code of Professional Conduct (Code) in the Tax Agent Services Act 2009 (TASA) to ensure tax practitioners uphold the appropriate standards of professional and ethical conduct in the tax profession.
4. The 2019 independent review into the effectiveness of the Tax Practitioners Board (TPB) and the TASA recommended that the relevant Minister be given a legislative instrument power to be able to supplement the Code to address emerging or existing behaviours and practices. This recommendation was accepted by government and legislative power was given to the Minister, from 1 January 2024.
5. In addition, on 6 August 2023, the government announced a significant package of reforms to address tax practitioner misconduct and rebuild people’s confidence in the systems and structures that keep our tax system and capital markets strong. The package of reforms covered 3 priority areas:
   • Strengthening the integrity of the tax system.
   • Increasing the powers of our regulators.
   • Strengthening regulatory arrangements to ensure they are fit for purpose.
6. One element of the package was supplementing the Code with additional professional and ethical obligations, giving rise to the Determination, to strengthen integrity and accountability in the tax profession and the system.
7. The Determination was made under section 30-12 of the TASA and sets out the following 8 additional Code obligations for registered tax practitioners:
   • Upholding and promoting the ethical standards of the tax profession
   • Addressing false or misleading statements
   • Managing conflicts of interest in activities undertaken for government
   • Maintaining confidentiality in dealings with government
   • Keeping of proper client records
   • Ensuring tax agent services provided on your behalf are provided competently
   • Quality management systems 
   • Keeping your clients informed.
8. These additional obligations are built upon the existing principles of the Code, including the key principles of honesty and integrity, independence, confidentiality and competence. As such, the majority of tax practitioners, acting legally and ethically, will comply with these new requirements with few changes to their process and services. The obligations seek to outline the high professional and ethical standards expected by the community of registered tax practitioners, with the objective of:
   • improving transparency and accountability
   • giving the public greater confidence and trust in the integrity of the tax profession
   • strengthening tax system integrity and the regulation of the tax profession.
9. The additional obligations also provide opportunities for registered tax practitioners to assess their business practices and the clients they engage to ensure that they safeguard their registration and their practice. 

The process to finalise the Determination

10. Following registration of the Determination on 2 July 2024, the government issued the following 2 legislative instruments to amend the Determination in response to stakeholder feedback:
    • Tax Agent Services (Code of Professional Conduct) Amendment (Measures No.1) Determination 2024 (registered on 9 September 2024) 
      • This amendment provided certainty to registered tax practitioners as to the TPB’s approach to the transition and implementation of the additional Code obligations.
      • The amendment also deferred the application date of the new obligations until 2025 (more information below at paragraph 12).

    • Tax Agent Services (Code of Professional Conduct) Amendment (Measures No. 2) Determination 2024 (registered on 8 October 2024)

      This amendment clarified the scope and intent of section 15 (addressing false or misleading statements) and section 45 (about keeping clients informed) of the Determination. 

      The obligations also leverage material from the Accounting Professional & Ethical Standards Board and other well-known and understood tax and corporate law concepts that registered tax practitioners will be regularly advising clients on. Such concepts include those in the Taxation Administration Act 1953 relating to false or misleading statements, reasonable care, recklessness, intentional disregard, and corporation law concepts that ‘you know, or ought reasonably to know’ and ‘materiality’.

11. The revised Determination was registered on 9 October 2024.

Application date for the Determination

12. The government has deferred the application date (originally 1 August 2024) of the new obligations. This means that the date at which the new obligations apply is as follows:
    • 1 July 2025 – for registered tax practitioners with 100 or less employees as at 31 July 2024.
    • 1 January 2025 – for any other registered tax practitioners.
13. New registered tax practitioners will also benefit from the deferral. For example, a newly registered tax practitioner on 30 November 2024 will need to comply with the new obligations from 1 January 2025 if they join an existing large firm, or 1 July 2025 if they join an existing small firm or start a new practice.
14. Further, if a registered tax practitioner moves firms or practices, the relevant application date may change to reflect the timeframe generally applying to their new firm or practice. For example, if a registered tax practitioner moves from a large practice to a small practice, the transitional timeframe will move from 1 January 2025 to 1 July 2025 for that tax practitioner.
15. The deferred application date provides certainty to the profession and gives time for registered tax practitioners to understand the new obligations, including with guidance from the TPB, so they are able to comply from the relevant application date.
16. Registered tax practitioners should use the time prior to their relevant application date to assess, and if necessary, develop and update, their systems and processes to meet their additional Code obligations from the relevant application date.

Our approach to support implementation

17. The majority of registered tax practitioners are already complying with the additional Code obligations and where they are not, these obligations usefully assist registered tax practitioners to amend their practices and processes to meet best practice.
18. To support the Determination, our immediate focus is to finalise its guidance, through consultation, to assist registered tax practitioners in understanding what is required of them. Our priority is to finalise our suite of guidance products by the end of the 2024 calendar year, working closely with key stakeholders, including the professional associations. We are committed to working closely with professional associations and other stakeholders to ensure that the guidance is practical and registered tax practitioners are appropriately supported.
19. Once the additional Code obligations begin to apply (as per the relevant application date in paragraph 12 above), we will take a pragmatic and practical approach in enforcing compliance with the additional obligations for all registered tax practitioners who are trying to do the right thing.
20. Our compliance approach has always been to achieve compliance through education and support, with investigations and sanctions reserved for the high risk and serious cases of non-compliance with the TASA.
21. If a registered tax practitioner fails to comply with one of the additional Code obligations under the Determination, we may impose one or more administrative sanctions in relation to the breach.
22. While a failure to comply with an item of the Code Determination will be a breach of Code item 17 (because the new obligations sit under Code item 17), we will treat a failure to comply with the Code Determination and the corresponding breach of Code item 17 as one breach for the purposes of determining any administrative sanction that may be imposed.