Thank you for joining Peter de Cure (TPB Chair) and Matthew Addison (Tax Practitioner Governance and Standards Forum Co-Chair), at the combined Tax Practitioner Governance and Standards Forum (GSF) and Consultative Forum (CF) held on Wednesday, 24 July 2024. We also welcomed Treasury’s attendance and appreciated everyone’s valuable input.

Below is a summary of the key messages arising from the meeting:

1. The purpose of the meeting was to discuss the Tax Agent Services (Code of Professional Conduct) Determination 2024. The Determination sets out further obligations to supplement and elaborate on the Code of Professional Conduct (the Code) that will strengthen the professional standards of tax practitioners to enhance public trust and confidence in the tax profession, implement recommendations from the 2019 independent review into the effectiveness of the TPB and the Tax Agent Services Act 2009 (TASA), and respond to the PwC tax leaks scandal.
2. From 1 August 2024, tax practitioners will need to comply with 8 additional Code obligations that will supplement the existing Code obligations. These new obligations have been informed by stakeholder input received from public consultation.
3. The Australian Government recognises the vital role that tax practitioners play in the tax system. Recent events associated with the PwC tax leaks matter have highlighted gaps in regulation of the profession. The government has determined that the TPB (as regulator), requires enhancement to TASA legislative framework to ensure appropriate standards of professional and ethical conduct in the profession.
4. Treasury provided background information relating to the Determination. In particular that:

   1. Recommendation 5.1 from the 2019 TPB Review^[1] recommended:

      The relevant Minister be given a legislative instrument power to be able to supplement the Code of Professional Conduct to address emerging or existing behaviours and practices. The legislative instrument process would also ensure appropriate consultation with key stakeholders and parliamentary oversight.

   2. Further, on 6 August 2023, the government announced a significant package of reforms to address misconduct and rebuild people’s confidence in the systems and structures that keep our tax system and capital markets strong. These reforms were aimed at strengthening the integrity of the tax system, increasing the powers of our regulators and strengthening regulatory frameworks to ensure they are fit for purpose.
   3. One element of the package was supplementing the Code – which the new Code items give effect to. See the government response to PwC tax leaks scandal for further information.
   4. The government welcomed the ongoing assurances from members of the GSF and CF that the profession supports and welcomes a more robust and effective regulatory framework of the tax profession, and an offer of ongoing constructive collaboration to assist and guide tax practitioners during implementation.
5. Treasury referenced the letter of the Joint Bodies of 15 July 2024, and clarified several points on the operation of the new obligations. In particular:
   1. Confirming that the new obligations operate consistently with the existing Code obligations, and the TASA, to deliver a coherent set of ethical and professional standards.
   2. Advising that the new Code items are informed by, and are broadly consistent with, standards made by Accounting Professional & Ethical Standards Board (APESB),^[2] and existing obligations already applying to tax practitioners under the TASA, taxation laws and the Criminal Code. The new Code items also reflect ethical standards already applying to other similar professions – and are therefore well tested.
   3. Assuring members that those practitioners that already comply with APESB standards will generally be complying with the new Code obligations. Treasury and the TPB expected the majority of tax practitioners, who already do the right thing, will already be generally compliant with all obligations under the expanded Code.
   4. Noting that tax practitioners owe duties to maintain public trust in the tax profession, and public trust in the tax system. Tax practitioners also owe duties to their clients. The duties sit alongside each other, uneasily at times, but not fundamentally opposed. The existing Code already reflects possible tension between the duties by acknowledging that sometimes the tension will need to resolve in favour of the public interest by permitting disclosure of certain information in certain situations to regulatory authorities where the law requires them to do so.
   5. Confirming that one new limited scenario requiring disclosure to authorities, which was revised and limited in scope following public consultation, is where the tax practitioner becomes aware that they were involved in making or preparing a false or misleading statement that was given the ATO or TPB. If the statement was made by a client, tax practitioners will firstly need to advise their clients to correct the statement, and only where the client does not act to correct the statement, does the practitioner need to notify the ATO that the statement given may have been false or misleading. There is no obligation to correct the statement for the client, nor necessarily provide anything more than some basic details to the ATO.  Any further action is then a matter for the ATO.
   6. The obligations requiring disclosure to clients of relevant matters relates only to matters that could significantly influence a reasonable client’s decision to engage the tax practitioner to provide tax agent services. Despite some commentary in media, the obligation is an objective test and does not apply to insignificant matters, nor matters that do not relate to a practitioner being a competent and fit or proper person to provide tax agent services.  The obligation reinforces the general duty to act in clients’ best interest, allowing clients to make informed decisions. Disclosure of some past events is necessary as those events may be just as important to fully informed decision-making as future events.
   7. The new obligations were developed to recognise different business models of a small practice and a large firm. What is required from each practitioner will turn on their individual circumstances.  For example, a system of quality management for a sole practitioner will be fairly streamlined, simple and straightforward, because that practitioner is unlikely to require much more to be confident that they are compliant with the Code in providing tax agent services.
6. The TPB emphasised that there will be a transitional phase and that once the new obligations commence, the TPB will take a pragmatic approach to implementation. The TPB’s immediate focus is to finalise guidance, through consultation, educate tax practitioners so they understand what is required of them and to support those tax practitioners genuinely trying to do the right thing. This includes providing a reasonable time for tax practitioners to understand their obligations, assess their own practice and implement changes, if required, to comply with the new obligations.

7. The TPB confirmed its commitment to seek initial feedback and input from professional associations before draft guidance is released for public consultation. The TPB advised of an updated anticipated timeline for consulting on guidance to support the new requirements as follows:

   Guidance	Expected release date for public consultation on draft guidance product	Expected date for finalisation of guidance product
   Tranche 1 False or misleading statements (s15) Conflicts of interest (s20) Maintaining confidentiality (s25)	Early August (4-week consultation period)	Late September
   Tranche 2 Record keeping (s30) Competence (s35) Quality management systems (s40) Informing clients of relevant matters (s45)	Late August (6-week consultation period)	Early November
   Tranche 3 Upholding standards (s10)	Early September (4-week consultation period)	Early November

8. The TPB also confirmed that the release of draft and final guidance products will be supported by information on TPB’s website, webinars and other communication products.
9. The professional associations raised several questions and concerns, including: 
   1. the start date of 1 August 2024 being insufficient for tax practitioners to comply with the new requirements 
   2. the false and misleading statement item in Code Determination was inconsistent with Code item 6 (confidentiality of client information) in the TASA 
   3. that there had been significant additions to the Code Determination that were not subject to further stakeholder consultation 
   4. the obligation to notify clients of ‘all relevant matters’ was too wide and should be clearer in the Code Determination that it does not include matters related to personal beliefs and health issues. Concerns about having to notify clients of events dating back to 1 July 2022 were also raised
   5. the broad scope of the new Code Determination item relating to ‘keeping proper client records’
   6. the lack of differentiation in what is required of a small practice compared to a large firm in relation to the new item in the Code Determination relating to having a quality management system in place.
10. The TPB and Treasury acknowledged this feedback and provided further information, including a reference to the TPB’s recently published FAQs, to address the concerns being raised. The TPB agreed to taken on board the discussion and incorporate into the draft guidance products wherever appropriate.  
11. Members were thanked for their time and contributions during the meeting. Given the significant reform program impacting the tax profession, it was agreed that frequent and targeted engagement with the GSF and CF on emerging issues will continue.
12. There was agreement that the community deserves to receive high quality taxation advice from advisers they can trust, and that all GSF and CF attendees were united behind that common goal.