Thank you for joining Ian Klug (TPB Chair), Michael O’Neill (TPB CEO/Secretary), Janette Luu (TPB Director of Policy and Legislation) and Nadja Harris (TPB Senior Policy and Legislation Adviser) at the TPB Combined Consultative Forum held on Thursday 3 December 2020. We appreciate your valuable input and have produced a summary below to assist your association with communicating key messages to your members.

Update from the Chair and the Board

• The TPB Chair provided the Forum with an update in relation to areas of strategic focus for the Board.

• A key development since the last Combined Consultative Forum meeting is in relation to Board appointments. It was noted that:

  • Ria Sotiropoulos and Julie Berry were not reappointed for a further term.

  • Two new appointments were made by the Minister - Judy Sullivan and Craig Stephens.

  • The Chair noted his appreciation and thanks to both Ms Sotiropoulos and Ms Berry for their service to the Board.

• The TPB Chair advised that:

  • Ms Sullivan is Principal Solicitor at Judy Sullivan Consulting Pty Ltd and has previously held positions as Partner (Tax) at PricewaterhouseCoopers and King & Wood Mallesons. She is a member of committees for the Law Council of Australia, the Australian Taxation Office (ATO) and the Board of Taxation. She holds a Bachelor of Economics and Bachelor of Laws (ANU) and a Master of Laws, University of Sydney.

  • Mr Stephens has extensive tax experience, including most recently as the Managing Partner of BDO in Hobart. He is a registered tax agent and has been working in a business services and taxation role for over 40 years. He is a Fellow of the Institute of Chartered Accountants in Australia and a Graduate Member of the Australian Institute of Company Directors. He holds a Bachelor of Commerce from the University of Tasmania.

• The TPB Chair acknowledged that the change in Board membership means that the Board no longer has a representative from the financial services industry. Despite this, the TPB remains well placed to ensure that we are able to draw upon skills in the financial services profession.

• It was noted that matters considered at the most recent Board meetings have been in relation to supporting tax practitioners through the COVID-19 pandemic, legislative and policy reforms and future strategic planning for the TPB.

Items raised by Forum members

Effect of bankruptcy on a tax practitioner’s registration

• The effect of bankruptcy on a tax practitioner’s registration was raised, with the TPB being asked about the factors that are taken into account by the TPB when considering whether to terminate a tax practitioner’s registration due to the tax practitioner being declared an undischarged bankrupt.

• The TPB confirmed that becoming an undischarged bankrupt is one event that may affect a tax practitioner’s continued registration under the Tax Agent Services Act (TASA), depending on the facts and circumstances - for example, whether the individual’s bankruptcy resulted from a significant failure to pay and take reasonable steps to address outstanding tax debts to the ATO (which may adversely impact on their fitness and propriety).

• The TPB advised that it will issue website guidance to support tax practitioner understanding of the issue.

TPB’s complaint process

• The TPB was asked about its complaint process and specifically its handling of complaints and complainant anonymity.

• The TPB confirmed that all complainants are provided with the opportunity to remain anonymous when submitting a complaint to the TPB, however in some instances this may limit the actions that the TPB can undertake to further the complaint. The TPB’s complaint process involves the TPB confirming with the complainant whether they agree to their identity being revealed to the subject of the complaint before providing any such detail to the subject.

• The TPB will consider adding messaging to its complaint form in relation to seeking independent legal advice about complaint information being provided to the subject of the compliant, if the complainant is concerned about the implications of being identified by the subject of the complaint.

2019-20 Regulator Performance Framework

• The Government’s regulation reform agenda includes a Regulator Performance Framework to help measure the performance of regulators and to reduce the burden of regulation on the community. The Government has developed the Framework to measure and test the performance of regulators with six outcome-based Key Performance Indicators (KPIs) of best practice, performance and administration.

• The TPB Combined Consultative Forum is the approved external body to validate the TPB’s metrics to measure and assess performance against the Government’s six KPIs. As such, the TPB’s Combined Consultative Forum members were provided the Regulator Performance Framework on 19 November 2020, out of session for consideration. The six KPIs are as follows:

  • KPI1 Regulators do not unnecessarily impede the efficient operation of regulated entities

  • KPI2: Communication with regulated entities is clear, targeted and effective

  • KPI3: Actions undertaken by regulators are proportionate to the risk being managed

  • KPI4: Compliance and monitoring approaches are streamlined and coordinated

  • KPI5: Regulators are open and transparent in their dealings with regulated entities

  • KPI6: Regulators actively contribute to the continuous improvement of regulatory framework.

• The TPB Combined Consultative Forum approved the 2019-20 Regulator Performance Framework report, with amendment to change KPI 6 from ‘Substantially met’ to ‘met’. This amendment reflects feedback from the Forum that the TPB has been responsive, proactive, flexible and an adaptive regulator and a commitment by the TPB to engage with all stakeholders and legislative and policy development.

• Comment was also made in relation to KPI 1 that greater consultation and transparency about the TPB’s compliance processes would be welcomed in the future.

• In summary, the Forum approved the ratings that KPIs 1 to 4 and 6 were ‘Met’ and KPI 5 was ‘Substantially met’.

Government’s response to the Keith James Review

• The TPB Combined Consultative Forum noted that the Government announced its response to the Keith James Review on 27 November 2020.

• The TPB advised that:

  • the Government’s response will result in a more effective and independent TPB, reduction in red tape for tax practitioners, enhance community confidence and support high standards in the tax profession

  • the Government confirms the TPB as the statutory authority responsible for regulating tax practitioners

  • the TPB will be more independent from the ATO, particularly in relation to financial independence

  • a formal agreement will be established with both the ATO and ASIC to enhance information sharing

  • a number of the recommendations require consultation to further develop options for implementation.

• Forum members expressed the view that consultation and implementation in relation to the recommendations is of high importance and as such should be treated with priority to commence and be substantially completed in 2021.

• Forum members largely expressed the view that the Tax Practitioner Governance and Standards Forum recommended by recommendation 3.3(b) would most appropriately be separate and distinct from the current TPB Combined Consultative Forum.

• It was agreed that Forum members would provide the TPB with their comments and feedback in relation to Government’s response to the Keith James Review by early January.

• Forum members are asked to provide their submissions and feedback to TPBSubmissions@tpb.gov.au by 14 January 2021.

• The TPB will send a calendar invite to Forum members for an out-of-session meeting to take place in late January or early February to further discuss the recommendations.

ATO update

The ATO provided the following organisational update to Forum members:

Tax time statistics

• As at 19 November 2020, the ATO has received over 12.59 million year to date total lodgements (including all entities and across all years) which is a 3% decrease compared with the same time last year.

• The ATO has received over 10.36 million 2020 Individual lodgements year to date, a 2% decrease compared with the same time last year. Of these:

  • over 4.76 million were lodged by self-preparers

  • over 5.59 million were lodged by tax agents

  • over 10.29 million were electronic lodgements

  • less than 69,000 were paper lodgements.

• In relation to refunds issued by the ATO, it was noted that more than 8.50 million individual 2020 refunds have been issued to date, totalling more than $22.25 billion with an average refund of $2,617, which is consistent with the returns issued at around the same time in 2019.

• Since 1 July 2020, total demand for the ATO’s contact centre was more than 5.19 million calls.

JobKeeper dates

• JobKeeper fortnight 20 (21 December 2020 to 3 January 2021) - the ATO are allowing employers until Monday 4 January 2021 to meet the wage condition for their eligible employees or business participant.

• Business monthly declarations for JobKeeper fortnights 18, 19 and 20 are now due 28 January 2021. It was noted that employers can complete their business monthly declaration from 4 January 2021. The ATO will continue to process monthly declarations to reimburse employers for December payments past the 14 January 2021 due date. These are now due by 28 January 2021.

Meeting the wage condition for JobKeeper fortnights 21 and 22

• JobKeeper fortnights 21 and 22 (starting 4 January 2021 and 18 January 2021) - the ATO is allowing employers until 31 January 2021 to meet the wage condition for their eligible employees or business participant. This is to make sure that employers have paid their eligible employees before claiming JobKeeper payments in their February monthly business declarations.

• Further information for practitioners is available on the ATO’s website JobKeeper Key Dates.

Victoria re-engagement

• Earlier this year the ATO contacted tax agents and businesses in Victoria to advise them of the ATO’s flexible lodgement approach for August and September Activity Statements. The ATO has now recommenced engagement with these agents to remind them to ensure these Activity Statements are lodged by the end of the year to avoid penalties.

Support Groups

• The ATO has been working with the Tax Practitioner Stewardship Group (TPSG) to formulate a framework for support to the tax profession following a disaster event. Four working groups with members across the ATO and the TPSG have been formed which will look at different focus areas to develop the framework. The groups are:

  • Flexible and adaptable processes

  • Information and guidance

  • Changing roles and mental health

  • Longer term impacts.

TPB update

COVID-19

Annual declaration concession for tax practitioners

The Forum was advised that the TPB has extended the existing temporary COVID-19 concession for tax practitioners from 31 December 2020 to 30 June 2021.

Compliance activity

• The TPB advised that it continues to receive intel shared by the ATO identifying tax practitioners that may be attacking the stimulus measures on behalf of clients and/or themselves. In September, the ATO provided an updated Top 50 list of highest risk tax practitioners for each stimulus measure. Some of these include practitioners already under investigation by the ATO, TPB or jointly. The TPB continues to risk assess these cases, with those identified as high risk being added to the Co-ordinated Compliance program.

• In addition to the Top 50 list, the ATO also referred a list of 247 where the practitioner’s personal claim for a stimulus measure has been denied. In relation to these practitioners, the TPB workshopped the Cash Flow Boost (CFB) element of the referral (44 agents). Of these, 6 agents have been identified as high risk in relation to CFB misconduct, and a further 20 agents identified as medium risk.

• The JobKeeper element of that referral (203 agents). Of these, 8 agents have been identified as high risk and 35 as medium risk in relation to JobKeeper misconduct.

General update

Client Services

• The TPB noted that both new and renewal application numbers on-hand have reduced, and for the period 1 July – 31 October 2020, the TPB has processed:

  • 1,987 new applications

  • 7,846 renewal applications

  • answered 9,911 telephone enquiries and 6,911 correspondence items.

• The TPB’s service standard of processing new and renewal applications is set at 80% within 30 days. The TPB has met this service standard and processed new and renewal applications at 86% within 30 days.

Investigations

• The TPB advised that so far this financial year, the TPB has presented 63 cases to the Board Conduct Committee, of these 39 of these cases resulted in termination of registration, and the cases not resulting in termination of registration ranged in sanctions from the TPB issuing a written caution, orders, suspensions, and in some cases, being finalised with no further action being required.

Litigation

• In the financial year to date, the TPB has finalised 18 litigation matters in the Administrative Appeals Tribunal (AAT) and Federal Court.

• On 30 October 2020, the Federal Court handed down its decision in relation to the civil penalty application brought by the TPB against unregistered agent, Ms Caolboy. Based on the agreed facts, the Court found over 500 unregistered agent contraventions and imposed a $40,000 penalty having regard to Ms Caolboy’s early cooperation with the TPB and financial circumstances.

Communications

• The TPB conducted 8 webinars from August to November, and noted that since implementing the direct invite in July over 27,000 people have attended a webinar. This is a 337% increase on the same period last year.

Information Technology

• The TPB advised that it has commenced a project to replace its internal business system iMIS, which assists the TPB to administer the public register; new registrations and renewals, investigations and Board decisions.

• The replacement system will improve tax practitioner interactions with the TPB because it will provide a complete integrated view of practitioner history.

• The replacement system will involve improvements to the MyProfile screens on tpb.gov.au used by practitioners to apply for, and renew, their practitioner registration. As the details of changes are understood, the TPB will consult with associations in advance.

• The success of the above initiatives would be greatly assisted by the formation of a practitioner testing group, who could be consulted on upcoming changes, gain access to early test versions and become early adopters. The TPB will seek nominations to assist in this process shortly.

Policy matters

Education Working Group update

• The TPB has commenced a review of its requirements for courses approved by the Board for tax and BAS agents. The TPB’s Consultative and Financial Adviser Forum members and key stakeholders in the education sector were recently provided with a discussion paper seeking comments and feedback on specific consultation points concerning the TPB’s requirements for courses approved by the Board. The comment period ended on 13 November 2020. There was significant interest in the review, with a total of 13 submissions received. Key themes raised in the submissions included:

  • The TPB’s requirements should be more flexible as to the duration of a course.

  • There should be more flexibility regarding the independent supervision aspect of the TPB’s assessment requirements, including allowing for online proctoring software to be utilised where appropriate to do so.

  • The requirement that 40% of the overall assessment for a course be undertaken under independent supervision does not align with the competency-based training and assessment undertaken in the vocational education system and therefore should be reviewed.

• The TPB met with Forum Members on 26 November to discuss the initial feedback and comments received on the consultation points raised in the Review discussion paper. Some of the key issues discussed included the topic and learning outcomes of courses for tax and BAS agents, the suitability of the TPB’s requirements around duration of courses, and the efficacy of the TPB’s other requirements for courses approved by the Board for tax and agents and in particular, whether those requirements represent contemporary practices.

• The TPB also held a separate workshop with key stakeholders in the education sector on 2 December.

• The TPB’s Professional Practice Committee is due to consider all submissions received when it meets on 15 December 2020.

• In addition, the TPB will schedule further workshops in February 2020 to finalise changes (if any) to its requirements for courses approved by the Board before releasing exposure draft documents for public consultation.

Draft legislative instrument: tax (financial) advice services

• At the TPB’s last Consultative Forum on 24 August 2020, the TPB was asked whether the TPB intended to progress the previously drafted legislative instrument that expanded the services, including the ability to apply for an Australian Business Number on behalf of a client, that can be provided by tax (financial) advisers.

• At the Forum, the TPB advised that it had not progressed the draft legislative instrument considering the pending implementation of the recommendations from Royal Commission into Misconduct in the Financial Services Industry, and the (then) impending Independent Review of the TPB and the TASA.

• Following consideration, the TPB agreed to recommence consultation on the draft legislative instrument, taking into account the previous stakeholder submissions. Out-of-session feedback from Forum members was sought in mid-September and following a 3-week period of submissions the TPB received individual submissions from two associations and one joint submission from 5 associations.

• The submissions either supported the draft instrument in full or not supportive and requested further discussions. Concerns raised about expanding the services centred on the nature of qualifications and experience, limited ATO interactions and necessity.

• The TPB is currently considering all submissions and the issue will be discussed at the TPB’s next professional practice committee that is taking place on 15 December.

• From that meeting the Committee will decide whether to continue with limited non-public consultation or whether to release the draft instrument for wider public comment.

Draft Practice Note: Proof of identity requirements for tax practitioners

• The TPB received 6 submissions from Forum members in response to the draft Practice Note. The submissions had largely recurring themes, which included:

  • Alignment with not only the ATO’s Modernising Client Verification requirements, but also with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) requirements where appropriate.

  • The Practice Note should include further clarity around:

    • electronic/remote verification requirements (including the TPB’s position on practitioners receiving email copies of documents, or having clients holding documents up during a video conference)

    • record keeping requirements

    • requirements in relation to well established clients.

  • The TPB also received feedback in relation to the timing of when the requirements for tax (financial) advisers should take place, noting that the TPB’s requirements as to timing should be consistent with the current AML/CTF requirements that apply to many financial advisers.

• The TPB’s Professional Practice Committee will consider the submissions on 15 December, before the draft Practice Note is updated and released for public consultation.

• The TPB was requested to delay to release of the draft Practice Note for public consultation until February 2021.

• The ATO updated the Forum in relation to the ATO’s review of customer verification requirements, including the consideration of technological solutions to support tax practitioners in undertaking appropriate customer verification before accessing and using the ATO’s online platforms. The ATO confirmed that it is currently undertaking internal consultations and will consult with the ATO’s TPSG on 15 December to discuss proposed solutions further.

Minor amendments to the Tax Agent Services Act 2009 and Tax Agent Services Regulations 2009

• On 21 October 2020 Treasury publicly released an exposure draft Bill, Regulations, Instrument, and supporting explanatory materials covering proposed minor and technical amendments to the Treasury portfolio laws. Some of the proposed amendments impact on the TPB’s regulation of tax practitioners, including in relation to:

  • the eligibility requirements for registration and renewal of registration in relation to professional indemnity insurance

  • the requirements in relation to when a renewal application may be lodged with the TPB;

  • circumstances in which the TPB may refuse to action a surrender request received from a registered tax practitioner;

  • services of notices and documents by the TPB

  • allowing the TPB to accept and action surrender requests from recognised professional association.

• The timing of the law changes is yet to be determined.

Other business

• The TPB has released a number of draft documents to Forum members “under embargo” in the recent months, and has received several enquiries from members about whether these documents can be further circulated or released under certain circumstances.

• The TPB clarified that when it provides these documents to Forum members, it is because they are in their preliminary stages of development, and as such it is not appropriate for the documents to be further released or circulated, including to members of professional associations. It is also not appropriate for submissions in relation to under embargo documents to be released or published.

• The TPB’s ordinary course is to then refine the document in question, before releasing to the public for a broader consultation.

• Forum members’ continued discretion in relation to under embargo documents is appreciated.

Next meeting

The next TPB Combined Consultative Forum meeting is scheduled to be held in early to mid- March 2021, noting that an out-of-session meeting to discuss Government’s response to the Keith James Review will be scheduled to take place in late January or early February.