74. The obligation under section 25 will apply to any disclosure to a ‘third party’.
75. A third party means any entity other than the registered tax practitioner and the government agency.
76. In relation to a registered tax practitioner that outsources a component of the tax agent services to another entity (for example, another registered tax practitioner, a legal practitioner, a contractor, or an overseas or offshore entity), the third party would include that other entity. 
77. Further, a third party may also include entities that maintain offsite data storage systems (including unencrypted ‘cloud storage’). 
78. In the case of a tax agent with a tax (financial) advice services condition that is an authorised representative of an Australian financial services (AFS) licensee, a third party includes the AFS licensee, and vice versa. 
79. Subject to the relevant contractual arrangements, a third party may also include other AFS licensees, authorised representatives, para-planners, product providers and advisers, insurance brokers, and technical teams and advisers. 

In what circumstances can a registered tax practitioner disclose information to a third party?

80. A registered tax practitioner may only disclose information received in connection with activities undertaken with an Australian government agency if:
81. it is reasonable to conclude that the further disclosure of the information received from the Australian government agency was authorised by that agency and the further disclosure was done consistently with the agency’s authorisation (whether express or implied, and as reasonably concluded), or
    1. there is a legal duty to do so.
    2. This ensures that government agencies can establish limits on with whom and how the information may be shared. 
82. Subsection 25(1) of the Determination complements section 20 in circumstances where the disclosure is authorised to certain registered tax practitioners with a need to know the information, and not authorised to be disclosed to people who may have a material conflict of interest. For example, these requirements may limit authorised disclosure of government information to certain registered tax practitioners or individuals within an entity, rather than the entirety of an entity.^[24] 

Reasonable to conclude further disclosure of information was authorised by Australian government agency

83. Where it is reasonable to conclude that the information received from the Australian government agency was authorised by that agency for further disclosure, and the further disclosure of the information was done consistently with that authorisation (whether express or implied), the registered tax practitioner will not contravene subsection 25(1) of the Determination. 
84. Whether the further disclosure was authorised by the Australian government agency is to be determined based on a registered tax practitioner’s reasonable assessment of the agency’s actions and surrounding circumstances, including consideration of the following:
    • whether the agency has advised that the information provided is confidential
    • whether any supplied documentation is marked in a manner indicating the contents are to be held in confidence
    • whether the agency has advised that the information is set to be made public on or after a particular time. 
85. Applying this standard, if a reasonable person, possessing the required knowledge, skill and experience of a registered tax practitioner, objectively determined, would conclude that the further disclosure of the information was authorised by the government agency, this will be sufficient. It is not necessary to determine the question with any certainty.
86. It would be reasonable for a registered tax practitioner to conclude that further disclosure is authorised in the following circumstances:
    • where there are no communications from the Australian government agency indicating the information has been supplied in confidence 
    • where the reproduction or disclosure is somehow qualified 
    • the information is not protected under law from disclosure
    • it is not generally accepted that information of this type or nature would be held in confidence. 
87. For example, where a registered tax practitioner is engaging with an Australian government agency for, and on behalf of, a particular client and receives information from the agency in relation to that client, it would be reasonable to conclude that the information received from the agency was authorised for disclosure to the client. 
88. Other relevant factors in determining whether it is reasonable to conclude that further disclosure of the information was authorised by the Australian government agency may include the following:
    • comments made by the government agency when providing the information to the registered tax practitioner, or
    • the availability of the information provided to the registered tax practitioner from other sources.
89. Ultimately, the registered tax practitioner should use their professional judgment to assess whether the further disclosure of the information by the registered tax practitioner was authorised, having regard to the Australian government agency’s action and surrounding circumstances.
90. There is no requirement that the information be marked as confidential or identified as for limited distribution although this may be a relevant factor  to reasonably conclude that further disclosure of the information is authorised by the government agency. 
91. Where a registered tax practitioner intends to disclose, to a third party, information received from an Australian government agency in connection with any activities undertaken with the agency, the TPB recommends that the registered tax practitioner should consider, prior to any disclosure, clearly informing the agency that there will be such a disclosure and obtain the  agency’s permission. This permission may be by way of a signed letter outlining the information that is to be disclosed and to whom the information is to be disclosed to, signed consent or other communication with the government agency. In all cases, the relevant communication should outline the disclosures to be made, as well as information about the entity/entities that will have access to the information disclosed. 
92. While there is no set formula or methodology used to obtain the Australian government agency’s permission, the TPB suggests that registered tax practitioners be clear in explaining to the government agency where information may be disclosed (including, among other things, where a component of the activity or add-on activity will be completed). For example, to avoid any likelihood of a registered tax practitioner’s practices being seen as misleading, the TPB suggests that registered tax practitioners do not imply or state that all activities undertaken with the government agency will be completed in Australia, if that is not the case.
93. In relation to outsourcing arrangements and cloud storage arrangements, the TASA does not specifically prohibit these activities. However, registered tax practitioners must consider their obligations under section 25 of the Determination in relation to these arrangements to ensure confidentiality of information received from an Australian government agency in connection with any activities undertaken with the government agency, including appropriate disclosure in regard to where data is being sent and stored.^[25]
94. While not binding on all registered tax practitioners, further useful guidance on what steps a registered tax practitioner may take when providing or utilising outsourced services may be found in specific APESB guidance.^[26] It is also noted that TPB accredited recognised professional associations may be able to assist in providing practical guidance, while recognising that there is not a default one-size-fits-all template and that arrangements will need to be mindful of the particular circumstances.^[27] 

Legal duty to do so

95. A registered tax practitioner may disclose information in connection with activities they undertake with an Australian government agency to a third party without the government agency’s agreement if the registered tax practitioner has a legal duty to disclose the information.
96. Examples of circumstances where a registered tax practitioner may have a legal duty to disclose such information to a third party include:
    • providing information requested by the TPB in undertaking enquiries about the registered tax practitioner’s conduct, including information requested under a notice issued pursuant to section 60-100 of the TASA
    • providing information to the TPB under the breach reporting obligations in sections 30-35 and 30-40 of the TASA
    • providing information to a court or tribunal pursuant to a direction, order, or other court process to provide that information
    • providing information to AUSTRAC in accordance with reporting obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)^[28] 
    • providing information or documents to the Australian Taxation Office (ATO) under a notice pursuant to section 353-10 in Schedule 1 to the Taxation Administration Act 1953 concerning taxation laws
    • providing information to an AFS licensee pursuant to section 912G of the Corporations Act, as inserted by ASIC Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice, which requires an authorised representative of an AFS licensee to give records to the AFS licensee if requested by the AFS licensee, provided the request is made:
      • in connection with the obligations imposed on the AFS licensee under Chapter 7 of the Corporations Act; and
      • within 7 years after the day on which the personal advice was provided to the client. 
97. The TASA, including section 25 of the Determination, does not affect the law relating to legal professional privilege (LPP).^[29] LPP protects confidential communications between a lawyer and their client from compulsory production. At times, a registered tax practitioner may be in possession of client documents or information that may be subject to LPP, such as legal advice about a client’s tax affairs which has been provided on a confidential basis. Before disclosing client documents or information to a third party, a registered tax practitioner should consider whether any of the documents may be subject to LPP. Where a registered tax practitioner considers that LPP may apply, they should seek legal advice about the application of LPP. Accordingly, in the practical examples given in paragraphs 123 and 124 below, a registered tax practitioner would need to consider any additional LPP obligations.
98. If a registered tax practitioner is concerned as to whether there is a legal duty to disclose information received in connection with any activities they undertake with the Australian government agency to a third party, the registered tax practitioner should consider seeking independent legal advice.

Inadvertent disclosure

99. Registered tax practitioners also need to ensure they have appropriate arrangements to prevent inadvertent disclosure.^[30] In this regard, the following are some examples of where registered tax practitioners need to be particularly mindful of their obligations:
    • leaving information in unsecured locations which may be accessed by third parties
    • disposing (such as trading in or selling to a second-hand market) of IT equipment or mobile devices that contain / store data that may be accessible by third parties
    • the use of shredding and data disposal services
    • the use of external service providers which may include, for example, IT consultants, virtual assistants, and cleaners
    • the use of virtual meetings to discuss information when third parties may be in attendance
    • the use of public Wi-Fi or unsecure network when providing services for a government agency
    • the use of unencrypted cloud storage.

Other considerations – Privacy 

100. In addition to a registered tax practitioner’s obligations under subsection 25(1) of the Determination, the Privacy Act 1988 (Cth) (Privacy Act) sets out a number of Australian Privacy Principles (APP) which govern the use of, storage and disclosure of personal information and other conduct by organisations.^[31] Some of these privacy principles may be relevant to the obligation under subsection 25(1) of the Determination. For example, APP6 outlines the circumstances in which an APP entity^[32] may use or disclose personal information that it holds. Further, APP11 states that an APP entity must take reasonable steps to protect personal information it holds from misuse, interference and loss, and from unauthorised access, modification or disclosure. 
101. Registered tax practitioners should seek their own advice about whether the provisions of the Privacy Act apply to them. Information about obligations under the Privacy Act is accessible from the Office of the Australian Information Commissioner’s website at www.oaic.gov.au. 

Obligation to not use information for personal advantage

102. Subsection 25(2) of the Determination prohibits registered tax practitioners from using information they receive (directly or indirectly) from an Australian government agency in connection with activities they undertake with the government agency in a professional capacity, in a way that may provide a personal advantage, except to the extent the following apply:
     1. it is reasonable to conclude that the information received from the Australian government agency was authorised by that agency to be used in a way that may provide for such a personal advantage, and
     2. any further use of the information was done consistently with the agency’s authorisation.

What is a personal advantage?

103. ‘Personal advantage’ is not defined in the TASA. It is a concept that has been considered in the context of the fiduciary duties owed by a director, other officers or employees of a corporation, in particular, the duties not to misuse one’s position or information obtained because of one’s position.  A director, other officer or employee of a corporation must not make improper use of one’s position,^[33] or information gained because of one’s position, to gain an advantage or benefit for themselves or someone else. ^[34]   
104. Whether a position, or information gained because of one’s position, has been used improperly is an objective test, based on what a reasonable person, with the knowledge of the duties, powers and authority of the position and the circumstances of the case would expect of a person in that position.^[35] It is not necessary that an actual advantage or benefit was gained^[36].
105. In the context of the obligation under subsection 25(2) of the Determination, the TPB is of the view that a registered tax practitioner, much like a director, other officer or employee of a corporation, is in a position of trust and confidence when engaging with an Australian government agency in their professional capacity. Any confidential information obtained from the agency in connection with activities the registered tax practitioner undertakes with the agency in their professional capacity, that is used for a purpose other than the purpose for which it was intended, would be considered to have been used for the personal interests of the registered tax practitioner.
106. It is not necessary that the use of the information was likely or guaranteed to result in a personal advantage.^[37] The TPB considers that the mere possibility that the information has the potential to result in a personal advantage to be gained by the registered tax practitioner is enough to trigger the obligation under subsection 25(2) of the Determination. Further, given the broad general meaning attributed to the terms ‘personal’ and ‘advantage’^[38], and in the absence of any limitation or qualification (express or implied), the TPB considers that ‘personal advantage’ for the purposes of subsection 25(2) of the Determination, it is not necessary that the advantage or benefit gained be characterised in financial terms.
107. The obligation imposes a strict restriction on registered tax practitioners to ensure that no personal advantage is taken from using information obtained from Australian government agencies in relation to activities undertaken with that agency, except where it is reasonable to conclude that the agency authorised this use.^[39] 
108. Subsection 25(2) of the Determination extends the obligation further to include the use of that information for the personal advantage of an associate, employee, employer, or client. This ensures that any potential indirect benefits do not flow to the registered tax practitioner through the unauthorised disclosure of such information for the personal advantage of others.

In what circumstances can a registered tax practitioner use information for personal advantage?

109. A registered tax practitioner may only use information received in connection with activities undertaken for an Australian government agency for the registered tax practitioner’s personal advantage, or the advantage of an associate, employee, employer (which may include the recognised professional association of the registered tax practitioner), or client, if:
     1. it is reasonable to conclude that the use of the information received from the government agency was authorised by that agency to be used in a way that may provide such a personal advantage, and
     2. any further use of the information was done consistently with the agency’s authorisation.
110. A registered tax practitioner must satisfy both parts of paragraph 108 above to be able to use the information for their personal advantage, or the advantage of an associate, employee, employer, or client.
111. Applying this standard, if a reasonable person, possessing the required knowledge, skill and experience of a registered tax practitioner, objectively determined, would conclude that the use of the information for such purpose was authorised by the Australian government agency, this will be sufficient. It is not necessary to determine the question with any certainty, although it is recommended that registered tax practitioners seek consent if in any doubt.
112. Ultimately, the registered tax practitioner should use their professional judgment to assess whether the use of the information for their personal advantage, or the advantage of others, was authorised, having regard to the circumstances. 
113. In determining whether it is reasonable to conclude that the Australian government agency authorised the use of the information for the personal advantage of the registered tax practitioner, or for the advantage of an associate, employee, employer or client, the following factors may be relevant:
     • the use of the information for the personal advantage of the registered tax practitioner (or others) was expressly authorised by the government agency, either in writing or otherwise (for example, the formal engagement letter included a clause authorising the information to be used in such a manner), or
     • the use of the information for the personal advantage of the registered tax practitioner (or others) was implied by the government agency, either in writing or otherwise.

Comparison with the Corporations Act 2001 (Cth) for tax agents with a tax (financial) advice services condition

114. The TPB recognises that the obligations of some Australian financial services (AFS) licensees and their representatives under the Corporations Act 2001 (Cth) (Corporations Act) are similar to some obligations under the TASA.
115. Ultimately, while compliance with relevant Corporations Act and Australian Securities and Investments Commission (ASIC) requirements will be a relevant factor, it is not conclusive in relation to whether obligations under sections 20 and 25 of the Determination have been satisfied. 
116. In particular, it is noted that paragraph 912A(1)(aa) of the Corporations Act provides that a financial services licensee must:
     • have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative.
117. Further, Standard 3 of the Financial Planners and Advisers Code of Ethics 2019, requires that all relevant providers must not advise, refer or act in any other manner where you have a conflict of interest or duty.
118. In addition, subsection 961B(1) of the Corporations Act requires that, in the provision of personal advice to a person as a retail client, the provider must act in the best interests of the client in relation to the advice (best interests duty).
119. Further, the best interests duty is supplemented by subsection 961J(1) of the Corporations Act which requires that if the provider knows, or reasonably ought to know, that there is a conflict between the interests of the client and the interests of the provider or their related parties (such as licensees, authorised representatives and associates), the provider must give priority to the client’s interests when giving the advice (conflicts priority rule).^[40] 
120. The primary distinction between the obligations under section 20 of the Determination as compared with the best interests duty / conflicts priority rule is that section 20 of the Determination requires that the registered tax practitioner identify and disclose certain matters in relation to material conflicts of interest, whether real or apparent. In comparison, the best interests duty / conflicts priority rule under the Corporations Act is more narrowly focused on how to deal with an actual conflict of interest.
121. Further, the best interests duty / conflicts priority rule under the Corporations Act merely requires that the client’s interests be prioritised in the event of an actual conflict, whereas section 20 of the Determination is broader and requires that arrangements must be in place in relation to material conflicts of interest, whether real or apparent, and if possible and appropriate, reasonable steps are to be taken to avoid the conflict of interest.^[41]
122. Another distinction between the obligation under section 20 of the Determination, and the best interests duty / conflicts priority rule is that section 20 applies broadly to any activities that a registered tax practitioner undertakes for an Australian government agency in their professional capacity. In comparison, the best interests duty / conflicts priority rule under the Corporations Act only applies to those providing personal advice to retail clients.
123. It is noted that if an AFS licensee or an authorised representative of an AFS licensee fails to comply with the Corporations Act (including the best interests duty), they may be liable for:
     • a civil penalty^[42] and / or
     • an order for compensation for loss or damage suffered by the client.^[43]

Case studies – section 20 of the Determination

124. These case studies provide general guidance only. In all cases, consideration will need to be given to the specific facts and circumstances. 

Case study 1 – Conflict of interest not disclosed to Australian government agency 

Situation

Ann is a registered tax agent and a tax partner at a large tax consulting firm. Ann is asked to participate in a confidential consultation led by an Australian government agency in relation to proposed draft legislation concerning new integrity measures that relate to the tax consolidation rules. If implemented, these rules would apply to clients of the large consulting firm, including Ann’s own clients.

Upon receiving the confidential consultation papers, Ann identifies that if the new integrity measures took effect, they would adversely impact the tax affairs of some of her clients. Ann identified that her duty to her clients could be perceived as a material conflict of interest, noting that in the circumstances, there was a potential opportunity for her to financially benefit from her knowledge of those proposed new integrity measures by offering advice to those clients who would be impacted (and potentially new clients) on how they could restructure their affairs before the government agency published the draft legislation. She does not document this conflict of interest, nor disclose it to the government agency. She also takes no steps to manage, mitigate or avoid the conflict of interest, despite the existence of reasonable steps she could have taken to document the conflict of interest, or manage, mitigate, or avoid it.

Breach of section 20 of the Determination

Ann has breached her obligation under section 20 of the Determination. 

Ann has identified a material conflict of interest in connection with the activities she is undertaking for the government agency and the duty she owes to the agency to maintain confidentiality. She has failed to document and disclose this conflict to the government agency. In addition, it cannot reasonably be concluded that the government agency expressly provided that Ann could continue to participate in the confidential consultation. 

In breaching section 20 of the Determination, Ann is in breach of subsection 30-10(17) of the TASA for failing to document and disclose the conflict of interest to the government agency. Further, if Ann used the confidential information to financially benefit from her knowledge of the proposed new integrity measures, the TPB may also find that Ann is in breach of subsections 30-10(1) of the TASA (failing to act with honesty and integrity) and is no longer a fit and proper person to be registered as a tax practitioner. 

Case study 2 – Agency authorises continued engagement following disclosure of conflict of interest 

Situation

Max is a registered tax agent and a tax partner at a large accounting firm. Max’s clients include several large corporations. Max is an expert in company tax law and is often engaged by his clients to advise on how they may lawfully arrange their tax affairs to reduce tax that they may otherwise be liable for. He also regularly lectures on this topic at several Australian universities and has published numerous peer-reviewed articles on the matter.

Due to his expertise in this field, Max is engaged by The Treasury to assist in the design of several company tax law reform measures.

Max immediately documents and discloses the conflict of interest to The Treasury, advising of the nature and extent of the conflict of interest, and provides a broad overview of the nature of the advice and services he provides to his clients. He discloses to The Treasury that his clients include several large corporations that may be adversely impacted by the proposed reform measures. Further, Max provides The Treasury with an overview of how he intends to manage and mitigate the conflict should the engagement continue, noting that his only option to avoid the conflict is to decline the engagement. He informs The Treasury that he has taken the following steps to manage and mitigate the conflict of interest:

• recorded the conflict of interest on the firm’s conflict register
• reviewed the firm’s internal governance policies in relation to conflicts of interest, including the provisions concerning consequences for failing to comply with the procedures, to ensure compliance with those internal policies
• ensured that access to information concerning the reform measures is restricted to those who are also assisting in the design of the reform measures (assuming others are engaged to assist in the design of these reforms).  

Following the disclosure of the conflict of interest, The Treasury decides to continue with the engagement, noting the mitigating actions taken by Max and Max’s expertise in company tax law. The Treasury provides Max with its express written consent to continue with the engagement, providing Max implements appropriate mitigation measures and those measures continue to be consistent with the express consent throughout the engagement. 

Conflict of interest

Max has met his obligation in section 20 of the Determination. 

Max has appropriately identified, documented, and disclosed the material conflict of interest to The Treasury. He has also provided The Treasury with details of how he intends to manage and mitigate the conflict of interest, noting that the conflict of interest may only be appropriately avoided if he declined the engagement with The Treasury.

In addition, throughout the engagement with The Treasury, Max at all times acts in a manner consistent with the express consent provided by The Treasury.

Case Study 3 – Conflict of interest considered not material 

Situation

John is a registered tax practitioner and expert on the Australian superannuation laws. John is engaged by an Australian government agency to provide advice in relation to a proposed superannuation reform package aimed at improving the fairness, sustainability, flexibility and integrity of the superannuation system. The proposed reforms are intended to apply to all superannuation funds.

John is a passive member of 123 Super Fund. Although John identifies that there is a conflict of interest given he is a member of a superfund that will be impacted by the proposed reform package, he assesses this conflict as one that is not material in the circumstances. Nonetheless, John documents and discloses the conflict to the government agency. 

Conflict of interest

John has met his obligation under section 20 of the Determination. 

Although John has identified that the conflict of interest in connection with the activities he is undertaking for the government agency is not material, he has nonetheless documented and disclosed the conflict to the government agency.

Even if John had not disclosed the conflict to the government agency, he would not have breached section 20 of the Determination given the conflict was not material. 

Case studies – section 25 of the Determination

125. These case studies provide general guidance only. In all cases, consideration will need to be given to the specific facts and circumstances. 

Case study 4 – Agency authorises disclosure of information to third party practitioner

Situation

Thomas is a registered tax agent and a tax partner at a mid-sized accounting firm. Thomas is invited to a set of confidential round table discussions led by The Treasury in relation to a proposed increase to tax rates that would largely impact high-wealth individuals. The proposed increase in the tax rates would impact a large portion of the firm’s client base. 

The invitation to participate in the round table discussions sets out the proposed terms of the engagement, including to whom information received in connection with any activities that Thomas is to undertake for The Treasury may be disclosed. The terms make it clear that a core group of expertise within the firm could be established to participate in the round table discussions and other dialogue in relation to the proposed tax-rate hike, but that the information could not be disseminated further.

Thomas asks two of the firm’s partners to participate in the engagement and this is communicated to, and authorised by, The Treasury. Throughout the engagement, Thomas discloses information to the two partners and no further disclosure of the information occurs.

Is there a breach of subsection 25(1) of the Determination?

Thomas has not breached subsection 25(1) of the Determination. 

It is reasonable to conclude that the information received in connection with the activities Thomas has undertaken for The Treasury was authorised by the department to be disclosed to the core group, noting in particular the proposed terms of engagement. In addition, Thomas and the core group did not disclose that information further. 

Case study 5 – Agency authorises disclosure of information to third party practitioner, but disclosure is inconsistent with that authorisation 

Situation

In Case Study 4, Thomas has been authorised to disclose certain information in relation to activities he is undertaking for The Treasury to a core group to be established within his firm. The authorisation provided to Thomas clearly states how that information is to be communicated to this core group, what information can be disseminated, what information is to remain strictly confidential and not be further disclosed to that core group, and for what purpose that information is to be used. Importantly, the authorisation clearly stipulates that any information shared with that core group is to be provided through email only (with a carbon copy (cc) to The Treasury) and not to be provided in printed form. 

Thomas asked two of the firm’s partners to participate in the engagement. Throughout the engagement, Thomas discloses information to the two partners. On several occasions, Thomas prints emails from The Treasury in relation to the confidential round table discussions, including confidential meeting papers, and provides those to the two partners. 

Is there a breach of subsection 25(1) of the Determination?

Thomas has breached subsection 25(1) of the Determination. 

It is not reasonable to conclude that the information received in connection with the activities Thomas has undertaken for The Treasury was authorised by the department to be disclosed to the core group in the manner in which it was disclosed, noting that the authorisation provided to Thomas by The Treasury clearly stipulated that information shared with the core group was to be shared through email only (with a cc to The Treasury). 

In breaching subsection 25(1) of the Determination, Thomas is in breach of subsection 30-10(17) of the Code in the TASA for making disclosures of the confidential information in a manner that was not consistent with The Treasury’s authorisation. 

Case study 6 – Agency does not authorise disclosure of information to third party practitioner

Situation

Isabella is a registered tax agent and a tax partner at a large tax consulting firm. Isabella is asked to participate in a confidential consultation by The Treasury in relation to new measures aimed at improving the tax laws. This confidential consultation included new rules to stop multinationals avoiding tax by shifting profits from Australia to tax havens overseas. 

The consultation papers distributed to Isabella were marked “under embargo”. In addition, Isabella was asked to sign a confidentiality agreement as part of her formal engagement. The confidentiality agreement signed by her clearly stipulated that any information received, directly or indirectly, in connection with any activities undertaken for The Treasury in relation to these new measures, is not for further dissemination and that any further disclosure would require the prior authorisation of the government agency. 

Throughout the engagement, Isabella made unauthorised disclosures of the confidential law reform to partners and staff within the consulting firm.

Is there a breach of subsection 25(1) of the Determination?

Isabella has breached her obligation under subsection 25(1) of the Determination. 

Isabella has disclosed information she received from The Treasury in connection with activities she undertook for the department in her professional capacity. Further, it is not reasonable to conclude in the circumstances that the information received by Isabella was authorised by The Treasury for further disclosure. 

In breaching subsection 25(1) of the Determination, Isabella is in breach of subsection 30-10(17) of the Code in the TASA for making unauthorised disclosures of the confidential information. Depending on the circumstances, the TPB may also find that Isabella is in breach of subsections 30-10(1) of the TASA (failing to act with honesty and integrity) and/or that she is no longer a fit and proper person to be registered as a tax practitioner. 

Case study 7 – Agency does not authorise use of information for personal advantage 

Situation

In Case study 6, during her engagement in the confidential consultation, Isabella became aware that clients of the firm would be impacted by the proposed new measures. Isabella chose to disclose the information received from The Treasury in connection with the activities she was undertaking for the department in her professional capacity for her personal advantage, noting that she stood to gain financially by disclosing the information to the partners of the firm whose clients would be impacted. Similarly, the partners, and others within the firm to whom the confidential information was also disclosed, would gain personally from the unauthorised disclosure, noting the financial benefit that would be gained by informing impacted clients prior to The Treasury publishing the draft legislation. 

Is there a breach of subsection 25(2) of the Determination?

Isabella has breached her obligation under subsection 25(2) of the Determination. 

In addition to the unauthorised disclosure of confidential information, Isabella has also used this information she received from The Treasury in connection with activities she undertook for The Treasury in her professional capacity for her personal advantage, and the personal advantage of others within the consulting firm. Further, it is not reasonable to conclude in the circumstances that the use of the information received by Isabella was authorised by The Treasury to be used in a way that may provide for such a personal advantage.

In breaching subsection 25(2) of the Determination, Isabella is in breach of subsection 30-10(17) of the TASA, for making unauthorised disclosures of the confidential information for her personal advantage. In the circumstances, it is possible that the TPB may also find that Isabella is in breach of subsections 30-10(1) of the Code in the TASA (failing to act with honesty and integrity) and/or that she is no longer a fit and proper person to be registered as a tax practitioner. 

Case study 8 – Agency does not authorise use of information for personal advantage

Situation

Adam is a registered tax practitioner and is employed by a recognised professional association as head of its tax training program. This program is designed to equip graduates with specialist tax knowledge, and upon completion of the program, a tax specialist certification. Adam has extensive experience over several decades in designing and delivering the curriculum of the program. His area of expertise is the taxation of trusts. 

Due to Adam’s experience in developing tax training programs, particularly on the topic of taxation of trusts, Adam is engaged by The Treasury to assist in drafting a consultation paper on proposed reforms to the taxation of trust income. 

Adam disclosed information in relation to the proposed reforms to the Chief Executive Officer (CEO) of the recognised professional association. He discussed his intention to commence work on developing a new training program that could be marketed and offered as soon as a public announcement was made on the proposed reforms. Both Adam and the recognised professional association stood to gain financially as a result of Adam’s disclosure of the confidential information, noting that the recognised professional association would gain a competitive advantage by commencing work on and releasing the tax training program into the market before other competitors. 

Is there a breach of subsection 25(2) of the Determination?

Adam has breached his obligation under subsection 25(2) of the Determination. 

In addition to the unauthorised disclosure of confidential information, Adam has also used this information he received from The Treasury in connection with activities he undertook for The Treasury in his professional capacity for his personal advantage, and the personal advantage of his employer (the recognised professional association). Further, it is not reasonable to conclude in the circumstances that the use of the information received by Adam was authorised by The Treasury to be used in a way that may provide for such a personal advantage.

In breaching subsection 25(2) of the Determination, Adam is in breach of subsection 30-10(17) of the TASA, for making unauthorised disclosures of the confidential information for his personal advantage, and the personal advantage of his employer. In the circumstances, it is possible that the TPB may also find that Adam is in breach of subsections 30-10(1) of the Code in the TASA (failing to act with honesty and integrity) and/or that he is no longer a fit and proper person to be registered as a tax practitioner. 

Further information

125. Outlined below is a listing of reference material that may provide further guidance in relation to managing conflicts of interest and maintaining confidentiality. 

Consultation questions

127. The TPB welcomes submissions addressing all aspects of this draft TPB(I). The following consultations questions may assist you in providing feedback: