Richard Marles (Corio, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Tax Agent Services Bill 2008 and I do so with a great deal of pleasure. It is a bill which seeks to improve and modernise the regulatory framework which applies to the services that are provided by tax agents. The fact that this bill has come to the House today is the culmination of a considerable amount of work on the part of successive governments and the tax profession itself, and my congratulations go to them that we have the bill to this point.

Currently, the regulation which applies to tax agents can be found in the Income Tax Assessment Act 1936. It was first put in there as a measure of the Curtin government in 1943. But since 1943 the reliance that people have had on tax agents has grown significantly. That is a function of a taxation system and a global financial world which has become much more complex over that period of time. For example, during the 1980s you had the implementation of the capital gains tax, the fringe benefits tax and the requirement for self-assessment, and in the 1990s you had the advent of the goods and services tax. It has got to a point now where we have 26,000 tax agents around our country. It is estimated that 74 per cent of income tax is now done through a tax agent and that almost 95 per cent of business returns are done through a tax agent, so this indicates the extent to which tax agents are fundamental to our system of taxation. Their work really underpins the taxation system and, in that sense, the revenue of this government.

This bill and this system of regulation has been a long time coming. There was a review of standards in the taxation industry back in July 1992 which was perhaps the beginning of the process which has led to this bill. That was a review which consisted of tax professionals, the New South Wales Tax Agents Board, representatives of the Attorney-General’s Department and the Australian Taxation Office. The culmination of that review came in 1994 when there was a report of the National Review of Standards for the Tax Profession entitled Tax services for the public. What was contained in that report really was the genesis, if you like, of the bill that we are debating in this House today.

From 1994 various statements were made during the Howard years, and in May 2006 the then Assistant Treasurer, the Hon. Peter Dutton, who is in the House today, announced funding for the implementation of a new regime for regulating tax professionals. In May 2007 the same minister provided an exposure draft, and in May 2008 under the new Rudd government there was a revised exposure draft which then led us to the point we are at today. Two things come from that potted history. Firstly, there has been an awful lot of consultation with the tax profession over a long period of time, which has led to the bill that we are debating today. The other point is that this is a bill which has bipartisan support and has been worked on by both governments.

It is a bill which has the absolute support of the industry, and that is perhaps typified by comments made on 14 November last year by the President of the Taxation Institute, Sue Williamson. She said:

This Bill is an important step forward in supporting a mature tax profession with an appropriate regulatory regime.

The bill contains six key parts. The first is the establishment of a national Tax Practitioners Board. Currently, there are six different state based boards around Australia, each with its own rules and proceedings, with little communication between them and with great degrees of inconsistency in the way in which they operate. They are all currently resourced by the Australian Taxation Office, and so this bill will provide for the consolidation of all of those into one national Tax Practitioners Board and one set of consistent rules will apply. The key functions of that board will be for the registration of tax agents and business activity statement, or BAS, agents—and I will come back to those in a moment—as well as the disciplining of registered tax agents in relation to certain activities and of people who are carrying out work in this field and who are unregistered.

The second area relates to the registration requirements for tax agents or BAS agents. They are anybody who is engaged in providing taxation advice services or BAS services and who is doing so for a fee, doing so through advertising or holding themselves out as being registered to do so. Everyone in that category is now required to register as a tax agent or a BAS agent. In a sense, as I have indicated, there are two types of registration that you can obtain. One is as a tax agent; the other is, if you are undertaking more limited advice in the area of business activity statements, simply seeking registration as a BAS agent. The requirements for obtaining registration will have elements of a character test, having the required education to provide the services that are being provided as well as having the required work experience. If we are talking about obtaining registration as a BAS agent then there is a lesser requirement in terms of education limited to the particular field of advice that will be provided. For partnerships and for companies, there need to be sufficient organisational education levels and experience within the organisation in order to obtain the registration. The system of registration will also provide for specialisation—that is, you will be able to seek registration in a particular area of specialty.

The third area of the bill provides for a legislated code of conduct that will apply to all tax agents and all BAS agents, and this is a really significant step forward. Currently, only those tax agents who by virtue of their professional association are obligated to carry out their functions in accordance with a code of conduct are, in a sense, covered by a code of conduct. As a result of this legislation every registered tax agent and every registered BAS agent will be required to carry out their duties under a code of conduct.

The code of conduct will include obligations for agents to carry out functions honestly and with integrity and to comply with tax laws in relation to their own personal affairs. If they are in receipt of money from a client in trust then there is an obligation to account for that money. There is an obligation to act in the best interests of a client and, in doing so, to manage any conflicts of interest which may arise for the tax agent. There is an obligation to maintain confidentiality around information that is provided by a client, unless there is a lawful obligation to disclose that information. There is an obligation to act with competence. Closely linked to that is an obligation to maintain one’s professional knowledge and skills. There is an obligation to ascertain, where relevant, the client’s state of affairs in putting forward a tax return and ensuring that tax laws are applied correctly to the situations being dealt with by the tax agent. There is also a requirement to maintain professional indemnity insurance. That is not an exhaustive list of the code of conduct, but it indicates the kind of behaviour which will now be legally required of tax agents and BAS agents when they are undertaking their duties.

The fourth area of the bill gives the new board the power of administrative sanctions where it believes there has been a breach of the code of conduct. In talking about administrative sanctions, we are talking about requirements, for example, to undergo training or to work under supervision. The point about these administrative sanctions is that they are aimed at being constructive and educative to try and improve the level of taxation advice which is being given within our community.

The fifth area which is dealt with by the bill is replacing the regime of criminal penalties currently under the bill with civil penalties and injunctions. That is an appropriate change in the law applying to the circumstances where these penalties would be put into play. In doing so, there is going to be an increased monetary penalty available to the board. We are talking about situations where an unregistered person is engaging in activities which would require registration as a tax agent—in other words, providing that advice when unregistered—or circumstances where you have a registered tax agent who makes a false or misleading statement. It is in these circumstances that we are talking about replacing criminal penalties with civil penalties but increasing the level of civil penalties which can apply. The board will be given the ability to apply to the Federal Court for a civil penalty order or indeed to apply to the Federal Court for an injunction in circumstances where an injunction may prevent these kinds of breaches from occurring.

Finally, there is a safe harbour provision in the bill which will essentially allow those people who, in good faith, go to a tax agent and provide all the relevant information some sense of security that, if for whatever reason a mistake is contained in their tax return, they will not be liable. That is a very important measure as well.

In conclusion, this bill has been a long time coming. It is a great pleasure for me to speak on it in this House today. It comes to this House with the unanimous support of the industry. It comes to this House with the support of all the players in this parliament. It is very important that this bill be passed and I very much commend it to the House.

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