Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Tax Agent Services Bill 2008 will have the opposition’s full support in this House and in the other place. The bill will introduce a national regulation regime for all tax practitioners and ensure that for the first time there is a single regime governing the registration and regulation of tax practitioners in Australia. The new regulatory system will replace the existing system in Part VIIA of the Income Tax Assessment Act 1936. There have been substantial reforms to the tax system over past decades that have brought about a requirement for a modern regime to regulate tax agents. Some of these changes include the introduction of self-assessment, which has been with us for some time, from the late 1980s, and, of course, the introduction of a goods and services tax by the former coalition government.

This bill and the reform in this area were developed by the former coalition government. In the late 1990s, proposals for a new tax agents regime had been developed through extensive consultation by the Australian Taxation Office with tax practitioners and all of those other relevant professional associations. On 6 April 1998 the then Assistant Treasurer, Senator Rod Kemp, announced that a new legislative framework for tax agent services had been approved, and the new regime was in fact scheduled to come into effect back in 1999 and 2000. Of course, at that time the former government was embarking on the largest tax reform in Australia’s history with the introduction of the new tax system and the introduction of the goods and services tax within that. With those comprehensive reforms taking place and all the bedding down that was required in the following months the tax profession requested that the new regime for tax agents be delayed to allow practitioners to contend with the implementation back at that time.

Soon after the reforms had been implemented the coalition government reconvened a working group of tax associations to consider the new regulatory regime. In 2005 the government requested that Treasury undertake some confidential consultation on a detailed discussion paper. Following that a draft bill and regulations were produced for confidential consultation with industry stakeholders. This was before the then Minister for Revenue and Assistant Treasurer, the member for Dickson, released a draft bill, regulations and explanatory materials for public consultation and comment in May 2007.

We now have before us the end part of that extensive consultation that has been approached in a bipartisan way over that period. Of course it represents, from our perspective on this side of the House, the coalition’s strong support for reform in this area. As I said earlier, the bill will introduce a new regime to regulate the provision of tax agent services. The bill will provide protection for those who use tax agent services. It will establish a national practitioners board to replace the existing state based tax agent boards. It will be a statutory authority within the ATO; however, its functions and powers are to be vested independently of the Commissioner of Taxation. This single national board will provide a consistent, nation-wide system of tax agent regulation and in doing so will ensure consistency in the registration and regulation of tax practitioners.

The bill will require that all entities that provide tax agent services or BAS services—business activity statement services—for a fee must be registered with the board. Apart from registering those who provide tax agent services the board will also set important education and qualification requirements for registration itself. It will allow a more flexible approach to regulating tax practitioners through a wider range of disciplinary sanctions, including replacing criminal penalties with civil penalties for certain misconduct by agents and unregistered entities.

In addition, the bill will create a code of practice, as we have read in the explanatory memorandum and heard from the minister both in this House and outside in the public domain. It will provide a safe harbour from tax shortfall penalties for false and misleading statements for taxpayers where they engage a registered tax agent to prepare their return and take reasonable care to provide that person with all the information necessary to complete and lodge their return.

The bill before us was referred to the Senate Standing Committee on Economics back in September by my colleague Senator Coonan. The committee held a hearing just last Friday and received submissions from more than 30 interested parties. I know a number of issues were raised at the hearing, including the registration status of an entity if the tax agent dies. Under the current law the registration is revoked when a tax agent dies but the bill provides for a minimum period of 28 days from when the board issues a notice to revoke registration. I am informed that the new board will be able to issue guidelines on dealing with the succession of an entity.

Another concern was the absence of transitional provisions and regulations along with this bill. It would, of course, have been preferable if in this debate and in considering this bill the associated transitional arrangements and regulations had been available. The evidence from the Treasury at the Senate committee hearing was that a reason for this was that the government intended to conduct a further round of consultation on those transitional arrangements. The introduction of the regime will of course affect those who provide tax agent services. There has been long consultation on the intent of the bill and what it will mean. It will also of course have an effect on all taxpayers who use the services of tax agents to manage their affairs. It would have been preferable if some of the transitional arrangements and the regulations had been available for concurrent debate with this bill.

The only point I would make is that—whilst we fully support this bill and we will support it in the other place; we think it is an important reform—there does unfortunately seem to be a growing trend by the government of producing legislation in a variety of fields and leaving a lot of the regulations and the guidelines until later. Of course, it is only in the regulations and the guidelines in so many instances that clarity can be found for those professional associations affected by the measures. We welcome the fact that Treasury have given evidence that they will have a further round of consultation on those arrangements, and that is important nonetheless. As I said, we will be supporting this bill. The committee tabled its report in the Senate today, 12 February. There is broad support for the bill right throughout the tax agent community in Australia. It is something that will improve tax agent services in so many respects and it has the opposition’s support.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak today in the debate on the second reading of the Tax Agent Services Bill 2008, on the face of it a dry and unexciting piece of legislation but one that will in fact have a great impact on the general community. There are 14½ million taxpayers in Australia, including over 11½ million individuals and over three million businesses. Over recent years the ATO has made greater efforts to allow taxpayers to prepare their own tax returns by the introduction of downloadable forms and the capacity for online preparation of tax returns. I would like to take the opportunity to congratulate it for these initiatives. It has made the lodgement of tax returns for many taxpayers much more accessible. Despite this, 74 per cent of individuals and 95 per cent of businesses use tax agents to prepare and lodge their tax returns. This means that over 13½ million individuals and businesses are impacted by this legislation. This is because this legislation is designed to protect consumers of tax services, being taxpayers.

The extent of taxpayer reliance on tax agents continues to grow over time with the increasing complexities of the tax system. These include the tax reforms of the 1980s, which resulted in the introduction of the capital gains tax, the fringe benefits tax and the self-assessment regime since 1986-87. This was followed by the greatest increase of complexity, being the so-called tax reforms of the 1990s, which included the introduction of the goods and services tax from 1 July 2000. It has constantly been a mystery to me that a coalition of parties that pleads for simplicity in the tax system could have been responsible, in government, for introducing the greatest complexity in a tax system of all time—and that is what the GST is. Anyone who disagrees with this should run a small business for a short time—or for a long time, as I did for a decade—or even talk to anyone in small business, because generally the greatest complaint of any small business operator is about BAS and the GST.

Going back to the Tax Agent Services Bill 2008, this legislation puts in place a scheme for the registration and regulation of tax agents and BAS agents to ensure appropriate standards are maintained in delivering services to tax-paying consumers. This does not mean there is no regulatory scheme in place at the moment. The present regime is provided for under part VIIA of the Income Tax Assessment Act and part 9 of the Income Tax Regulations 1936. This regime was introduced in 1943 to deal primarily with taxpayer services in relation to income tax. The regime was extended to include the providers of BAS services upon the introduction of the GST from 1 July 2000, as I have already mentioned.

I really do find it very hard to believe that it has been so long since the GST came into force, but it has been nine years. The existing scheme provides a registration process for tax agents and their nominees. The existing scheme states that unregistered tax agents must not charge a fee for listed services that are set out in the legislation but provides exemptions for providers of a BAS service, and certain specified unregistered individuals may provide a BAS service for a fee without being registered under the old scheme. BAS services are defined and include the preparation or lodging of an approved form about a taxpayer under a BAS provision, giving advice with regard to that BAS, or liaising with the commissioner in relation to it. Members of recognised professional associations such as accountants can provide BAS services through an entity. Barristers and solicitors, if they desire to provide this sort of advice, are exempt from the previous legislation. Division 2 of that part currently provides for tax agents’ boards to be established in each state, and these state boards are responsible for the registration of tax agents in their own state. There are also administrative penalties for taxpayers who make false statements to the ATO which reduce the amount of tax payable by them or make late lodgement of their return, whether or not they are using or were using the services of a tax agent.

Despite the presence of this regime, there is a real need for reform and an upgrading of the protections provided to consumers, and they are contained here in this bill. The regulation impact statement says that the need for reform is justified by deficiencies in the existing regulatory framework, and they are: inconsistencies in the regulation of agents, inadequacy of consumer protection, and the threat to the integrity of our tax system.

There are a number of major elements to this bill. The first is the establishment of a national Tax Practitioners Board. The Tax Practitioners Board will have responsibility for registering tax agents and BAS agents. This will ensure that agents have the appropriate skills and knowledge. The board will also have responsibility for investigating complaints against agents and ensuring that unregistered entities do not hold themselves out to be agents.

The second main element of the bill is that it provides a wider scope of registration to include BAS agents. They previously were not provided for. They will be governed in the same way as tax agents, but they will only be able to provide a limited range of services which relate to the taxation laws relevant to BAS provisions under the legislation.

The third element of the bill is that it puts in place registration requirements for tax and BAS agents. Tax agents are required to meet the ‘fit and proper person’ test, as well as minimum educational qualifications and relevant experience requirements, in order to obtain registration to provide tax agent services for a fee or other reward. BAS agents have a lower level of minimum educational qualifications and relevant experience requirements for registration than do tax agents, in recognition of the narrower scope of services provided by BAS agents.

To allow for the registration of ‘specialist’ tax agents and BAS agents, the board may impose conditions on registration. These conditions can limit the scope of the services that an agent may provide to a single area of the taxation laws or a single type of tax agent service. These limitations relate to the prescribed qualifications and relevant experience of an individual agent. In a situation where an agent is part of a partnership or company, the limitations may correspond to the prescribed qualifications and relevant experience of the individuals who work for the agency.

Registration is restricted to individuals, partnerships and companies, but there is flexibility within the regime for a registered entity to conduct its business through a trust. The registered entity is required to be a trustee of the trust and must ensure that the work produced by the trust on behalf of the trustee is of a competent standard.

The fourth element of the bill is that it introduces a code of professional conduct, which governs the ethical and professional standards of tax agents and BAS agents. The code is set out as a statement of principles, and the board may issue binding written guidelines for the interpretation and application of the code. This code is made binding through this legislation to enable the board to impose sanctions for breaches and thereby to enforce compliance with the code.

Under this bill’s regime, if a tax agent or BAS agent has breached the code, the board has a number of alternatives. The board may caution the agent, require the agent to complete a course of training, subject the agent to practising restrictions, require the agent to practise under supervision, or suspend or terminate the agent’s registration. This is a much greater number of options than under the previous arrangements.

The board also has the capacity to apply to the Federal Court of Australia for an order for the breaching tax or BAS agent to pay a pecuniary penalty for particularly serious misconduct, or seek an injunction to prevent the entity from engaging in, or obtain an order to compel an entity to undertake, certain conduct. Such a wide range of sanctions allows the board to tailor its response according to the severity of the misconduct.

A taxpayer who uses a tax agent or BAS agent will benefit from a safe harbour from certain administrative penalties in certain circumstances. Penalties will no longer apply where a false or misleading statement is made carelessly, provided the taxpayer has taken reasonable care to comply with their tax obligations by giving their tax agent or BAS agent the information necessary to make the statement; or where a document is not lodged on time in the approved form due to the tax agent’s or BAS agent’s carelessness, provided the taxpayer gave the agent the necessary information, in sufficient time, to lodge the document on time and in the approved form. In other words, a taxpayer who is doing the right thing, acting reasonably and providing all the information, doing all the necessary things and giving the right information to their tax agent is no longer liable for a penalty. It is essentially a protection from incompetence of agents in those circumstances.

The bill has generally been accepted by the taxation community, particularly because it has been such a long time coming. There has been extensive consultation, an exposure draft and an inquiry. There have been some small concerns but essentially the Taxation Institute of Australia has welcomed the bill and, in a press release on 14 November 2008, Sue Williamson from the Taxation Institute said:

This Bill is an important step forward in supporting a mature tax profession with an appropriate regulatory regime. It ensures that clients can use tax agents with greater comfort in knowing that their tax agent will be expected to meet education requirements and be required to comply with an acceptable code of conduct.

The bill was also welcomed by the CEO of the Financial Planning Association, Jo-Anne Bloch. I certainly welcome the bill myself and I commend it to the House.

Richard Marles (Corio, Australian Labor Party) Share this | Link to 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.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Madam Deputy Speaker, for the opportunity to speak on the Tax Agent Services Bill 2008. A lot of legislation that comes through this place has a great deal of complexity attached to it, and none more so than taxation law. I feel there is an obligation for all of us as Australians to comply with tax law and to do the best that we possibly can to make sure that we meet all of our responsibilities and obligations under tax law.

The responsibility that we have as members of parliament is to ensure that the regulatory regime and the laws that we put in place are of the best possible quality to ensure that people can and will comply with them and to ensure that people have a fair understanding of what their obligations are. That applies not only to individual taxpayers but also to tax agents and, as has been noted more recently, to people who provide BAS services. It is particularly important that this parliament regularly monitors, reviews and updates the regulation of taxation. This bill does that specifically in relation to tax agent services and it also introduces BAS agents into the law.

There is a heavier reliance today on tax agents due to a range of complex changes over a number of years, particularly with the introduction of the GST and the way that our tax system operates. We have such a highly complex, highly evolved and voluminous set of laws that it is much too complex for the ordinary Australian to do their tax on their own. This is despite that fact that there are online systems and a range of mechanisms in place that are designed to make paying tax and reconciling tax at the end of the financial year easier processes, although I do not know that anyone would use the word ‘easy’ to describe preparing their tax. Over the years tax has become more complex, so there has been more and more need for even simple individual tax returns to be dealt with by tax agents and related organisations. It is critically important that we get regulation right to manage and deal with the people who provide those services.

The Tax Agent Services Bill aims to improve the regulatory environment for the provision of services by tax agents. It has a particular number of objectives specifically to improve consistency in the registration of tax agents so that consumers have confidence that the people that provide those services are properly accredited agents and so that consumers have confidence they are meeting all their obligations. The bill also applies to other intermediaries and regulates to ensure the provision of tax agent services in an appropriate and flexible manner.

It is important, while we are making these changes and improving regulation, that we have at the front of our minds the protection of consumers from unscrupulous tax agents and other service providers. There need to be mechanisms in place that give consumers the protection they need. This bill will reduce the level of uncertainty for taxpayers and the risks that are associated with the self-assessment systems that are currently in place. I think a self-assessment system that is simple enough to use is an integral part of getting the balance right between providing a regulatory regime for self-assessment and ensuring that there is a proper system in place for people who wish to have someone else do their tax for them. I think we struck that balance in this bill by bringing forward some necessary changes. In getting the balance right, it is also important to make sure that the integrity of the tax system and the tax industry is and continues to be intact. This bill goes some way to dealing with those matters.

Of particular note is the introduction of a national Tax Practitioners Board, the members of which will be appointed by a Treasury portfolio minister. That will replace the existing state based tax agents boards. While those boards have done a fantastic job over many years and decades, the reality is that in today’s environment a nationally uniform and credible system that is in one place and covers the whole tax system and the whole country is of critical importance. I believe that today it is no longer acceptable to have different regimes across what is one system at a national level with different rules, processes and applications of time, proceedings, penalties and other matters related to what a state based tax agents board might do. So the introduction of an independent national Tax Practitioners Board is of great importance.

The board’s functions, of course, will include the very important one of registering and disciplining tax agents and BAS agents. It will have a range of powers to ensure that unregistered entities can be registered so that we do not have a situation where people providing these types of services hold themselves to be registered when in fact they are not. It is important to get those elements right, which is what this bill does. The board will also be able to investigate matters and impose sanctions, something very important and appropriate in building consumer confidence in this area.

If there are problems—and mistakes can obviously be made by boards—there will of course be an opportunity for review. That review would be done by the Administrative Appeals Tribunal. Through the normal processes that consumers have when decisions are made that they are not satisfied with, they can seek some redress through the AAT.

It is also the case that boards of this nature need to be accountable and transparent. While the board will be independent, I think it is important that it reports to the parliament and keeps it up to date with its dealings, with its findings, with any sanctions it imposes and with registration numbers so that we are informed of the practices taking place in the community. It will be an important factor in us being able to determine the board’s success or otherwise and problem areas that may arise from time to time. I eagerly await the first report to have a look at the new board when it is fully operational and providing services.

It has been the case in the past that the Australian tax office has provided secretarial services to the state based boards. This will continue but at a national level. So there will be some operational efficiencies—I would go so far as to say some money saved—in that area.

Entities that want to provide tax agent or BAS services—and, of course, BAS services are of a somewhat narrower and more limited capacity—for a fee or some other reward, or who want to place themselves out in the open market to provide these services, will be required to be registered with the new board. There will be two types of registration, tax agent registration and BAS agent registration, and there will be different requirements, as they exist under law, for the sorts of services they can provide and the type of entity they are when they register with the board.

There will be the normal minimum requirements for registration, as one would expect, related to character—these people would have to be of good character—educational qualifications and relevant work experience. This will also be the case for BAS agents, but to a lesser degree in proportion to the services they provide. Again, this is about consumer protection, about ensuring the integrity of the tax system and about ensuring that regulations are met with. In cases where the services are provided by partnerships, companies and organisations and they seek registration, their compliance with the requirements will have to be demonstrated at an organisational level—that is, organisational qualifications and experience to match. For those who want to specialise in particular areas, the same types of rules would apply—that is, the person or organisation would have to demonstrate that they are of good character and meet the minimum requirements based on the specialty area in which they are seeking to be registered.

It is particularly important in the area of tax agent services that there is a professional code or some sort of professional standards and guidelines, as there are in a range of other areas. Those who register will be governed by a legislated code of professional conduct, which will define the professional and ethical standards required of the people or organisations providing the services. Currently, there are only a small number of agents who are required to comply with any such codes of conduct, so the roping-in, through registration, of all the service providers—be they individual entities, partnerships, companies or other organisations—is a move in the right direction and will provide a great deal of confidence to ordinary people and consumers in the products they provide. It is important to note that there will be specific penalties for breaches of codes or ethical standards and for certain conduct.

The idea of this bill is to bring into line a higher level of integrity and compliance. But what it specifically does—which may seem at first glance to be at odds with what people might expect but which is, I think, certainly a move in the right direction—is replace the existing criminal penalties for offences. They will be replaced by civil penalties and injunctions. These civil penalties are a much more appropriate mechanism to discourage certain types of behaviour, and the penalties will be serious enough to match the seriousness of the conduct or offence. The current types of offences are not serious enough to warrant a criminal conviction or imprisonment. Of note here is that significant monetary penalties will apply. This is about deterrence, consumer confidence and the integrity of the tax system, and we want to deter prohibited conduct by people who engage in these areas.

It will be completely appropriate for the board to be able to apply to the Federal Court of Australia for civil penalty orders, in particular, when there is certain conduct by unregistered entities or by registered agents—for example, the making of false statements, misconduct, the provision of misleading information or noncompliance with their responsibilities. Given that that misconduct often has a direct impact on a consumer whom it will affect greatly, there needs to be strong deterrence in those areas, and I fully support the measures that are contained within this bill. Importantly, following on from that, agents or service providers who decide that the civil penalties and monetary or pecuniary penalties are not a deterrent can actually be deregistered—that is, have their registration taken away from them and no longer be allowed to practise. I think it is important to note that there is an escalation through the regulatory environment to ensure that we maintain the integrity of the system.

This bill is widely supported. It has in fact been supported unanimously by interested and affected parties, industry bodies and, I would say, by everyone in this place. I have taken note that there have not been any opposition views expressed about the measures that are contained in this bill.

This bill does a number of key and very simple things. It is about strengthening the integrity of the tax system. It is about providing greater protection—something which I am a huge advocate of and which I think is a very important part of the role that we play in this place. It is also about modernising. It is making sure that our regulatory system keeps pace with the fast-changing world in which we live. Often we keep pace, but at much too slow a rate. So it is good to see that these amendments are being brought before us in this place in a very timely manner. As a government member, it is always nice to be able to stand up and say that we are tidying up work that perhaps should have been done years ago—but I will not make too much comment on that particular point.

This package was developed through extensive consultation with professionals and associations. This is something that has been done with the industry; hence why there has been unanimous support for what is contained in this legislation. It is something that the sector itself appreciates and understands. The measures in this bill will be an advantage for all those professional tax agents, BAS service providers and others involved in this area. They will know that they have a better system in place with better compliance measures. It will weed out the crooks and the shonks and make sure that we have the right people doing the right thing by ordinary Australians.

There are a number of key elements in this reform package—and, obviously, the national Tax Practitioners Board is a key element—which go across a whole range of areas that the Rudd government has been very vocal on in terms of trying to get some uniformity across the nation and replace state based regimes with a consistent, uniform and national platform which is easily understood by everybody, regardless of which state they live in. Particularly for taxpayers that may operate in a variety of states or environments, it makes sense that they need only to comply with one regime across a consistent, understandable and uniform system.

Another element is, of course, the registration of entities and BAS service providers, which is very important in ensuring not only that consumers are protected but also that those who operate in that environment have some certainty about their work and have certainty that they are dealing with other professionals and people who are actually registered. It also goes to the heart of a legislated code of professional conduct—something which should probably be looked at in a whole range of other areas. I was recently involved in a report on franchising where we specifically looked at a code of conduct for that sector. It is strikingly obvious, I think, to a lot of people that, as systems become more complex, more opportunities arise for people to take advantage of others, to abuse their power, to abuse their position and to abuse the complexity contained within systems—no less here in taxation and the provision of tax services or BAS services, and therefore there is a need for us to put in place a set of standards and codes. I am very supportive of that. In fact, I would encourage other ministers to follow the lead of the Assistant Treasurer and other people in this regard. I note that the Assistant Treasurer is here in the House to sum up the debate on this bill. I congratulate him on the work that he has done in protecting consumers and providing greater integrity and certainty in the tax system in Australia. I believe a legislated code of professional conduct is very important and something that will be welcomed by all those who practise in the tax area.

With legislation like this, it is important to be conscious of not placing onerous regulatory burdens on small business and individuals—or, for that matter, doing anything which might affect consumers further down the line and make life harder or more expensive for them in accessing these services. So it is good to see a wider and more flexible range of measures in this bill, including disciplinary sanctions that can be imposed by the board.

The change I mentioned before, of civil penalties and injunctions replacing criminal penalties, is, I think, highly appropriate. It is not always the case that criminal penalties are the best way forward. There are many cases and examples where civil penalties are a much better mechanism. I think there are circumstances—where people make mistakes, sometimes unknowingly and sometimes knowingly in a small capacity that they thought was not important enough to provide—where safe harbour is needed to give people some room to fix those errors. So, where it is identifiable, in certain circumstances and for certain reasons, that a safe harbour is required, I think it is appropriate that it is contained in these measures—and it is. All in all, I am very supportive of this bill, as I know other members of this House are, and I think it is a very important move forward for the protection of consumers and the integrity of the tax system.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for his contribution. I call the shadow Treasurer.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

in reply—I am the Assistant Treasurer.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I am sorry—the Assistant Treasurer.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

That would be a great problem, Mr Deputy Speaker.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

It would—just as I am not the ‘Assistant Deputy Chair’.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Unless there has been an event in the last hour that I was not aware of, I am not the shadow Treasurer. Firstly, I thank all members who have contributed to this debate: the member for Casey, the member for Robertson, the member for Corio and the member for Oxley. The Tax Agent Services Bill 2008, as several honourable members have highlighted, has been a long time coming. In fact, with the passing yesterday by the House of the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008 we see the completion through this process of two of the longest pieces of public policy development in the Treasury’s history—TOFA and the Tax Agent Services Bill. It has been one of the government’s priorities to deal with these two pieces of legislation and get them on the statute books. We have been working hard at that. We wanted to get it done by the end of last year, but it is very good to see this go through very early in the session this year.

The member for Casey argued in the House that it would have been better, preferable, if the transitional bill was in the House at the same time. I agree with him that that would have been ideal. But I took the decision that that would have delayed the processing of this bill quite considerably. We needed to get the transitional bill right. There needs to be a consultation period and, given that this has gone on for so long, we did not want to delay the passage of this bill through the parliament. But, as it happens, today the draft exposure bill for the transitional arrangements has been released for consultation on the same day that this has come in. That is now out for public comment and will be introduced in the not too distant future, once that consultation process has finished. I agree it would have been ideal, but we were faced with the decision of either delaying this even further or bringing the transitional bill in without consultation, and I was not prepared to do that.

As several honourable members have pointed out, this represents a considerable modernisation of the regime—a long overdue modernisation of the regime—that applies to tax agents in this country. It will replace the current law providing for the registration of tax agents, which was introduced in 1943. It is now out of date and inconsistent with the current tax and commercial environment. This bill provides for significant improvements to the existing regulation of the provision of tax agent services through the creation of a national Tax Practitioners Board. This bill provides consistency in the regulation and registration of tax agents and other intermediaries in the tax field.

The requirement that entities providing BAS services—that is, business activity statement services—for a fee must register ensures a level playing field and reflects the expansion of the tax base over recent decades. Of course, BAS servicing is complex, BAS arrangements are complex and difficult, and it is appropriate that BAS operators are registered. The legislated code of professional conduct provides certainty to both agents in terms of the standard of conduct expected of them and to taxpayers in providing a benchmark against which they can evaluate the services that they receive. The introduction of a range of constructive and educative administrative sanctions allows the new board flexibility to respond appropriately to breaches of the code. Furthermore, the application of civil penalties instead of criminal penalties for certain specified misconduct by registered agents and unregistered entities provides an effective deterrent against engaging in prohibited conduct.

The requirement that entities providing BAS services for a fee register as BAS agents has led to some bookkeepers expressing concern about the costs they will incur in order to comply with the requirements in this bill. The key cost for bookkeepers who intend to provide BAS services for a fee is that they are expected to bear the costs associated with obtaining the necessary qualifications for registration. Many such bookkeepers will either already hold the necessary qualifications or be able to seek recognition of prior study and experience from the education provider. In addition, any actual cost incurred is proposed to be spread over at least two years and, in some cases, as many as five years, via the generous transitional arrangements contained in the transitional provisions in the bill that has been exposed for public comment today.

The bill largely regulates the same scope of services as currently regulated. Indeed, the scope of tax agent services as defined in the bill is roughly the same as the scope of services that are prohibited without registration under part VIIA of the Income Tax Assessment Act 1936, as both rely on the definition of taxation law—that is, services that are currently prohibited without registration will be prohibited without registration under the bill. While the scope of the services being regulated will not change dramatically, consistent with the expansion and modification of the tax base to include the GST, capital gains tax, fringe benefits tax and others, the bill strengthens the regulatory environment by accommodating the registration of service providers who specialise in a particular type of tax. In addition, the transitional provisions legislation proposes a generous transitional arrangement for specialists, whereby such entities may register within the first six months without demonstrating that they meet the education and experience requirements. I think that might deal with some of the concerns we have heard from some small elements of the sector in relation to very specialised tax advice.

As I have outlined, the bill provides for significant improvements to the existing regulatory regime. It provides appropriate but flexible regulation of the provision of tax agent services and will improve consistency in the registration of tax agents and other intermediaries in the tax field. It will also enhance the protection of consumers of tax agent services, thereby reducing uncertainty and risk faced by taxpayers. Finally, it will strengthen the integrity of the tax system and the tax industry. The government is committed to implementing these regulatory reforms for the provision of taxation services.

As I say, this bill has been in the pipeline for a very long time. I take this opportunity to thank the Treasury officials who have undertaken numerous rounds of consultations, both under this government and under the previous government. Earlier, there were a lot of concerns about this bill, it is fair to say, in the taxation industry. There have been a lot of representations to the Treasury, to me and to the government about concerns. Those concerns have by and large all disappeared because of the consultation process dealing with those concerns, listening and reflecting their concerns in the bill. That says two things: that the government was prepared to listen to those concerned and that it is a tribute to the consultation process undertaken by the Treasury. I commend the bill to the House.

Question agreed to.

Bill read a second time.