Barbara Pocock (SA, Australian Greens) Share this | Hansard source

by leave—I move Australian Greens amendments (1) and (2) on sheet 2161 together:

(1) Clause 2, page 2 (after table item 5), insert:

(2) Schedule 3, page 33 (after line 25), at the end of the Schedule, add:

Part 4 — Appointments to the Tax Practitioners Board

Tax Agent Services Act 2009

16 Paragraph 30-25(4)(a)

Repeal the paragraph, substitute:

(aa) Part 2 (Registration); and

(ab) Subdivision 30-C (Notifying a change of circumstances); and

(ac) Part 4 (Termination of registration); and

(ad) section 60-25 (Appointment of Tax Practitioner Board members); and

17 Section 60-1

Omit:

Comprising at least 7 Board members, the Board has functions and powers relating to the operation of this Act, including investigating your application for registration and conduct that may breach this Act. For the purposes of an investigation, the Board may oblige you to give it information.

substitute:

Comprising at least 7 Board members, the Board has functions and powers relating to the operation of this Act. Board members must be individuals who are representatives of the community rather than representatives of larger registered tax agents or BAS agents.

One of the Board's functions is to investigate your application for registration and conduct that may breach this Act. For the purposes of an investigation, the Board may oblige you to give it information.

18 At the end of subsection 60-10(1)

Add:

Note: Board members must be community representatives (see subsection 60-25(4)).

19 At the end of section 60-25

Add:

Community representatives

(4) In appointing an individual as a *Board member, the Minister must be satisfied that the individual is a *community representative.

(5) An individual is a community representative if the individual is not any of the following:

(a) a partner in a partnership that is a *prescribed tax agent;

(b) an *executive officer of a company that is a prescribed tax agent;

(c) a former partner in a partnership that is currently a prescribed tax agent, if the individual is receiving regular and ongoing benefits, or has within the last 6 months received a material benefit, from the partnership;

(d) a former executive officer of a company that is currently a prescribed tax agent if either of the following apply:

(i) the individual is receiving regular and ongoing benefits, or has within the last 6 months received a material benefit, from the company;

(ii) the individual holds *shares in the company.

(6) A prescribed tax agent means a company or partnership that:

(a) is a *registered tax agent or BAS agent; and

(b) has more than 100 employees.

Note: A company or partnership whose registration as a registered tax agent or registered BAS agent is suspended remains a registered tax agent or BAS agent for the purposes of this section (see subsection 30-25(4)).

(7) An executive officer of a company means a director, secretary or senior manager (within the meaning of the Corporations Act 2001) of the company.

20 Subsection 90-1(1)

Insert:

community representative has the meaning given by section 60-25.

executive officer has the meaning given by section 60-25.

prescribed tax agent has the meaning given by section 60-25.

21 Application of Board member appointment amendments

The amendments of the Tax Agent Services Act 2009 made by this Part apply in relation to any appointment of a Board member made after the commencement of this Part.

Part 5 — The Code of Professional Conduct

Tax Agent Services Act 2009

22 At the end of subsection 30-20(1)

Add:

; (d) requiring you to notify, in writing, all of your current clientsabout the findings of the Board's investigation specified in the order.

23 Subdivision 30-C (heading)

Omit "Notifying a change of circumstances", substitute "Other obligations".

24 After paragraphs 30-35(1)(b), (2)(b) and (3)(b)

Insert:

(ba) you have reasonable grounds to believe that:

(i) you have breached the *Code of Professional Conduct; and

(ii) the breach is a *significant breach of the Code; or

25 Subsection 30-35(4)

Repeal the subsection, substitute:

When notice must be given

(4) You must give the notice within 30 days of the day on which:

(a) you become, or ought to have become, aware that the event occurred (unless paragraph (1)(ba), (2)(ba) or (3)(ba) applies); or

(b) if paragraph (1)(ba), (2)(ba) or (3)(ba) applies—you first have, or ought to have, reasonable grounds to believe that you have breached the *Code of Professional Conduct, and that the breach is a *significant breach of the Code.

Note: A breach of this subsection is a breach of section 8C of the Taxation Administration Act 1953 and of subsection 30-10(2) of this Act.

26 At the end of Subdivision 30-C

Add:

30-40 Obligation to notify of significant breaches of the Code of Professional Conduct

(1) If you are a *registered tax agent or BAS agent, you must notify the Board, in writing, if you have reasonable grounds to believe that:

(a) another registered tax agent or BAS agent has breached the *Code of Professional Conduct; and

(b) the breach is a *significant breach of the Code.

(2) In addition, if at the time you have reasonable grounds to believe that other agent has breached the Code, and that the breach is a *significant breach of the Code:

(a) the other agent is a member of a professional association accredited by the Board under the regulations; and

(b) you are aware of that other agent's membership;

you must notify the association, in writing, of the breach.

When you must notify

(3) You must notify under subsection (1) or (2) within 30 days of the day on which you first have, or ought to have, reasonable grounds to believe that the other agent breached the Code, and that the breach is a *significant breach of the Code.

27 Subsection 90-1(1)

Insert:

significant breach of the Code means a breach of the *Code of Professional Conduct by a *registered tax agent or BAS agent if the breach:

(a) constitutes an indictable offence, or an offence involving dishonesty, under an *Australian law; or

(b) results, or is likely to result, in material loss or damage to another entity (including the Commonwealth); or

(c) is otherwise significant, including taking into account any one or more of the following:

(i) the number or frequency of similar breaches by the agent;

(ii) the impact of the breach on the agent's ability to provide *tax agent services;

(iii) the extent to which the breach indicates that the agent's arrangements to ensure compliance with the Code are inadequate; or

(d) is a breach of a kind prescribed by the regulations for the purposes of this paragraph.

28 Application of obligation amendments

(1) The amendments of section 30-35 of the Tax Agent Services Act 2009 made by this Part apply in relation to breaches that occur on or after the commencement of this Part.

(2) Section 30-40 of the Tax Agent Services Act 2009, as added by this Part, applies in relation to breaches that occur on or after the commencement of this Part.

This amendment is the first legislation to deal with some of important issues that have arisen since the PwC scandal broke. Since that scandal began to unfold, Australians have come to much better understand the power of big consultants and their literally incredible influence on our tax advice and consultancy sector, as well as their huge reach into our public sector, government decision-making and so many activities of government. The size and expansion of big consultants has introduced new risks to our tax administration system, which the PwC debacle has revealed. We've seen in too many places the capture and taming of regulatory machinery, with the voice of the big four too often dominating processes of decision-making, creating very significant conflicts of interest and hobbling regulation.

This amendment aims to begin the processes of unwinding that capture and those conflicts, to get those who are being regulated off the regulatory bodies. We Greens have secured government agreement to improve the system of tax administration and ensure its independence and its pursuit of the public interest to make sure it's not captive to big consultants. We need to remove both real conflicts of interest and the appearance of conflicts of interest. To that end, our amendments restrict membership of the Tax Practitioners Board to community members without vested interests.

Our amendment will ensure that partners from the big four are banned from sitting on the TPB. The TPB regulates the tax advisory industry and has the power to deregister tax advisers who engage in serious misconduct. The Greens amendment will ban any senior executives or partners currently working at a tax firm with more than 100 employees, or with ongoing financial links to large tax firms, from being members of the Tax Practitioners Board. Through this amendment, we're fixing the loophole that allows big consultants to regulate themselves. Through our amendment, the remaining former PwC partner on the TPB will not be able to be reappointed. We will have members of the Tax Practitioners Board who are not financially tied to those same large tax agents they are regulating.

The amendment also requires tax agents not only to report to the TPB if they've breached the code of professional conduct but also to report if another agent has breached the code. This is an important amendment to prevent partners protecting other partners and turning a blind eye to unethical behaviour. It widens the responsibility for unethical behaviour from the individual to others that are aware of their behaviour. This is what happened in the PwC tax scandal. If tax agents do not report such unethical behaviour, they can now be penalised. Hopefully, this means we will not be sitting here in the years ahead trying to unpick unethical tax behaviour, who did it, who was party to it, who knew about it and who did nothing to stop it. Hopefully, the whistle will be blown early, loudly and more often. Whenever someone does the wrong thing and others have witnessed it, it will be blown.

If we've learned anything from the PwC tax scandal, it's that we need to pay much closer attention to the regulation of the professional services sector in general and tax advisers in particular. The Australian public will no longer tolerate self-regulation and the capture of regulatory machinery. They want it to work fairly, ethically and in the public interest, with penalties for those who do the wrong thing.

We thank the Labor government and, in particular, the Assistant Treasurer and Minister for Financial Services, Stephen Jones, and his staff, for his willingness to reach agreement with us on these important changes. The minister has also agreed to use his new legislative powers to implement some important changes to the tax practitioners code of professional conduct, to make sure they properly capture and describe behaviour that assists an ethical and effective tax advisory system upheld by all who work in this field. I commend this amendment to the Senate. I'm confident it's a positive and powerful step in the right direction.