The black economy taskforce has suggested legislative changes may be needed to sanction tax agents who act “illegally or unethically”, prompting prominent members of the Australian tax sector to ask the taskforce to explain exactly what concerns it has with the current system of catching out dodgy accountants.
The 18th policy discussion area in the taskforce’s report into fighting tax avoidance in Australia suggests “greater attention needs to be paid to sanctioning unethical agents and the role that the Tax Practitioners’ Board should be playing in this”.
The taskforce suggests investigating “legislative and other factors” that could be addressed to better weed out agents who skirt the law, including possibly “increasing the onus of proof on agents suspected of acting illegally or unethically”.
Investigations into the role of tax agents in the black economy has previously been raised by taskforce head Michael Andrew, who claimed some practitioners are assisting clients to make incorrect claims.
However, head of policy at CPA Australia Paul Drum says the taskforce has to explain the deficiencies in the current system, given there’s already professional standards codes and legal frameworks in place to de-register or penalise agents if they are found to be doing the wrong thing.
“What’s the real issue here? Is it around the actions that can be taken under the current laws? Well, that has not been raised with us,” Drum says.
While Drum believes there could be scope for the introduction of education programs to remind tax professionals their licences come with obligations and responsibilities, at this stage it’s unclear what has prompted the concern about sanctioning agents, he says.
Tony Greco, senior tax adviser at the Institute of Public Accountants, says the sector is already subject to plenty of oversight, including from professional membership associations, the Tax Practitioners Board and the Australian Tax Office.
Greco says “there are already rules in place to address unethical behaviour”, and it’s up to “Tax Practitioners Board and the tax office to ramp up compliance to weed out any bad apples in the profession”.
Unethical vs illegal?
Senior tax counsel for The Tax Institute Bob Deutsch says the vast majority of accounting professionals comply with their obligations, and there is potential risk in lumping “unethical” and “illegal” practices together.
“I think we have to tread very carefully here … if something is illegal, there is no question, but where it could be unethical, there are value judgments there,” he says.
In particular, Deutsch warns of “grey areas” caused by situations in which an accountant is approached by a client and asked to act in a certain way.
“If a client says to the tax agent, ‘this what i’m proposing to do’, and then the agent says, ‘I won’t have a bar of it’, then what’s the agent’s responsibility in that situation? Does the agent have an obligation to report that [client]?” he says.
Deutsch says there are still plenty of questions about how policy suggestions from the black economy taskforce will play out.
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The Tax Institute says it will be waiting for more information on the policy discussion, as it wants to ensure any changes don’t put unreasonable demands on the many accountants behaving well.
“My view is that the overwhelming majority of tax agents are ethical and do not step over the line,” Deutsch says.
“But there is a minority that are doing the wrong thing.”