CA ANZ calls for review of amendments to TPB legislation

Legislation to implement recommendations from the Tax Practitioners Board Review, new restrictions on TPB board appointments and franking credit changes has now been passed both houses of Parliament.

Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, which enhances the financial independence of the TPB and legislates other recommendations from the final report of the TPB review was passed by Parliament yesterday, after the House of Representatives agreed to amendments by the Senate.

The amendments by the Senate restrict big four firm partners from being appointed to the TPB Board and also impose new requirements for tax agents to report to the TPB where they’ve breached the Code of Professional Conduct and to also report if another tax agent has breached the code.

CA ANZ Chief Executive Ainslie van Onselen said the he Green’s amendments passed yesterday afternoon present a very real risk of unintended consequence for members who do not work in large firms, with many concerned they are being punished for the actions of a few at the top end of town.

“As an example, imposing mandatory reporting obligations on tax practitioners, without providing effective protection against reprisal and defamation claims for those reporting, and without clarifying the availability of the privilege against self-incrimination for self-reported disclosures, is likely to be ineffective or inoperable, and I have written to the Treasurer expressing those concerns on behalf of CA ANZ members,” said Ms van Onselen.

“At the same time, the proposal to limit the TPB to people who are members of an organisation with fewer than 100 employees also brings significant risk to our profession. Appointments to the TPB should be merit-based; the Board needs suitably qualified members who are experienced in running small practices, but it also needs people who understand how medium and large firms operate.”

Under the proposal, Ms Van Onselen said the TPB will be deprived of the opportunity to appoint members who have cutting edge information, stripping important strategic skill sets, knowledge bases and insights.

Ms van Onselen has urged the Government to include a review of the amendments in its two-year reform roadmap, including both policy and administrative aspects.

“The Government should also consider whether the TPB has adequate funding and resources to implement these previously unanticipated changes. The experience with ASIC’s similar reporting regime suggests that the TPB’s administrative workload and systems changes required may be substantial,” she said.

“I have offered to meet with the Treasurer to directly convey these concerns, and I will await a response with great interest.”

The bill also implements a number of recommendations from the TPB Review, including updating and modernising the object of the TAS Act, to support public trust and confidence in the integrity of the tax profession and the tax system.

This is in addition to the current object which is to ensure that tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct.

The billl also establishes a special account for the TPB, which means that funding for the TPB will be largely independent from the ATO.

It also implements a recommendation from the review to restrict tax practitioners from employing or using people who meet the definition of a ‘disqualified entity’ to provide tax agent services on their behalf, unless they have approval from the TPB.

The registration period for tax practitioners will also move from three years to an annual registration to align with tax practitioners’ other regulatory obligations.

The EM said this will ensure the TPB has greater ongoing visibility of tax practitioner registrations, increases the sector's integrity, and ensures a level playing field.

“It will also increase consumer confidence that tax practitioners continue to meet the ongoing registration requirements of the TAS Act,” it stated.

Franking credits changes

The bill also makes changes to the share buy-back provisions by aligning the tax treatment of off-market share buy-backs undertaken by listed public companies with the tax treatment of on-market share buy-backs.

The changes are aimed at ensuring that listed public companies can no longer use off-market purchases and selective e reductions of capital to take advantage of the concessional tax status of shareholders as part of their capital management activities.

Schedule 4 to the Bill also amends the income tax treatment for selective reductions of capital which may be used to achieve similar outcomes.