CPA urges government to scrap proposed extension of tax secrecy exceptions

CPA Australia is urging Treasury to reconsider plans to extend tax secrecy exceptions as it risks permanently damaging the integrity and trust in Australia’s tax system.

According to CPA, Treasury believed there were circumstances where information obtained by the Tax Office or the Tax Practitioners Board should be shared with other bodies or agencies for the purpose of public interest.

Treasury has proposed that the sharing of this information would meet public interest as it was an attempt to prevent and investigate allegations of fraud and other misconduct.

Belinda Zohrab-McConnell, CPA Australia regulations and standards lead, said the confidentiality of protected information was integral to maintaining taxpayer confidence to openly engage with regulators.

“While we support the sharing of appropriate information to help protect the integrity of the regulatory framework for tax practitioners and the broader system in which they operate, we believe the threshold being proposed by treasury, set at a ‘reasonable suspicion’, is too low,” she said.

“As proposed, individuals suspected of misconduct would see their personal information shared with other agencies, which could ultimately lead to unfair reputational damage if they are found to have done nothing wrong.”

CPA Australia noted concern regarding the impact of the ATO and TPB sharing personal information with other agencies was not a new issue.

In a consultation paper on the Explanatory Memorandum to the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill in 2010, Treasury said: “compliance with taxation laws could be adversely affected if taxpayers thought that their information could be readily disclosed.”

“As a guide for future policy consideration, the disclosure of taxpayer information should be permitted only where the public benefit associated with the disclosure clearly outweighs the need for taxpayer privacy.”

In response, CPA Australia and other accounting bodies said in a joint submission that the proposals listed in the consultation paper may have already been covered by the ATO’s existing ability to share information, such as information about fraud for the general administration of tax laws.

The accounting bodies also voiced a lack of support for granting delegated powers by which the minister could make subordinate legislation to extend the secrecy exceptions without due parliamentary process.

Zohrab-McConnell said it was important for Treasury to note that smaller agencies did not have the same robust architecture to prevent data leaks, nor did they demand the same standards of confidentiality as the Tax Office.

“It’s vital that taxpayers have confidence in the system in which they place so much trust. The honest exchange of personal information is fundamental to upholding a fair and transparent tax system. Any loss of confidence acts to undermine public trust in the integrity of the tax system,” she said.

“Not only might individuals and businesses be more reluctant to share the personal information they previously trusted to the ATO and TPB, but this may extend to the sharing of information with their tax advisors on whom businesses and individuals rely for their tax compliance.”

CPA Australia said it has called on the Tax Office and the TPB to fully consider the existing exceptions to the secrecy provisions before looking to extend the exceptions.