Emerging issues affecting tax practitioners

Ian R. Taylor Chair, Tax Practitioners Board

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Business practices are changing – how do you embrace these changes and meet your obligations under the Tax Agent Services Act 2009 (TASA)?

Will software ultimately replace the role of tax practitioners?

EMERGING ISSUES

Adapting to changing business practices

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Tax practitioners must adapt while ensuring they meet obligations under the TASA, including the Code of Professional Conduct.

The TASA protects consumers by setting the appropriate professional and ethical standards.

CHANGING BUSINESS PRACTICES

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Key future trends and impacts: automation likely to spread rapidly foreign task automation more freedom around the geography of work. experience economy overtakes knowledge and services. payroll, taxation and other routine bookkeeping is

reformed around automated systems.

CSIRO report examining plausible futures for jobs and employment markets in Australia over the next 20 years.

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Issues experienced today that are predicted to continue: o automation and outsourcing of routine tasks o the “cloud” and privacy o digital interaction and the risk of fraud.

Responding to these issues while complying with the Code.

EMERGING ISSUES

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Part of the TASA, 14 Code principles under 5 groups: honesty and integrity independence confidentiality competency, and other responsibilities.

CODE OF PROFESSIONAL CONDUCT

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CODE – HONESTY AND INTEGRITY

1. Act honestly and with integrity.

2. Comply with taxation laws in the conduct of your personal affairs.

3. Account to clients for money or property held of trust.

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CODE – INDEPENDENCE

4. Act lawfully in the best interests of your client.

5. Have in place adequate arrangements for managing conflicts of interest.

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CODE ITEM 5 – MANAGING CONFLICTS OF INTEREST

Recommending software or technology solutions?

You must adequately manage conflicts of interest that arise: disclosing the conflict controlling the conflict avoiding the conflict.

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CODE - CONFIDENTIALITY

6. You must not disclose any information relating to a client’s affairs to a third party without your client’s permission, unless there is a legal duty to do so.

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CODE ITEM 6 AND THE CLOUD

Draft information sheet – TPB(I) D30/2015 Need to obtain client’s permission before disclosing information to a third party – e.g. cloud provider. Understand the cloud computing arrangements and the impact they have on client information.

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CODE ITEM 6 AND OUTSOURCING / OFFSHORING

When outsourcing or offshoring work, you need to ensure that: appropriate disclosure is provided to clients clients have given permission for third parties to

access their information.

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CODE - COMPETENCE

7. Services you provide (or provided on your behalf) must be provided competently.

8. Maintain skills and knowledge relevant to the tax agent service you provide.

9. Take reasonable care to ascertain a client’s state of affairs.

10. Take reasonable care to ensure tax laws are applied correctly.

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CODE ITEMS 9 & 10 – REASONABLE CARE

Exercising your professional judgement, taking into account relevant factors concerning the client engagement. Exercise reasonable care when engaging new clients, especially online.

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CASE STUDY – TAX AGENT SCAMMED

Mr Hansig Kim, registered tax agent, unwittingly caught in a tax scam. Loses his registration and his business.

Mr Kim failed to take reasonable care to ensure that the

information provided to him was true and correct.

Federal Court of Australia ruled he had been reckless in carrying out his duties and imposed a fine of $4,000.

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CODE – OTHER RESPONSIBILITIES

11. Do not knowingly obstruct the administration of tax laws.

12. Advise clients of their rights and obligations under tax laws relevant to the services you provide.

13. Maintain professional indemnity insurance that meets the TPB’s requirements.

14. Respond to requests and directions from the Board in a timely, responsible and reasonable manner.

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RESPONDING TO EMERGING ISSUES

Adequately manage conflicts of interest that may arise. Understand how cloud-computing arrangements could

result in the disclosure of your client’s information to third parties, and obtain client consent before disclosure.

Exercise reasonable care when outsourcing or offshoring

work, and adequately ascertain a client’s state of affairs.

Software and tax practitioners

Can a tax agent service be automated? When does software provide a tax agent service? TPB(I) 09/2011

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SOFTWARE AND TAX PRACTITIONERS

Make sure software has the correct processes and workflows in place to allow you to review and verify information prior to lodgement.

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CONFIGURING SOFTWARE

Demonstrate to your clients the value you add.

Continue to adapt to changes and emerging technology,

while complying with the TASA.

We will continue to develop guidance to help you in

response to emerging issues.

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RESPONDING TO EMERGING ISSUES

Questions