Please forgive the dramatic introductory title, but we thought that the tax agent profession should be aware of a tiny part of the Tax Practitioner’s Board (TPB)’s investigative powers that are not apparent at first glance, but may have a catastrophic effect on a tax agent’s registration.
Subdivision 60-E of the Tax Agent Services Act 2009 (TASA) sets out the framework for TPB investigations. Subsection 60-95(1) sets out the areas for which the TPB can investigate a tax agent. According to the TPB website, these areas are expanded to include the following:
- applications for registration
- breaches of the Code of Professional Conduct (Code)
- any false or misleading statements made to the Commissioner of Taxation
- advertising or supplying tax agent services when not registered
- any other conduct that may breach the TASA.
Subsection 60-95(2) says that the TPB must notify you in writing if it decides to investigate you, and the notice must be given within 2 weeks after the decision is made. That’s the transparency inherent in the investigative framework.
We have deliberately emphasised the word “must”, because it is a mandatory term, and the TPB is bound to disclose to the tax agent if it is investigating any conduct set out above. In that way the tax agent may prepare herself or himself, including retrieving old client files, notes, advices, copies of returns, etc. And this is to be expected given that due process ought to be followed by both the TPB and the tax agent in question.
Now think about this possibility: an allegation is made that a tax agent’s conduct has breached TASA; say that the tax agent in question is alleged not to be fit and proper for some reason. We are not contemplating a breach of the Code, but say that the tax agent is considered not to be of good fame, integrity and character (section 20-15(a)).
So here’s the item which may be a surprise; if you look at section 60-125 which talks about outcomes of investigations, you’ll see that it also contains a note, which says “The Board may terminate an entity’s registration under Subdivision 40-A without investigating conduct under section 60-95“.
In other words, section 60-95 (which mandates that the TPB acts transparently by giving notice to a tax agent beforehand), may potentially allow the TPB to investigate the fitness and propriety of a tax agent, forming a decision and then unilaterally terminating a tax agent’s registration. Needless to say if such events were to occur, it would come as an appalling shock to the tax agent involved.
We are unaware of the extent to which the TPB might resort to this type of activity and would think that it would only be used rarely, but nevertheless the ability to ignore the transparency in the framework in section 60-95 is there and it is real.
If you have any questions about TASA, the Code or anything else relevant to practising as a tax agent, please contact a member of Thomson Geer’s Tax Advocacy team.