The draft information sheets were released last week by the Tax Practitioners Board, and relate to four different areas: acting in the best interests of clients; taking reasonable care to ascertain a client’s state of affairs; applying tax laws correctly; and managing conflicts of interest.
Speaking to SMSF Adviser, DBA Lawyers director Daniel Butler said he suspects a lot of the 16,000 advisers with tax (financial) status don’t fully understand what the consequences are, or what their duties are under the Tax Agents Services Act (TASA) and how it "potentially conflicts with the Corporations Act".
"There are two main pieces of legislation these people are governed by, if they are under an AFSL, and they’re under a Tax Practitioners Board regulation, so they’ve got two regulators, and two main pieces of legislation, and there's potential overlap, and there are some differences there," said Mr Butler.
He referred to one of the codes specifying that tax (financial) advisers must act in the best interests of clients.
"[While] acting in the best interests of a client is a well-trodden path for financial advisers, in respect of tax, the tax (financial) adviser has to [ensure] they don’t contravene a tax law, they have to be competent and they have to be able to manage conflicts," he said.
"They basically need to be on top of their game so that they’re not going to be subject to any sanction."
Mr Butler said advisers also need to ensure they are aware there can be serious sanctions in some cases for breaching the code of professional conduct.
Paragraph 17 of the TPB D34/2016 Code of Professional Conduct specifies that the board may simply send a written caution or require the tax (financial) adviser to do something specified in an order, but the board can also suspend the that tax (financial) adviser’s registration or terminate their registration, Mr Butler said.
"In Paragraph 21, the Tax Practitioners Board recognises that the obligations of some Australian financial services licensees and their representatives under the Corporations Act 2001 are similar to some obligations under the TASA," said Mr Butler.
"[However], it says compliance with the Corporations Act 2001 and ASIC requirements will not be conclusive in relation to whether the obligations under code item 10 in the TASA have been satisfied."
The Tax Practitioners Board is inviting stakeholders to comment, and will review and consider feedback before the final information sheets are published on the TPB website.