TPB powers need to be robust: SMSFA
The Tax Practitioner’s Board should have a “robust” sanctions regime to deter misconduct and impose appropriate penalties proportionate to the level of wrongdoing, says the SMSF Association.
In a submission to Treasury on Enhancing the Tax Practitioners Board’s sanctions regime (the Consultation Paper), the SMSFA and joint bodies (Australian Bookkeepers Association, CA ANZ, CPA Australia, the Financial Advice Association of Australia, the Institute of Public Accountants, the Institute of Certified Bookkeepers, the National Tax & Accountants’ Association) said it is important for the tax profession to be held to the highest standard to ensure that the community has confidence in the operation and administration of the taxation and superannuation system.
“We consider it important that any sanctions regime be built on the core principles of proportionality and fairness and the TPB’s powers should be proportionate to the wrongdoing, be flexible so as to allow for consideration of a tax practitioner’s circumstances, and include a fair process,” the submission stated.
The joint bodies said the TPB’s powers should comprise a wider range of graduated sanctions that allow it to impose the appropriate sanction proportionate to the severity of the relevant contravention or misconduct.
“It was acknowledged that a gap exists in the sanctions available to the TPB, particularly mid-range sanctions, which should be addressed,” it said.
“Further, it was identified that the TPB lacks interim powers that would allow it to respond more swiftly to curtail seriously egregious or harmful conduct with sufficient urgency.”
The submission drew attention to the need for any infringement notice regime to be designed in a constitutionally valid manner if it is to proceed.
“This requires there to be a proper exercise of administrative/executive powers, without crossing over into the exercise of judicial power, in breach of the doctrine of separation of powers,” it stated.
The consultation paper contains a number of proposals concerning the TPB’s enhanced sanctions regime including criminal penalties for parties who operate without being registered by the TPB, broader and increased civil penalties in the Tax Agent Services Act 2009 (Cth) and an infringement notice scheme attached to the civil penalty regime.
It also proposes a new power to allow the TPB to enter into enforceable voluntary undertakings (EVUs) with tax practitioners; and a new power to allow the TPB to impose interim and contingent suspensions.
The submission from the Joint Bodies suggested Treasury and the government should consider the findings of the Australian Law Reform Commission in its recently released report on the 2019 financial services industry regulatory reforms, which it considered made the legislation “complex, incoherent, confusing maze”.
“The ALRC Report provides a cautionary tale for the work that we are about to embark on to reform the sanction and enforcement powers under the TASA. According to the ALRC complexity costs consumers not only in the expenses that are passed on by financial services providers, but by failing to protect them from misconduct,” it said.
“It will be important to understand, learn from, and apply these learnings in the context of the current TASA reforms.”
