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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Tax agent services (transitional provisions and consequential amendments)
bill 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 Consequential and other amendments 5
Chapter 2 Relief from certain administrative penalties for taxpayers who
engage a registered tax agent or BAS agent 15
Chapter 3 Transitional arrangements for registration 25
Chapter 4 Transition of the state Tax Agents' Boards to the Tax
Practitioners Board 51
Index 65
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|AAT |Administrative Appeals |
| |Tribunal |
|ATO |Australian Taxation Office |
|BAS |Business Activity Statement |
|Board |Tax Practitioners Board |
|Code |Code of Professional Practice|
|Commissioner |Commissioner of Taxation |
|ITAA 1936 |Income Tax Assessment Act |
| |1936 |
|ITAA 1997 |Income Tax Assessment Act |
| |1997 |
|Minister |Treasury portfolio Minister |
|R&D |research and development |
|state Board |Tax Agents' Board |
|TAS Act |Tax Agent Services Act 2009 |
|TAA 1953 |Taxation Administration Act |
| |1953 |
General outline and financial impact
Transition to the new regulatory regime for the provision of tax agent
services
This Bill facilitates the smooth transition from the current law
regarding the registration of tax agents to the new law in the Tax
Agent Services Act 2009 (TAS Act) regarding the regulation and
registration of tax agents and Business Activity Statement (BAS)
agents.
Date of effect: Most of the provisions in this Bill will commence
immediately after the commencement of Part 2 of the TAS Act. Other
provisions will either commence on the day on which this Bill
receives Royal Assent or at the same time as the commencement of
Part 2 of the TAS Act. These dates of effect are outlined in
paragraphs 1.53 to 1.58.
Part 2 of the TAS Act commences on a single day to be fixed by
Proclamation. A Proclamation must not specify a day that occurs
before the day on which this Bill receives Royal Assent.
Proposal announced: These proposals were announced by the then
Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs in Media Release No. 039 of 29 May 2008.
Reform of the existing regulation of tax agents was first announced
in 1998.
Financial impact: There is expected to be a cost to the revenue
associated with the introduction of 'safe harbour' provisions which
exempt taxpayers from administrative penalties in certain
circumstances when they use a tax agent or BAS agent. However,
this cost is unquantifiable.
Compliance cost impact: The compliance costs associated with the
transition to the new regime, noted in the explanatory memorandum
to the Tax Agent Services Bill 2008, are estimated to be:
. small for tax agents and BAS agents with the appropriate
qualifications for registration purposes; and
. potentially large for those individuals seeking
registration as a BAS agent who do not currently meet the
minimum standard of educational qualifications.
Summary of regulation impact statement
Regulation impact on business
A summary of the regulation impact statement associated with the
introduction of the new regulatory regime was provided in the
explanatory memorandum to the Tax Agent Services Bill 2008.
Chapter 1
Consequential and other amendments
Outline of chapter
1. Items 1 to 22 and item 25 of Schedule 1 to this Bill provide for
the amendments to existing legislation that are necessary as a
result of the commencement of the Tax Agent Services Act 2009 (TAS
Act).
2. Items 27 to 30 of Schedule 1 to this Bill provide for amendments to
the TAS Act.
Context of amendments
3. The new framework for the registration of tax agents is contained
in the TAS Act, which replaces Part VIIA of the Income Tax
Assessment Act 1936 (ITAA 1936) (the current law).
4. As a consequence of the repeal of the current law, certain
references in existing Acts, such as references to the current law
and references to, and definitions of, 'tax agent', require
amendment.
5. Other amendments are made to existing Acts to reflect changes
associated with the transfer of the general administration of the
provisions relating to the registration of tax agents from the
Commissioner of Taxation (Commissioner) to the Tax Practitioners
Board (Board).
6. Minor amendments are also made to the TAS Act to correctly
reference provisions in this Bill and correct minor typographical
errors.
Summary of new law
7. This Bill:
. repeals provisions in the law that will no longer have any
effect due to the commencement of the TAS Act (such as
Part VIIA of the ITAA 1936 regarding the registration of
tax agents);
. amends, repeals or inserts relevant definitions and
references in other Acts to ensure consistency with the
TAS Act;
. amends certain provisions in the Taxation Administration
Act 1953 (TAA 1953) to reflect the enhanced independence
of the Board from the Commissioner as provided for in the
TAS Act;
. expands the definition of 'taxation law' to include the
TAS Act, and associated regulations; and
. amends the TAS Act to correct typographical errors and to
expand the circumstances in which the Board can disclose
information to the Commissioner.
Detailed explanation of new law
Amendment to the A New Tax System (Goods and Services Tax) Act 1999
8. The Bill repeals the definition of 'registered tax agent' in
section 195-1 which is 'as defined in Part VIIA of the ITAA 1936',
because Part VIIA will also be repealed by the Bill. The term
'registered tax agent' is not used in the A New Tax System (Goods
and Services Tax) Act 1999, and therefore no replacement definition
is required. [Schedule 1, item 1, section 195-1 of the A New Tax
System (Goods and Services Tax) Act 1999]
Amendment to the Corporations Act 2001
9. The Bill replaces a reference in paragraph 766B(5)(c) to 'tax agent
registered under Part VIIA of the Income Tax Assessment Act 1936'
with a reference to 'registered tax agent or Business Activity
Statement (BAS) agent (within the meaning of the Tax Agent Services
Act 2009'). The amendment updates the reference and maintains the
same effect of the paragraph. [Schedule 1, item 2,
paragraph 766B(5)(c) of the Corporations Act 2001]
Amendments to the Fringe Benefits Tax Assessment Act 1986
10. The Bill repeals Part IX of the Fringe Benefits Tax Assessment Act
1986. Part IX provides for administrative penalties for:
. unregistered entities advertising to prepare fringe
benefits tax returns; and
. tax agents that allow unregistered entities to prepare
fringe benefits tax returns or conduct any business
relating to fringe benefits tax returns on the tax agent's
behalf.
11. This Part will become redundant upon commencement of the new
regulatory regime as administrative penalties which cover services
related to fringe benefits tax returns are contained in the TAS
Act. [Schedule 1, item 3, Part IX of the Fringe Benefits Tax
Assessment Act 1986]
12. The Bill repeals the definition of 'registered tax agent' in
subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986,
which is 'as defined in Part VIIA of the Income Tax Assessment Act
1936', and replaces it with a new definition of 'registered tax
agent', which states that 'registered tax agent has the meaning
given by subsection 90-1(1) of the Tax Agent Services Act 2009'.
These amendments update the reference and maintain the same effect
of the definition. [Schedule 1, item 4, subsection 136(1) of the
Fringe Benefits Tax Assessment Act 1986]
Amendments to the Income Tax Assessment Act 1936
13. The Bill repeals the definition of 'registered tax agent' in
subsection 6(1), which 'has the meaning given by section 251A' of
the ITAA 1936. Section 251A is in Part VIIA of the ITAA 1936 and
is repealed by the Bill. With the repeal of Part VIIA, all
occurrences of the term 'registered tax agent' in the ITAA 1936 are
repealed. Therefore no replacement definition is required.
[Schedule 1, item 5, subsection 6(1) of the ITAA 1936]
14. The Bill amends paragraph 16(4)(b) of the ITAA 1936 to allow the
Commissioner, or other person authorised by the Commissioner, to
communicate information to a board, or a member of a board, for the
purpose of the board performing its functions or exercising its
powers under a taxation law. [Schedule 1, item 6,
paragraph 16(4)(b) of the ITAA 1936]
15. This amendment maintains the existing ability of the Commissioner
to disclose information to the state-based Tax Agents' Boards
(state Boards). The amendment is necessary because, unlike the
current state Boards, the Board will not be a board exercising a
function under an Act administered by the Commissioner (but will be
a Board exercising a function under a taxation law, see
paragraph 1.22).
16. This provision will allow, for instance, the Commissioner to
disclose information about unregistered entities, which may assist
the Board in its new role of monitoring and taking action against
entities providing tax agent services for a fee without
registration. This is a function that is currently performed by
the Australian Taxation Office (ATO).
17. The Bill repeals Part VIIA of the ITAA 1936. Part VIIA contains
the current law concerning the registration of tax agents and is
being replaced by the new framework contained in the TAS Act.
[Schedule 1, item 7, Part VIIA of the ITAA 1936]
Amendments to the Income Tax Assessment Act 1997
18. The Bill repeals section 214-185 of the Income Tax Assessment Act
1997 (ITAA 1997). The effect of section 214-185 is that persons
giving a franking credit return or making an objection for the
purposes of Part 3-6 (dealing with the imputation system) of the
ITAA 1997 are subject to the tax agent registration requirements in
the current law. This section is no longer needed as those persons
will be covered by the TAS Act, given that the definition of 'tax
agent service' in the TAS Act includes ascertaining or advising on
liabilities, obligations or entitlements under a taxation law.
(The current law applies to income tax-related services.)
[Schedule 1, item 8, section 214-185 of the ITAA 1997]
19. The Bill replaces a reference to a 'registered tax agent' in the
definition of 'recognised tax adviser' in subsection 995-1(1) with
a reference to a 'registered tax agent or BAS agent', reflecting
the broadening of the regulatory regime to include the regulation
of entities providing BAS services for a fee or other reward as BAS
agents. [Schedule 1, item 9, definition of 'recognised tax
adviser' in subsection 995-1(1) of the ITAA 1997]
20. Consistent with this amendment, the Bill inserts a new definition
of 'registered tax agent or BAS agent' which links to the
definition in the TAS Act. [Schedule 1, item 11, subsection 995-
1(1) of the ITAA 1997]
21. The Bill also replaces the existing definition of 'registered tax
agent' to link into the new definition provided for in subsection
90-1(1) of the TAS Act. [Schedule 1, item 10, definition of
'registered tax agent' in subsection 995-1(1) of the ITAA 1997]
22. 'Taxation law' is defined in subsection 995-1(1) of the ITAA 1997
to mean an Act of which the Commissioner has the general
administration, or regulations made under such an Act. The Bill
expands the definition of 'taxation law' to include the TAS Act and
regulations made under the TAS Act, despite the fact that the Board
and not the Commissioner will have general administration of the
TAS Act. This ensures that the Board can rely on certain
provisions in the taxation law, such as those relating to the
prosecution of offences contained in Part III of the TAA 1953.
[Schedule 1, item 12, at the end of the definition of 'taxation
law' in subsection 995-1(1) of the ITAA 1997]
Amendment to the Income Tax (Transitional Provisions) Act 1997
23. The Bill repeals section 214-130 of the Income Tax (Transitional
Provisions) Act 1997, a provision that ensures that the current law
regarding the registration of tax agents operates in relation to
the imputation system. As noted in paragraph 1.18, this provision
will no longer be required as persons providing services in
relation to the imputation system will be covered by the TAS Act.
[Schedule 1, item 13, section 214-130 of the Income Tax
(Transitional Provisions) Act 1997]
Amendments to the Taxation Administration Act 1953
24. A number of amendments are made to the TAA 1953 to ensure that
references are appropriately updated to account for new definitions
introduced by the TAS Act and to ensure that relevant 'machinery
provisions' in the TAA 1953 are effectively applied to the TAS Act
and the Board.
Amendment to terms
25. The Bill replaces references to a 'registered tax agent' in
paragraph 8AAZLH(2A)(b) and in subsection 8J(2A) with references to
a 'registered tax agent or BAS agent', reflecting the broadening of
the regulatory regime to include the regulation of entities
providing BAS services for a fee or other reward as BAS agents.
[Schedule 1, item 17, paragraph 8AAZLH(2A)(b) of the TAA 1953 and
item 19, subsection 8J(2A) of the TAA 1953]
26. The Bill inserts a new definition of the term 'registered tax agent
or BAS agent' in subsection 2(1) of the TAA 1953, which states that
'registered tax agent or BAS agent has the same meaning as in the
Tax Agent Services Act 2009'. This definition is required because
of the amendments to paragraph 8AAZLH(2A)(b) and subsection 8J(2A)
as noted above. [Schedule 1, item 14, subsection 2(1) of the TAA
1953]
Applying machinery provision in the TAA 1953 to the TAS Act
27. The TAS Act already applies sections 3D and 3E of the TAA 1953 as
if references to the Commissioner were references to the Board.
This effectively gives the Board the authority to disclose
information, protected under the TAS Act, to certain law
enforcement agencies and Royal Commissions (see section 70-45 of
the TAS Act).
28. In addition to applying sections 3D and 3E, this Bill makes
amendments to the TAA 1953 to ensure that other machinery
provisions apply to the Board and the TAS Act.
29. Part III contains prosecution and offence provisions. The Bill
amends Part III to apply that Part in relation to the TAS Act as if
references (with certain exceptions) to the Commissioner, or an
office of the Commissioner, were references to the Board.
[Schedule 1, item 18, section 8AC of the TAA 1953]
30. The amendment allows the Board to initiate criminal proceedings for
offences against certain provisions in Part III of the TAA 1953
that relate to the TAS Act, rather than requiring it to rely on the
Commissioner to commence such proceedings.
31. Not all references to the Commissioner will be deemed to be
references to the Board. The exceptions are those provisions that:
. provide for an offence for failing to lodge an instrument
with the Commissioner for assessment (paragraph 8C(1)(b));
or
. relate to the payment of money to the Commissioner
(sections 8HA, 8W, 8WC, 8ZE, 8ZG and 8ZH).
32. These provisions are excepted because the Board's functions do not
include receipt of instruments concerning assessment and the Board
does not have the power to receive money on behalf of the
Commonwealth. It is therefore appropriate for references to the
Commissioner (or an office of the Commissioner) to be retained in
relation to the TAS Act in these circumstances.
33. References to the Commissioner in sections 8AB and 8AC which
provide for the application of Part III to the Development
Allowance Authority Act 1992 and the TAS Act, respectively, will
also remain unchanged.
34. By ensuring that it is the Board and not the Commissioner that can
undertake prosecution action with respect to offences committed in
the context of the new regulatory regime, the Board's independence
from the Commissioner is enhanced.
1.
The Board has requested that Allan appear before it in
relation to an investigation that the Board is conducting.
At the investigation hearing, Allan refuses to answer a
question posed by the Board and is therefore guilty of an
offence under section 8D of the TAA 1953 for failing to
answer questions when attending before the Board.
Rather than relying on the Commissioner to initiate criminal
proceedings under section 8D of the TAA 1953, the Board has
the power to initiate criminal proceedings against Allan in
relation to the offence committed.
35. Another 'machinery' provision being applied to the Board is section
15 of the TAA 1953. This provision specifies certain persons that
are able to represent the Commissioner or an office of the
Commissioner in any action, prosecution or other proceeding under,
or arising out of, a taxation law and which is instituted by or on
behalf of the Commissioner or an office of the Commissioner.
36. The Bill amends section 15 to apply that section in relation to the
TAS Act as if references to the Commissioner, or an office of the
Commissioner, were references to the Board, and as if references to
a Second Commissioner or to a Deputy Commissioner were omitted.
[Schedule 1, item 20, subsection 15(3) of the TAA 1953]
37. The Board will therefore be able to be represented by certain
persons in any action, prosecution or other proceeding under, or
arising out of, a taxation law that relates to the TAS Act. This
will enable the efficient use of the Board's resources.
38. The persons that may represent the Board are:
. a person enrolled as a barrister, solicitor, barrister and
solicitor or legal practitioner of a federal court or of
the Supreme Court of a State or Territory; and/or
. a person authorised by the Board, by instrument in
writing, to appear.
39. Section 15A of the TAA 1953 will also be applied to the Board.
This provides that the Commissioner may certify a copy or extract
of a document obtained pursuant to a taxation law to be a true copy
or true extract. [Schedule 1, item 21, subsection 15A(12) of the
TAA 1953]
40. This amendment will allow the Chair of the Board to certify a copy
or extract of a document to be a true copy or extract, when the
document is obtained by the Board pursuant to a taxation law that
relates to the TAS Act (for example, pursuant to section 8D of the
TAA 1953). It would be inappropriate to require the Board to seek
the Commissioner's certification of documents obtained pursuant to
a taxation law that relates to the TAS Act, particularly given the
Board has the general administration of that Act.
41. Under paragraph 20-20(2)(a) of the TAS Act the Board may require an
application for registration under section 20-20 of the TAS Act to
be accompanied by any documents. The amendments ensure that the
Board can certify a copy or extract of the document provided by
virtue of paragraph 20-20(2)(a), as the documents will be obtained
by the Board pursuant to a taxation law (the TAS Act is now
included in the definition of 'taxation law', see paragraph 1.22
above).
42. As a consequence of applying machinery provisions in the TAA 1953
to the Board, further amendments of the TAA 1953 need to be made.
43. Section 3B of the TAA 1953 provides that the Commissioner is
required to publish in his annual report information regarding
certain actions taken under provisions in the TAA 1953 (such as
disclosing information to law enforcement agencies under section 3D
and 3E). The Bill ensures that, to the extent that action is taken
by the Board under any of the provisions, the Commissioner does not
have to include such action in his own annual report. [Schedule 1,
item 15, subsection 3B(1C) of the TAA 1953]
44. Reporting on the working of these provisions insofar as they apply
in relation to the TAS Act (and are undertaken by the Board) will
be included in an annual report required to be prepared by the
Board under the TAS Act (see section 60-130 of the TAS Act).
45. Another amendment is made to section 3C of the TAA 1953. This
provision governs the use and disclosure of taxpayer information
obtained under or for the purposes of the TAA 1953. The Bill
amends section 3C to ensure that these secrecy provisions do not
apply to the Board to the extent that it receives or discloses
information under a provision of the TAA 1953 that has been applied
to the Board. Instead, the use and disclosure of such information
will be governed by the secrecy provisions in the TAS Act (see
section 70-35 of the TAS Act). [Schedule 1, item 16,
subsection 3C(1AB) of the TAA 1953]
46. Further amendments to the TAA 1953 are made to ensure that the
appropriate machinery provisions in the TAA 1953 apply to the civil
penalty regime created by the TAS Act. As civil penalties are
imposed by a court it is appropriate to treat them differently to
other liabilities (such as ordinary taxation liabilities) that
arise under a taxation law. This is consistent with the manner in
which civil penalties imposed under the promoter penalty regime
(see Division 290 of Schedule 1 to the TAA 1953) are treated.
47. To achieve this result, civil penalties that arise under the
TAS Act are specifically excluded from the definition of 'tax-
related liability' provided for in subsection 255-1(1). Similarly,
the civil penalty machinery provisions contained in Subdivision 298-
B are specifically applied to civil penalties that arise under the
TAS Act. [Schedule 1, item 22, subsection 255-1(2) of Schedule 1
to the TAA 1953 and item 25, section 298-80 of Schedule 1 to the
TAA 1953]
Amendments to the Tax Agent Services Act 2009
48. The Bill amends paragraph 20-5(4)(a) of the TAS Act to ensure that
the provision refers to item 7 of Schedule 1 to the Tax Agent
Services (Transitional Provisions and Consequential Amendments) Act
2009, rather than item 12 of Schedule 1 to the Tax Agent Services
(Transitional Provisions and Consequential Amendments) Act 2009.
This reflects a change in numbering in this Bill. [Schedule 1,
item 27, paragraph 20-5(4)(a) of the TAS Act]
49. The Bill also amends subparagraphs 50-30(1)(c)(iii) and (2)(c)(iii)
of the TAS Act to replace the words 'or control' with 'and
control', to ensure consistency with the wording in the
subparagraphs. The amendment is needed to amend the typographical
error. [Schedule 1, item 28, subparagraphs 50-30(1)(c)(iii) and
(2)(c)(iii) of the TAS Act]
50. The Bill also amends section 70-40 of the TAS Act which outlines
the circumstances in which the Board is able to disclose
information to the Commissioner (in addition to those circumstances
covered by subsection 70-35(2)). The amendments remove the
requirement that the Board be 'satisfied' that the information is
relevant to a particular purpose. A reference to the Board's
satisfaction is not required as the onus is on the Board, prior to
disclosure, to ensure that the proposed disclosure does fall within
the exemption in section 70-40. [Schedule 1, item 29, subsection
70-40(1) of the TAS Act]
51. Section 70-40 is further amended to allow the Board to disclose
information to the Commissioner for the purposes of a civil penalty
provision in the taxation law. This would ensure, for instance,
that the Board can provide evidence of a tax agent's involvement in
the promotion of tax schemes (the promoter penalty regime creates a
civil penalty - see Division 290 of Schedule 1 to the TAA 1953).
[Schedule 1, item 30, subsection 70-40(2) of the TAS Act]
52. This expanded disclosure is not intended to limit the Board's
ability to disclose information to the Commissioner for the
purposes of a civil penalty created under the TAS Act. Such
disclosures, if required, would fall within subsection 70-35(2) of
the TAS Act.
Commencement
53. Sections 1 to 3 of the Bill commence on the day on which this Bill
receives Royal Assent. These sections include the short title of
the Bill, the commencement provisions and provisions relating to
the Schedules. [Section 2]
54. Schedules 1, Part 1 and Schedule 2 to the Bill commence immediately
after the commencement of Part 2 of the TAS Act. [Section 2]
55. Schedule 1, Part 1 provides for the consequential amendments to be
made following the commencement of the TAS Act and Schedule 2
contains the provisions to allow a smooth transition from the
existing law requiring the registration of tax agents in the
current law to the new regulatory regime for the provision of tax
agent services contained in the TAS Act.
56. As outlined in the TAS Act, Part 2 of that Act will commence on a
single day to be set by Proclamation. However, Proclamation must
occur within nine months of this Bill receiving Royal Assent.
57. This ensures that the key regulatory provisions in the TAS Act
(including Part 2 of the TAS Act) and the provisions contained in
Schedules 1, Part 1 and Schedule 2 to this Bill will commence at
the same time.
58. The commencement of Schedule 1, Part 1 and Schedule 2 to the Bill
is referred to as 'commencement' throughout this explanatory
memorandum.
Chapter 2
Relief from certain administrative penalties for taxpayers who engage a
registered tax agent or BAS agent
Outline of chapter
59. Items 23 and 24 of Schedule 1 to this Bill amend the Taxation
Administration Act 1953 (TAA 1953) to provide for 'safe harbours'
for taxpayers who engage a tax agent or a Business Activity
Statement (BAS) agent. The safe harbours ensure that, in certain
circumstances, taxpayers who engage a tax agent or a BAS agent are
not liable to administrative penalties that ordinarily apply for
making a false or misleading statement resulting in a shortfall
amount, or for late lodgment.
60. Item 26 of Schedule 1 to this Bill sets out when the safe harbour
provisions apply.
Context of amendments
Operation of current provisions
Penalty for false or misleading statement
61. Subsection 284-75(1) of Schedule 1 to the TAA 1953 provides that a
taxpayer is liable to an administrative penalty if they, or their
agent, make a statement to the Commissioner of Taxation
(Commissioner) that is false or misleading in a material
particular, and this results in a shortfall amount.
62. A shortfall amount is the difference between the amount of tax,
credit or payment entitlement calculated based on a taxpayer's
statement and the amount calculated in accordance with the law. A
shortfall amount arises where the tax liability is less, or the
credit or payment entitlement is more, than it would have been if
the statement had not been false or misleading.
63. The amount of the administrative penalty is calculated by
determining the base penalty amount (see section 284-90) adjusted
upwards for aggravating factors (see section 284-220) or downwards
(see section 284-225) for mitigating factors.
64. The base penalty amount for providing a false or misleading
statement is calculated as a percentage of the shortfall amount,
with the percentage being determined with reference to the
culpability of the taxpayer or their agent. Therefore, the base
penalty will depend on whether the shortfall resulted from:
. intentional disregard of a taxation law (this gives a
penalty of 75 per cent of the shortfall amount);
. recklessness as to the operation of a taxation law (this
gives a penalty of 50 per cent of the base penalty
amount); or
. a failure to take reasonable care to comply with a
taxation law (this gives a penalty of 25 per cent of the
base penalty amount).
65. This last point highlights the fact that, at present, a taxpayer
will be subject to a penalty if the making of the false or
misleading statement resulted from not only their own carelessness
(that is, their failure to take reasonable care) but also the
carelessness of their agent.
Penalty for failure to lodge on time
66. Subsection 286-75(1) of Schedule 1 to the TAA 1953 provides that a
taxpayer is liable to an administrative penalty if they fail to
give the Commissioner a return, notice, statement or other document
on time and in an approved form.
67. The amount of the penalty is determined by reference to a base
penalty amount and adjusted on the basis of the size of the
taxpayer (see section 286-80). The 'base penalty' is calculated as
one penalty unit for each period of 28 days, or part thereof,
starting on the day the document is due and ending when the
document is given to the Commissioner.
68. The base penalty amount is multiplied by two or five depending on
the size of the entity (measured by the entity's withholding
status, the entity's assessable income or the entity's annual
turnover) at the time lodgment is required.
69. The culpability of the taxpayer or their agent is not taken into
account in determining the taxpayer's liability to the penalty, nor
the amount of the penalty. As a consequence, a taxpayer will be
liable to a penalty where the failure to lodge a document in the
approved form on time resulted from their tax agent's carelessness
(or indeed, even where reasonable care was taken).
Rationale for changes
Why should there be an exemption from certain administrative
penalties?
70. With the introduction of self assessment, the burden of applying
the taxation laws to individual circumstances was shifted in some
respects from the Commissioner to taxpayers. While it remains
appropriate, even in a self-assessing environment, for taxpayers to
be responsible for deliberate or reckless acts (whether their own
or their agent's), this Bill recognises that in the absence of
recklessness or intentional disregard for requirements in the
taxation law a taxpayer should not be subject to an administrative
penalty as a result of the actions (or omissions) of their agent.
71. This approach is possible now that the new regulatory framework
allows effective action to be taken to improve the performance of
tax agents or BAS agents where necessary.
Where an exemption for certain administrative penalties will not
apply
72. Taxpayers are not relieved from administrative penalties for their
own or their registered tax agent's or BAS agent's recklessness or
intentional disregard of the taxation law (for example, where the
failure to lodge a document or the provision of a false or
misleading statement occurs in the context of a scheme -
Subdivision 284-C of Schedule 1 to the TAA 1953 provides for
penalties relating to schemes).
73. Where the taxpayer becomes liable for an administrative penalty due
to the recklessness or intentional disregard of the taxation law by
their registered tax agent or BAS agent (and through no fault of
their own) it is open to the Commissioner to remit all or part of
the penalty (see section 298-20 of Schedule 1 to the TAA 1953).
74. The Bill does not provide a safe harbour for subsection 284-75(3)
of Schedule 1 to the TAA 1553, which relates to the raising of a
debt where the taxpayer fails to lodge as required. Although
superficially subsection 284-75(3) appears similar to 284-75(1) for
failure to lodge on time, for which the Bill provides a safe
harbour, they differ significantly. Subsection 284-75(3) requires
the Commissioner to make a determination of an amount, that is, he
will generally undertake an audit before the penalty can be
applied. Usually lodgment is required before the audit commences,
unless there is a perceived risk to the revenue such as fraud,
evasion or flight. It is considered that failure to lodge after
being requested to lodge and being advised of an audit, is to be
reckless or intentionally disregarding the law. Therefore a safe
harbour would generally never apply to administrative penalties
under subsection 284-75(3).
Summary of new law
75. The Bill ensures that taxpayers who engage a registered tax agent
or BAS agent and provide them with all relevant information:
. are no longer subject to a penalty for making a false or
misleading statement that results in a shortfall amount if
the shortfall amount was caused by their agent's failure
to take reasonable care; and
. are no longer subject to a penalty for the failure to
lodge a document (under subsection 286-75(1)) where that
failure resulted from their agent's failure to take
reasonable care or indeed even when that failure arose
despite the agent's exercise of reasonable care.
76. The proposed 'safe harbours' exempt taxpayers from administrative
penalties in certain circumstances. This liability is not
transferred to the registered tax agent or BAS agent.
Comparison of key features of new law and current law
|New law |Current law |
|By engaging a registered tax |Taxpayers are liable for an |
|agent or BAS agent and |administrative penalty for |
|providing them with all |making a false or misleading |
|relevant taxation |statement to the Commissioner|
|information, taxpayers are |resulting from their own or |
|not liable for an |their tax agent's lack of |
|administrative penalty for |reasonable care. |
|making a false or misleading | |
|statement to the Commissioner| |
|that results from their | |
|registered tax agent or BAS | |
|agent failing to take | |
|reasonable care. | |
|By engaging a registered tax |Taxpayers are liable for an |
|agent or BAS agent and |administrative penalty for |
|providing them with all |their own and their tax |
|relevant information to |agent's failure to lodge a |
|enable the preparation and |document with the |
|lodgment of a document with |Commissioner in the approved |
|the Commissioner on time, |form and by a particular day.|
|taxpayers are not liable for | |
|an administrative penalty for| |
|late lodgment resulting from | |
|their agent's failure to take| |
|reasonable care (or despite | |
|their agent exercising | |
|reasonable care). | |
Detailed explanation of new law
77. Detailed information and specific examples on each of the safe
harbours is provided below. However, one general requirement for
both safe harbours is that, to access them, a taxpayer must show
that they provided all relevant taxation information to their tax
agent or BAS agent.
78. Using the services of a tax agent or a BAS agent does not of itself
mean that an entity discharges their obligations. It remains the
entity's responsibility to properly record matters relating to
their tax affairs and to bring all of the relevant facts to the
attention of the agent in order to show reasonable care. By
supplying all relevant taxation information the taxpayer is taking
reasonable care. To this end, the taxpayer must:
. bring to the agent's attention all accurate information
which they would reasonably expect to be necessary to
enable the provision of the tax agent service or BAS
service correctly; and
. provide accurate and complete information in response to
questions asked by their agent.
79. The taxpayer has the burden of proof on them to establish that they
provided all relevant information as required. Further guidance
and examples on how a taxpayer would discharge this onus of proof
are provided below.
Safe harbour from an administrative penalty for making a false or
misleading statement
80. Taxpayers are not liable to an administrative penalty for the
making of a false or misleading statement to the Commissioner
resulting in a shortfall amount where:
. the shortfall amount did not result from their tax agent's
or BAS agent's recklessness as to the operation of a
taxation law or their intentional disregard of a taxation
law;
. they can establish that they have provided their agent
with all relevant taxation information; and
. the statement was made by their agent.
[Schedule 1, item 23, subsections 284-75(1A) and (1B) of Schedule 1
to the TAA 1953]
1.
George, a self-funded retiree, had interest-bearing accounts
with several different financial institutions. George kept
all statements received from these financial institutions
and provided these to Alex, a registered tax agent, who
prepared and lodged his tax return.
When preparing George's tax return, Alex had relied entirely
upon the statements provided by George. However, in
calculating the interest income, Alex accidentally omitted a
quarterly interest payment from one of the financial
institutions.
After an audit was conducted on George's income tax return,
it was found that George had a shortfall amount. However,
as George had provided Alex with all the relevant
information he will not be liable for a shortfall penalty
due to Alex's failure to take reasonable care. (Alex may,
however, have breached the Code of Professional
Conduct (Code) - refer to Chapter 3 of the explanatory
memorandum to the Tax Agent Services Bill 2008.)
2.
Stephen engages Maria, a registered BAS agent, to prepare
his quarterly BAS. He provides Maria with details of income
and expenditure for the quarter. Stephen confirms that he
has provided all the relevant information that Maria
requested and any other information that he could think of.
Maria then prepares the BAS based on the information
provided by Stephen. The BAS is signed by both parties and
lodged with the Australian Taxation Office (ATO).
An audit reveals that cash receipts totalling $10,000 have
been omitted from the BAS resulting in a shortfall amount.
Stephen went through the information that he provided to
Maria and discovered he had forgotten to give the cash
receipts to Maria. Because Stephen has not provided all
relevant information to Maria, he is therefore liable for an
administrative penalty for failing to take reasonable care
when making a false or misleading statement resulting in a
shortfall amount.
81. The safe harbour from administrative penalty in relation to the
making of a false or misleading statement will apply to statements
that are given on or after the commencement. [Schedule 1,
subitem 26(1)]
Safe harbour from an administrative penalty for late lodgment of documents
in the approved form
82. Taxpayers are not liable to an administrative penalty for the late
lodgment of a return, notice, statement or other document in the
approved form if:
. they can establish that they provided their agent with all
relevant taxation information to enable the agent to give
the return, notice, statement or other document to the
Commissioner by the due date for lodgment; and
. they can establish that the failure to lodge the document
in the approved form in time resulted from their tax
agent's or BAS agent's failure to take reasonable care (or
despite their agent exercising reasonable care).
[Schedule 1, item 24, subsections 286-75(1A) and (1B) of Schedule 1
to the TAA 1953]
1.
Darney engages Rumi, a registered tax agent, to prepare her
income tax return. Rumi asks for Darney's records to be
provided by 15 November, and Darney provides her records by
that day. Rumi prepares the return and posts it to Darney
for signing. Darney signs the return and posts it back to
Rumi within two days. Through an oversight in Rumi's
office, the return is lodged late.
Darney did all things required in time to enable Rumi to
lodge her return in the approved form by the due date.
Because of this, and because the reason for late lodgment
was a lack of reasonable care by the agent (in this case, an
administrative oversight acknowledged by Rumi), Darney is
not liable to any penalty.
83. Supplying all relevant information to enable the agent to lodge the
document on time in an approved form includes meeting deadlines
specified by the agent for the provision of relevant taxation
information. 'Relevant information' also includes a signed
document (where applicable).
1.
Odilia engages Dylan, a registered tax agent, to prepare her
income tax return. Dylan asks Odilia to provide her records
by 15 November, and Odilia does so. Dylan prepares the
return and posts it to Odilia to sign and return it within
the following week. Odilia forgets to return her signed tax
return until Dylan's office contacts her the day before the
due date for lodgment. She returns the documents
immediately, but the return was lodged after the due date.
Because Odilia has not provided all the information
(including her signed declaration) to enable Dylan to lodge
the return in time, the safe harbour would not relieve
Odilia of an administrative penalty for failing to lodge her
return on time.
If, however, Odilia has returned her signed tax return
within the time frame specified by Dylan, and if her return
was subsequently lodged late due to Dylan's lack of
reasonable care, Odilia would be able to seek an exemption
from the administrative penalty.
2.
Ruhan, a registered tax agent, has prepared Peter's return
in time for it to be lodged by the due date. In the process
Ruhan has provided an opinion about the treatment of certain
assets relevant to the preparation of Peter's income tax
return with which Peter does not agree. Peter seeks a
second opinion before agreeing to sign the return. Although
Ruhan sought an extension to the due date for lodgment on
Peter's behalf, Peter's enquiries still result in the return
being lodged late.
The exemption will not apply in this case as the late
lodgment of Peter's return is due to his own actions.
84. Although the concepts of reasonable care, recklessness and
intentional disregard do not exist in relation to penalties for
failing to lodge required documents on time the safe harbour is
available only where the late lodgment results from the registered
tax agent or BAS agent failing to take reasonable care (or occurs
despite their exercise of reasonable care). It is not available
where the agent intentionally disregards a taxation law or is
reckless as to the requirements of a taxation law.
1.
Lucas, a registered tax agent, has prepared Sofia's return
in time for it to be lodged by the due date. However, the
time taken to resolve a dispute between Lucas and Sofia
regarding the return preparation fees has led to the return
being lodged late.
In this case, Lucas's actions in withholding lodgment
pending settlement of the dispute regarding fees constitutes
intentional disregard of the lodgment obligation. Since the
late lodgment is not due to Lucas's failure to take
reasonable care, the safe harbour from penalty is not
available to Sofia. Note, however, that Sofia could apply
for remission of the penalty and Lucas may have breached the
Code.
2.
Courtney engages Davinford GST Specialists, a registered BAS
agent, to prepare her BAS. Courtney provides all of her
records two weeks before the due date for lodgment, as
agreed with Davinford GST Specialists. Davinford GST
Specialists has a large number of clients and experiences
significant work pressures leading into key lodgment dates
and is also in the process of moving its offices into larger
premises. It does not post the prepared return to Courtney
for signing until after the due date.
Courtney seeks safe harbour from administrative penalty for
failing to lodge her return on time. Although the late
lodgment was caused by Davinford GST Specialists, knowingly
accepting too many clients and taking on an unmanageable
workload, or adopting poor practice management practices
demonstrates their recklessness as to the operation and
requirements of the taxation law. The late lodgement did
not result from the agent's failure to take reasonable care,
nor in spite of an exercise of reasonable care.
Courtney does not gain the safe harbour from administrative
penalty for failing to lodge her return on time.
85. If there is a dispute about whether or not the taxpayer provided
all relevant information in time for the document to be lodged on
time, the taxpayer will need to provide sufficient evidence to
satisfy the elements of the safe harbour to the Commissioner in
order to obtain the safe harbour.
1.
Henry is a small business owner. He engages a registered
tax agent, Hann Pty Ltd, to handle all tax related matters
of his business (including the preparation and lodgment of
quarterly BASs and his annual income tax returns). Hann Pty
Ltd has many clients and is therefore very busy, so it
requests that Henry provides his business transaction
records and any other required information on a quarterly
basis within a week of each quarter's end. Henry complies
with this request.
Henry receives a notice from the Commissioner imposing an
administrative penalty for late lodgment of the final
quarter's BAS as well as the annual income tax return for
the previous year.
Henry writes to the Commissioner outlining his circumstances
and seeking withdrawal of the penalty imposed. The
Commissioner responds that, in order to obtain the safe
harbour, Henry needs to demonstrate that the late lodgment
was due to Hann Pty Ltd's failure to take reasonable care.
Henry approaches Hann Pty Ltd. Hann Pty Ltd admits that the
paperwork relating to documents to be lodged for Henry at
the end of the financial year was accidentally filed without
being processed, and was only discovered after the due date
for lodgment of the documents had passed. Hann Pty Ltd
writes a statement to this effect for Henry to give to the
Commissioner.
In this case, because the late lodgment was caused by Hann
Pty Ltd failing to take reasonable care, and because Hann
Pty Ltd admitted fault, the administrative penalty imposed
on Henry for his failure to lodge documents on time may be
withdrawn.
If, however, Hann Pty Ltd disputed Henry's assertion that he
provided all relevant information on time and refused to
admit that it had failed to take reasonable care in lodging
the BAS and return, the safe harbour may not be granted. In
these circumstances, Henry must provide other evidence to
the Commissioner to prove that he provided all relevant
taxation information in accordance with the timetable agreed
with Hann Pty Ltd, for example, copies of relevant email
correspondence with Hann Pty Ltd.
86. The safe harbour from administrative penalty for late lodgment of a
document in the approved form due to the registered tax agent or
BAS agent failing to take reasonable care (or in spite of them
exercising reasonable care) applies in relation to a return,
notice, statement or other document required to be given on or
after the commencement. [Schedule 1, subitem 26(2)]
Administration of the 'safe harbour' provisions
87. The safe harbour provisions allow the ATO to consider and/or apply
the exemption from administrative penalty either prior to or after
the imposition of the administrative penalty. This enables the
safe harbour to be administered in the most efficient way.
88. In situations where a shortfall amount arises due to a tax agent's
or BAS agent's failure to take reasonable care, recklessness or
intentional disregard for the taxation law, the agent may be
referred by the Commissioner or the taxpayer to the Tax
Practitioners Board (Board) for appropriate action. However,
whether the exemptions from administrative penalties are applied or
not, is independent of the Board's decision whether or not to take
action against an agent. Similarly, it does not necessarily follow
that a registered agent whose client is granted relief from an
administrative penalty will necessarily have breached the Code.
89. The introduction of these exemptions from administrative penalties
does not affect taxpayers' ability to seek remission of any
penalties from the Commissioner.
Chapter 3
Transitional arrangements for registration
Outline of chapter
90. Part 1 of Schedule 2 to this Bill provides for the meanings of
defined terms used in Schedule 2.
91. Part 2 of Schedule 2 to the Bill provides for the transitional
arrangements for certain entities that are providing tax agent
services as defined in the Tax Agent Services Act 2009 (TAS Act)
before the commencement of the TAS Act.
92. Part 3, Division 1 of Schedule 2 to the Bill provides for the
transitional arrangements for entities that have applied for
registration or re-registration under Part VIIA of the Income Tax
Assessment Act 1936 (ITAA 1936) (the current law requiring the
registration of tax agents (current law)) and the relevant state
Tax Agents' Board (state Board) has not decided their application
before the commencement of the TAS Act.
93. Part 3, Division 2 of Schedule 2 to the Bill provides for the
transitional arrangements for entities that have not made an
application for registration under the current law, but the time
period for making such applications has not expired at the time of
commencement of the TAS Act.
94. Part 3, Division 3 of Schedule 2 to the Bill makes provision for
new applications (under section 20-20 of the TAS Act) from entities
that are not registered under the current law, but are providing
specialist tax agent services (notably, this includes research and
development (R&D) specialists). There are similar provisions for
entities providing Business Activity Statement (BAS) services.
95. Part 5 of Schedule 2 to the Bill provides that certain decisions of
the Tax Practitioners Board (Board) related to registration are
reviewable by the Administrative Appeals Tribunal (AAT).
96. Part 8 of Schedule 2 to the Bill provides the form in which
notification must be given to the Board.
Context of amendments
97. As the current law is repealed by the Bill (refer to
paragraph 1.17), provision needs to be made to facilitate the
transition of entities registered under the current law into the
new regulatory regime for the provision of tax agent services
provided in the TAS Act. Likewise, provision needs to be made to
allow entities that are currently legally providing tax agent
services or BAS services (within the meaning of the TAS Act) for a
fee without registration to transition into the regime in the TAS
Act.
98. Transitional provisions are also required to deal with applications
for registration and re-registration that are on foot under the
current law upon commencement.
Summary of new law
99. Existing registered tax agent and nominee registrations and re-
registrations are deemed to be registrations and renewals under the
TAS Act and existing but undecided applications for registration
and re-registration that were lodged with a state Board are decided
in accordance with the current law by the Board.
100. Certain entities that are currently providing tax agent services
for a fee legally without being registered or that otherwise
satisfy the conditions for the provision of those services (because
such services are not currently regulated) are transitioned into
the regime under the TAS Act.
101. Certain entities providing specialist tax agent services that apply
for registration as a registered tax agent under the TAS Act are
eligible for registration regardless of whether they meet the
qualifications and relevant experience requirements for
registration. This is intended to transition certain specialist
tax service providers (such as those in the R&D field) who are not
currently registered.
102. Certain entities that apply for registration as a registered
BAS agent under the TAS Act before the end of the three-year period
from commencement are eligible for registration regardless of
whether they meet the qualifications and relevant experience
requirements for registration.
103. Certain terms used in Schedule 2 to the Bill are defined in that
Schedule. Other expressions used in Schedule 2 have the same
meaning in that Schedule as in the TAS Act or in the Income Tax
Assessment Act 1997 (ITAA 1997).
Detailed explanation of new law
Explanation of the use of defined terms in Schedule 2 to the Bill
104. An expression used in Schedule 2 to the Bill that is also used in
the TAS Act has the same meaning in Schedule 2 as it has in that
Act. Likewise, but subject to those expressions used in the TAS
Act, an expression used in Schedule 2 to the Bill that is also used
in the ITAA 1997 has the same meaning in Schedule 2 as it has in
that Act. [Schedule 2, subitems 1(2) and (3)]
105. When the term 'commencement' is used in Schedule 2 to the Bill, it
means the commencement of Part 1 in Schedule 1 to the Bill. Refer
to paragraphs 1.50 to 1.55 for further information about
commencement. [Schedule 2, subitem 1(1)]
106. When the terms 'old law' and 'new law' are used in Schedule 2 to
the Bill, they mean 'Part VIIA of the ITAA 1936 as in force
immediately before commencement' and 'the TAS Act', respectively.
[Schedule 2, subitem 1(1)]
107. For the purposes of this explanatory memorandum, current law has
the same meaning as 'old law', being 'Part VIIA of the ITAA 1936'.
108. When the term 'Board' is used in Schedule 2 to the Bill, it means
the Board established under section 60-5 of the TAS Act.
[Schedule 2, subitem 1(1)]
Transition of entities providing tax agent services and BAS services
109. The transitional provisions facilitate the transition of entities
registered in the current tax agent registration regime into the
new regulatory regime introduced by the TAS Act. The transitional
provisions enable entities to continue to provide the services they
were able to provide before commencement of the TAS Act, after
commencement of the TAS Act. Entities will therefore be able to
continue their day to day provision of services without disruption
due to the change in law and without a detrimental impact on their
livelihood.
110. Entities contemplated by Part 2 of the Bill are 'taken to be
registered' under section 20-25 of the TAS Act. Accordingly, all
of the provisions in the TAS Act (for example, obligations,
responsibilities, powers of the Board) apply to those entities. To
continue registration beyond the registration period specified in
the relevant item in Part 2 of the Bill, an entity will apply for
renewal in accordance with section 20-50 of the TAS Act.
Continuation of existing registration of registered tax agents and
nominees
111. If, immediately before commencement an entity was a registered tax
agent or registered nominee within the meaning of the current law,
the entity is taken to be a registered tax agent under the TAS Act.
[Schedule 2, subitem 2(1) and item 3]
112. Registered tax agents under the current law will be deemed to be
registered tax agents under the TAS Act, as the requirements for
registration under the current law are not substantially different
from the requirements for registration under that Act, other than
the removal of the 'carry on business' requirement. It is
therefore appropriate that those entities that are registered under
the current law be automatically transitioned into the new
regulatory regime under the TAS Act.
113. Registered nominees under the current law will be deemed to be
registered tax agents under the TAS Act. This is because the TAS
Act removes the concept of 'nominees'. Such 'nominees' are
therefore now registered tax agents in their own right and not
subject to the registration of their host tax agent.
Period for which registered tax agents and nominees transitioning
will be taken to be registered tax agents under the TAS Act
114. Registered tax agents and nominees transitioning into the new
regime are taken to be registered tax agents under the TAS Act for
the period:
. beginning on commencement; and
. ending on the earliest of the following:
- for a registered tax agent transitioning - the day on
which the entity's registration would have expired under
the current law, were it not repealed (refer to
paragraph 1.17);
- for a nominee transitioning - the day on which the
entity's registration would have ceased under the
current law by virtue of the expiry of the nominee's
host tax agent's registration (a nominee's registration
ceases to be in force when the nominee's host tax
agent's registration expires);
- the day on which the entity's registration is cancelled
under the current law (despite the repeal of the current
law), where item 17 of Schedule 2 to the Bill applies
and the Board decides to cancel the entity's
registration (item 17 provides for the continuation of
inquiries by a state Board - refer to paragraphs 4.18 to
4.28); and
- the day on which the entity's registration is terminated
under Subdivision 30-B (termination for failure to
comply with the Code of Professional Conduct (Code)) or
40-A (termination of registration on certain other
grounds) of the TAS Act.
(During the period when an entity is taken to be a registered tax
agent after commencement, the Board may still suspend the entity
under the TAS Act.) [Schedule 2, subitem 2(1) and item 3]
1.
Immediately before commencement (assume 1 January 2010),
Hayden was a registered tax agent whose registration was due
to expire on 1 April 2010. From commencement, Hayden will
be taken to be a registered tax agent within the meaning of
the TAS Act until 1 April 2010 (unless Hayden's registration
is terminated prematurely).
Hayden will need to apply for renewal of his registration
under, and in accordance with, the TAS Act, which specifies
that the application for renewal must be made at least 30
days before the day on which the registration expires. If
Hayden makes an application for the renewal of his
registration on 20 February, Hayden's registration will
continue in accordance with the TAS Act until a decision has
been made by the Board.
Registered tax agents that are also nominees/multiple nominees
115. If an entity is both a registered tax agent and a registered
nominee of a registered tax agent under the current law, then that
entity simply transitions using its 'tax agent' status and hence
their registration will continue under the TAS Act on the basis of
their registered tax agent registration under the current law.
116. Likewise, if an entity is a registered nominee of more than one
registered tax agent, the registration of such a nominee is, after
commencement, taken to expire on the latest day that their
registration could have continued under the current law - that is,
its expiry will be determined with reference to whichever of the
nominee's host tax agent's registration would have continued the
longest.
Entities that are suspended at commencement
117. If, immediately before commencement, an entity was taken not to be
a registered tax agent within the meaning of the current law
because its registration was suspended, the entity's registration
is taken to have been suspended under section 30-25 (provisions
regarding suspension) of the TAS Act. [Schedule 2, subitem 2(2)]
118. Entities whose registration is suspended at commencement are
therefore transitioned into the regime under the TAS Act, even
though they are not taken to be registered tax agents or nominees
(for most purposes) upon commencement.
119. In accordance with subsection 30-25(4) of the TAS Act, such
entities will be taken not to be a registered tax agent except for
the purposes of Part 2 (registration), Subdivision 30-C (notifying
a change of circumstances) and Part 4 (termination of
registration). This means that during their period of suspension
the Board may, amongst other things, impose further sanctions on
the entity such as a further period of suspension.
120. Such an entity's registration is taken to be suspended under the
TAS Act for the period:
. beginning on commencement; and
. ending on the day on which the suspension would have ended
under the current law, were it not repealed.
[Schedule 2, subitem 2(2)]
121. Once the period of suspension ends, the entity is taken to be a
registered tax agent within the meaning of the TAS Act for the
period:
. beginning on the day immediately after the day on which
the suspension ends; and
. ending on the earliest of the following:
- the day on which the entity's registration would have
expired under the current law, were it not repealed;
- the day on which the entity's registration is cancelled
by the Board under the current law (the Board may
continue inquiries initiated by the state Boards and can
continue to impose sanctions under the current law -
refer to paragraphs 4.18 to 4.34); and
- the day on which the entity's registration is terminated
under Subdivision 30-B (termination for failure to
comply with the Code) or 40-A (termination of
registration on certain other grounds) of the TAS Act.
[Schedule 2, subitem 2(3)]
1.
Commencement is 1 January 2010. Prior to commencement,
Sally's registration as a registered tax agent was suspended
until 17 September 2010 in accordance with the current law,
after she was found guilty of incorrectly keeping records
with the intention of deceiving or misleading the
Commissioner of Taxation (Commissioner).
Upon commencement, as Sally was suspended, Sally is taken to
have been suspended under the TAS Act. Sally's suspension
under the TAS Act will end on 17 September 2010. After that
time, Sally will be taken to be a registered tax agent under
the TAS Act until the original expiry date under the current
law (unless Sally's registration is terminated before that
time).
Special rules for entities that are not currently required to
register
122. The TAS Act regulates a slightly broader range of services than the
current law. As a result, the Bill ensures that those entities
providing a service that they are not currently required to be
registered for, but will be required to register for under the TAS
Act, are considered to be a registered tax agent or BAS agent after
commencement. (Note that this transitional provision is not
intended to cover those entities currently providing tax agent
services where such entities are required to be registered. This
would include R&D specialists. Special transitional rules apply to
such entities. See paragraphs 3.87 to 3.93).
Entities providing tax agent services (that are not BAS services)
123. An entity that is not currently required to register to provide tax
agent services (other than a BAS service) for a fee will be taken
to be a registered tax agent within the meaning of the TAS Act for
a period of two years beginning immediately after commencement.
However the entity:
. must have been providing a tax agent service, other than a
BAS service (within the meaning of section 90-10 of the
TAS Act), for a fee immediately before commencement;
. must not have been required to register under the current
law; and
. must notify the Board (notification must be in a
particular form) that they are such a person within the
three-month period beginning immediately after
commencement.
[Schedule 2, subitem 4(1)]
124. As the entity must notify (rather than apply to) the Board, there
is no requirement for the Board to consider an application.
Notification gives the Board a record of those entities that are
taken to be registered tax agents during the two-year period.
125. It is appropriate to provide a three-month limit within which such
entities are able to access this transitional arrangement. This is
because these entities are currently unregistered and can gain the
benefits of registration through simply notifying the Board. They
therefore represent a higher risk category of all those
transitioning.
126. Refer to paragraphs 3.49 to 3.57 for the form of notification and
the period and conditions of registration under this transitional
provision.
Entities providing BAS services
127. Under the current law only registered tax agents and certain
persons listed in subsection 251L(6) (entities exempt from
registration) can provide BAS services for a fee. A transitional
rule is necessary to ensure that these exempt entities are able to
transition into the new law under the TAS Act.
128. A BAS service is defined under subsection 251L(7) of the current
law as any of the following:
. preparing or lodging an approved form about a taxpayer's
liabilities, obligations or entitlements under a BAS
provision;
. giving advice about a BAS provision; or
. dealing with the Commissioner, or a person who is
exercising powers or performing functions under a taxation
law, in relation to a BAS provision.
129. Under subsection 995-1(1) of the ITAA 1997, BAS provision means:
. Part VII of the Fringe Benefits Tax Assessment Act 1986;
. the indirect tax laws; and
. Parts 2-5 and 2-10 on Schedule 1 to the Taxation
Administration Act 1953 (which are about the pay as you go
system).
130. Entities who were providing BAS services (within the meaning of the
current law) immediately before commencement, for a fee, but are
currently exempt from the requirement to register (except for
Customs brokers licensed under Part XI of the Customs Act 1901)
will be taken to be a registered BAS agent within the meaning of
the TAS Act for a period of two years beginning immediately after
commencement. However, to access this transitional arrangement the
individual must notify the Board (notification must be in a
particular form) within the six-month period beginning immediately
after commencement that:
. they are exempt from registration under the current law
(subsection 251L(6)); and
. they were providing a BAS service immediately before
commencement.
[Schedule 2, subitem 5(1)]
131. Customs brokers licensed under Part XI of the Customs Act 1901 are
exempt from registration under subsection 251L(6) of the current
law. Customs brokers will not be transitioned into the new regime
because the new regime provided for by the TAS Act continues to
exempt such individuals from the requirement of registration (since
they cannot be subject to a civil penalty under the TAS Act for
providing the certain BAS service that they are exempt from
registration for under the current law, without registration).
1.
Before commencement, Jordan is a bookkeeper working under
the direction of a registered tax agent and is therefore not
required to be registered under the current law (subsection
251L(6)). If Jordan notifies the Board in writing, within
the six-month period after commencement, that he has been
working as a bookkeeper under the direction of a registered
tax agent to provide BAS services, he will be taken to be a
registered BAS agent for the two-year period beginning
immediately after commencement.
132. The TAS Act introduces a broader concept of BAS service than that
used in the current law. Significantly, section 90-10 of the TAS
Act includes in the definition of BAS service services relating to
ascertaining liabilities, obligations and entitlements arising
under a BAS provision (rather than merely preparing or lodging BAS
forms about a taxpayer's liabilities, obligations or entitlements
under a BAS provision).
133. As a result of the broadening of the definition of BAS service,
this Bill ensures that those entities providing a BAS service under
the TAS Act (where that service is not currently considered to be a
BAS service) will, upon commencement, be taken to be a registered
BAS agent within the meaning of the TAS Act for a period of two
years beginning immediately after commencement. However, to access
this transitional arrangement the entity must notify the Board
(notification must be in a particular form) within the six-month
period beginning immediately after commencement that:
. they were not a person providing a BAS service within the
meaning of the current law who was exempt from
registration; and
. they were an entity providing a BAS service within the
meaning of the TAS Act.
[Schedule 2, subitem 5(2)]
1.
Alli completes calculations for her clients regarding the
goods and services tax credits they can claim on the
purchases they have made. She does not, however, prepare
and lodge the BASs for her clients and is therefore not
providing a 'BAS service' within the meaning of the current
law.
Although the provision of Alli's services is not regulated
by the current law, Alli will be required to register under
the TAS Act in order to continue to provide her services for
a fee. This is because she is providing a BAS service
within the meaning of section 90-10 of the TAS Act, namely
services that relate to ascertaining clients' entitlements
arising under a BAS provision.
If Alli notifies the Board in writing, within the six-month
period after commencement, that she was unregistered but
legally providing services that are now captured by the
definition of BAS service in the TAS Act, she will be taken
to be a registered BAS agent for a two-year period
commencing from commencement.
In this situation, it would not be unusual if the Board
placed conditions on Alli's registration as a registered BAS
agent.
2.
Deaken is a bookkeeper and is providing BAS services for a
fee to his clients before commencement. Deaken is not a
registered tax agent and is not exempt from registration
under subsection 251L(6) of the current law. He is
therefore providing BAS services illegally.
Deaken is not a person that will be transitioned into the
new regulatory framework under the TAS Act as he is not
legally providing BAS services within the meaning of the TAS
Act immediately before commencement.
134. An entity is taken to be a registered BAS agent for the two-year
period beginning immediately after commencement, provided it
assesses itself against the criteria correctly and, if applicable,
notifies the Board that it is an entity to which the transitional
provision applies. As the requirement is to notify, not to apply,
the Board is not required to consider the notification.
135. Refer to paragraphs 3.49 to 3.57 for the form of notification and
the period and conditions of registration under this transitional
provision.
What is meant by 'immediately' before?
136. The transitional provisions in Part 2 of the Bill use the wording
'immediately before commencement', in relation to when an entity
was registered/the state of an entity or when an entity was
providing a particular service.
137. Immediately before commencement is not intended to mean only a
period of time just prior to commencement but is also intended to
convey the notion of a continuing provision of services. For
example, if an entity provided one tax agent services the day
before commencement, it would not be expected that the entity be
able to access the transitional provisions. Guidelines may be
provided by the Board in relation to such terms, indicating how the
Board will administer the provisions.
Period and conditions of registration
138. Notification to the Board must be in a form approved by the Board,
contain any information, statement or document required by the
Board and be provided in a manner required by the Board. [Schedule
2, item 25]
139. The Board may find it helpful to specify what additional
information it would like to know about the transitioning entity.
Likewise, upon receiving a notification, the Board has the power
under the TAS Act to seek additional information from the entity or
commence an investigation if it considers it necessary.
140. Entities taken to be a registered BAS agent or registered tax agent
within the meaning of the TAS Act are taken to be registered under
section 20-25 of that Bill for a two-year period beginning
immediately after commencement. At least 30 days before expiration
of the two-year period, the entity needs to apply to the Board for
renewal of its registration, and then registration is taken to
continue until the Board decides the application in accordance with
section 20-50 of the TAS Act. (Refer also to paragraphs 3.94 to
3.100 for an explanation of further provisions that may be accessed
by entities taken to be registered BAS agents under the TAS Act
after the two-year transitional period has ceased.)
141. All of the provisions in the TAS Act (for example, obligations,
responsibilities, powers of the Board) apply to entities that are
'taken to be registered' under the TAS Act. Therefore, entities
taken to be registered tax agents by virtue of these transitional
provisions will be subject to the Code and civil penalty provisions
under the TAS Act. Accordingly, any of the sanctions under the TAS
Act may apply to the entity. This ensures that those transitioned
into the regulatory regime under the TAS Act are competent to
provide tax agent services.
142. The Board may consider pre-commencement conduct when applying
sanctions under the TAS Act. The Board may consider pre-
commencement conduct/actions when deciding to terminate the
registration of entities that have transitioned into the new
regulatory regime, including those that transition via
notification. For example, if the Board is not satisfied, once
receiving notification and information from an individual, that the
individual does not meet the fit and proper person requirements
because of pre-commencement actions (for example, becoming an
undischarged bankrupt), the Board can terminate the individual's
registration under paragraph 40-5(1)(b) of the TAS Act, because the
individual would cease to meet one of the tax practitioner
registration requirements. (The term 'tax practitioner
registration requirements' is defined in section 90-1 of the TAS
Act.)
143. Even though the individual was an undischarged bankrupt at the time
it transitioned into the new regulatory regime and therefore did
not technically meet the tax practitioner registration requirements
at that time, the Board may still terminate the individual for
ceasing to meet the requirements. (Paragraphs 4.29 to 4.34 relate
to the Board's power to consider pre-commencement conduct.)
144. To avoid doubt, if an entity is taken to be registered as outlined
in paragraphs 3.34, 3.41 or 3.44, the Board may, in accordance with
the TAS Act, impose conditions to which the entity's registration
is subject and/or require the entity to maintain professional
indemnity insurance as if that entity had applied for registration
and the Board had decided to grant the application. [Schedule 2,
subitems 4(2), 5(3) and (4)]
145. It would be expected that many entities accessing the transitional
provisions by virtue of item 4 or subitem 5(2) of the Bill will
have a condition placed on their registration by the Board to limit
the tax agent services it can provide. It would be expected that
the condition would enable the entity to provide only those tax
agent services the entity was providing before commencement. This
allows the entity to continue to provide services, while also
managing the consumer risk associated with transitioning entities
that are not within the current regulatory regime.
146. A decision by the Board to impose conditions and a decision by the
Board to require an entity to maintain professional indemnity
insurance are reviewable by the AAT under section 70-10 of the TAS
Act, for which the entity can make an application to the AAT.
Refer to paragraph 4.46. [Schedule 2, subparagraphs 18(2)(a)(i)
and (ii) and 18(2)(b)(i) and (ii)]
Pending applications for registration and re-registration
147. Broadly, decisions made by the Board regarding registration
applications or re-registration applications that are on foot upon
commencement are made in accordance with the current law. The time
frames for making decisions are consistent with the TAS Act.
Tax agents and nominees
148. Where an entity has applied for original registration as a
registered tax agent or re-registration as a registered tax agent
under the current law (section 251J or 251JB, respectively) and the
relevant state Board has not decided the application before
commencement, then the Board must decide the application in
accordance with the registration requirements in the current law
(being section 251JA for original registration and section 251JC
for re-registration). [Schedule 2, paragraphs 6(1)(a) to (c) and
7(1)(a) to (c)]
149. Sections 251JA and 251JC of the current law require companies and
partnerships that apply for registration or re-registration to
specify an original nominee of the entity. Given that, on
commencement, all nominee registrations are taken to be
registrations as a registered tax agent (refer to paragraph 3.10),
in deciding an application in accordance with the current law, the
Board will need to ensure that the original nominee specified in
the application is a partner (in the case of a partnership
application) or an employee (in the case of a company application)
who is taken to be a registered tax agent on commencement.
150. Where an entity has applied for registration or re-registration of
a nominee under the current law (section 251KB) and the relevant
state Board has not decided the application before commencement,
then the Board must decide the application in accordance with the
nominee registration and re-registration requirements of the
current law (being section 251KC). [Schedule 2, paragraphs 8(1)(a)
to (c) and 9(1)(a) to (c)]
151. The Board must decide registration and re-registration applications
for both registered tax agents and nominees within six months after
commencement. This is consistent with the time limits for
registration decisions under the TAS Act and provides finality to
those applications that are pending upon commencement. (The
current law does not impose a time frame on registration decisions
by the state Boards.) [Schedule 2, paragraphs 6(1)(c), 7(1)(c),
8(1)(c) and 9(1)(c)]
152. If the Board decides to grant the application for registration or
re-registration in accordance with the current law, the Board:
. must register the entity or nominee (as appropriate) as a
registered tax agent under section 20-25 of the TAS Act;
- In accordance with section 20-25, the Board may impose
conditions to which the entity's registration is
subject.
. must notify the entity and nominee (if appropriate) of its
decision in accordance with section 20-30 of the TAS Act;
and
- Under section 20-30 the Board must notify of its
decision to grant registration within 30 days of its
decision. Notification by the Board must be in writing
and must include the period of registration and any
conditions to which the registration is subject.
. may require the entity or nominee (as appropriate) to
maintain professional indemnity insurance in accordance
with subsection 20-30(3) of the TAS Act.
[Schedule 2, paragraphs 6(1)(d), 7(1)(d), 8(1)(d) and 9(1)(d) and
subitems 6(3), 7(3), 8(3) and 9(3)]
153. If the Board decides to grant the registration, it is reasonable
that the entity (and nominee, where appropriate) be notified in
accordance with the TAS Act. Notification under that Bill also
ensures that the Commissioner is notified of the Board's decision.
154. If the Board decides to reject the application, the Board must
notify the entity and nominee, where appropriate, of its decision
in accordance with the current law as follows:
. for a registration decision - notification must be in
accordance with subsection 251JA(3) (for registered tax
agents) or 251KC(3) (for nominees) and section 251QB
(regarding statements to accompany notification of
decisions); and
. for a re-registration decision - notification must be in
accordance with subsection 251JC(3) (for registered tax
agents) or 251KC(3) (for nominees) and section 251QB.
[Schedule 2, paragraphs 6(1)(e), 7(1)(e), 8(1)(e) and 9(1)(e)]
155. Subsections 251JA(3), 251JC(3) and 251KC(3) of the current law
require the Board to notify the entity in writing of the decision
to reject the application and the reasons for that decision.
Section 251QB requires the Board to include a statement in certain
notices, including notices made under subsections 251JA(3),
251JC(3) and 251KC(3), stating that the entity has the right to
make an application to the AAT for review of the decision, if it is
dissatisfied with the decision.
156. The Board is taken to have rejected the application if it has not
made its decision within six months after commencement. This is
consistent with the approach adopted in the TAS Act. [Schedule 2,
subitems 6(2), 7(2), 8(2) and 9(2)]
Additional rules for re-registration applications
157. An entity whose application for re-registration is pending upon
commencement is taken to be a registered tax agent for the period:
. beginning on commencement (for an explanation of
'commencement', see paragraphs 1.50 to 1.55); and
. ending on the earlier of:
- the day on which the Board makes its decision regarding
the application for re-registration; or
- the day that occurs six months after commencement.
[Schedule 2, subitems 7(4) and 9(4)]
158. This approach is broadly consistent with the approach taken in
subsection 251JC(4) of the current law, with the addition of a six-
month limitation. Subsection 251JC(4) provides that in the case
where a state Board decides to refuse a registered tax agent's re-
registration application and the notice of the refusal occurs after
the date of the registered tax agent's registration expiry, then
the registered tax agent is taken to be registered for the period
from expiry until the time of notification of the state Board's
decision. This additional rule for pending re-registration
applications will ensure that entities will not be considered
unregistered and hence have to cease providing services simply
because they have not been notified by the Board of its decision.
159. Under the current law, entities seeking re-registration must
normally make their application during the period 60 to 30 days
before expiry. They may, however, request that a state Board allow
them to make their application during the 30 days before the expiry
date. If such a request has been made to a state Board under
paragraph 251JB(4)(b) (for registered tax agents) or paragraph
251KB(4)(b) (for nominees) and the relevant state Board has not
made a decision before commencement, then the Board must make a
decision in accordance with section 251JB (in the case of
registered tax agents) or 251KB (in the case of nominees) of the
current law. [Schedule 2, subitems 7(5) and 9(5)]
160. If the Board decides to allow such a request, the entity may apply
for re-registration within the time decided by the Board. When the
entity applies for re-registration, even though the TAS Act will be
in force, the entity is taken to have applied to a state Board for
re-registration as if it had applied under the current law prior to
commencement. [Schedule 2, paragraphs 7(5)(d) and 9(5)(d)]
161. If the Board decides to refuse the request, the Board must notify
the applicant (and specified nominee/s, in the case of a company or
partnership application) in writing of the decision to refuse the
request and the reasons for the decision in accordance with
subsections 251JB(5) and 251KB(5) of the current law (which require
the Board to provide a notice in writing that sets out its decision
to refuse to allow a later time for the making of an application
for re-registration and giving reasons for that decision).
[Schedule 2, paragraphs 7(5)(e) and 9(5)(e)]
162. The notice must also include a statement informing the recipient/s
of the notice that the Board's decision is reviewable by the AAT
under section 251QB of the current law. Absence of this statement,
however, does not affect the validity of the Board's decision.
[Schedule 2, paragraphs 7(5)(e) and 9(5)(e)]
Successor tax agents - changes in the constitution of a partnership
163. Under the current law, when the constitution of a partnership
(original partnership) changes, the registration of that
partnership is terminated. The new partnership can apply to a
state Board for a new registration as long as a partner of the new
partnership was a partner, and a registered nominee, of the
original partnership immediately before the termination, there is
no partner who is an undischarged bankrupt and the registration of
the original partnership was not suspended immediately before the
termination.
164. In addition, under the current law a person who was a partner and a
registered nominee of the original partnership immediately before
the termination may apply to a state Board for registration as a
registered tax agent, provided that partner is not an undischarged
bankrupt.
165. The treatment of partnerships under the TAS Act is quite different.
Under that Bill, if the constitution of a partnership changes, the
registration of that partnership is not terminated. Therefore a
change in the constitution of a partnership does not affect the
continuity of that partnership's registration. Under the TAS Act,
a registered partnership must notify the Board within 30 days of
the day on which the partnership becomes, or ought to have become,
aware that the composition of the partnership changed.
Partnership registration terminated and decision not made by state
Board before commencement
166. If the registration of a partnership was terminated under the
current law because there was a change in the constitution of the
partnership and, at commencement:
. a person mentioned in paragraph 3.75 or a new partnership
mentioned in paragraph 3.74 had applied to a state Board
for registration as a registered tax agent in accordance
with subsection 251JE(1) or (2) of the current law, as
appropriate; and
. the relevant state Board had not yet registered the person
or new partnership under section 251JF of the current law,
then, despite section 251JD of the current law (termination because
of a change in partnership), the original partnership's
registration is taken not have been terminated at the time of the
change in the constitution of the original partnership. [Schedule
2, subitems 10(1) and (2)]
167. Because the original partnership's registration will be taken not
to have terminated, the transitional arrangements described in
paragraph 3.22 will apply to the partnership and its nominee/s.
Partnership registration terminated and first application rejected
by state Board before commencement
168. Under the current law, certain time limits and special provisions
apply to the making of applications for registration as a successor
tax agent following termination of registration due to a change in
the constitution of a partnership. Broadly speaking, an
application must be made within 30 days after the original
partnership's registration terminated. If a state Board is of the
opinion that the application made is not in accordance with the
requirements in the current law, and the notice of that opinion is
given, at the earliest, 21 days after termination of the original
partnership's registration, then the applicant has a further period
of seven days (under subsection 251JE(9)) in which to resubmit its
application. Because of the changed approach to the continuity of
partnerships (and therefore partnership registration in the case of
a change in constitution), under the TAS Act, transitional
provisions are required to accommodate situations where
commencement occurs during the 30-day period or during the
subsequent seven-day period granted by a state Board.
169. In situations where the seven-day period for resubmitting an
application under subsection 251JE(9) of the current law has not
expired at commencement, the applicant may resubmit its application
for registration as a successor tax agent in accordance with
section 251JE within seven days after commencement. The applicant
may do so where:
. a state Board received a document from the entity
purporting to be an application made in accordance with
section 251JE of the current law (application for
registration as a successor tax agent);
. the state Board was of the opinion that the document was
not an application made in accordance with 251JE and
notified the entity of that opinion before commencement in
accordance with subsection 251JE(8);
. the seven-day period mentioned in subsection 251JE(9) has
not expired at commencement; and
. the entity has not yet re-made an application under
section 251JE as allowed by subsection 251JE(9).
[Schedule 2, paragraphs 10(3)(a) to (e)]
170. If the Board is of the opinion that the entity has applied in
accordance with section 251JE of the current law, the Board:
. must register the entity as a registered tax agent under
section 20-25 of the TAS Act;
. must notify the entity of its decision in accordance with
section 20-30 of that Act; and
. may impose conditions to which the entity's registration
is subject and/or require the entity to maintain
professional indemnity insurance in accordance with that
Act.
[Schedule 2, paragraph 10(3)(f) and subitem 10(4)]
1.
Before commencement, Billy is a partner and a registered
nominee of a partnership, YUU & Partners, which is a
registered tax agent under the current law. YUU & Partners'
registration is terminated because the constitution of the
partnership changes.
Within the required timeframe in the current law, Billy
submits an application to a state Board for registration as
a successor tax agent. Billy was notified by the state
Board that it was of the opinion that the document submitted
by Billy was not an application made in accordance with
section 251JE of the current law. Three days later, the TAS
Act commenced.
Billy had not re-made his application for registration as a
successor tax agent before commencement. Under the Bill,
Billy has seven days from commencement to re-submit his
application for registration as a successor tax agent to the
Board.
Application not yet made
Successor tax agents - changes in the constitution of a partnership
Partnership registration terminated and application not made before
commencement
171. If the registration of a partnership was terminated under the
current law because there was a change in the constitution of the
partnership and, at commencement:
. a person mentioned in paragraph 3.75 or a new partnership
mentioned in paragraph 3.74 had not applied to a state
Board for registration as a registered tax agent in
accordance with subsection 251JE(1) or (2) of the current
law, as appropriate; and
. the 30-day period within which an application had to be
made (as mentioned in subsection 251JE(4) of the current
law) had not expired,
then, despite the repeal of the current law, the person or new
partnership may apply to the Board in accordance with subsection
251JE(1) or (2) of the current law, as appropriate, within the
balance of the 30-day period. [Schedule 2, subitems 12(1) and (3)]
172. If a person or the new partnership makes such an application, then
despite section 251JD of the current law (termination because of a
change in partnership), the original partnership's registration is
taken not to have been terminated at the time of the change in the
constitution of the original partnership. [Schedule 2, subitems
12(2) and (4)]
173. These provisions ensure that a person or new partnership retains
the ability to make an application to the Board for successor
registration under the current law where the 30-day period for
making such an application has not expired, notwithstanding the
repeal of the current law from commencement. A person or new
partnership will have the time from commencement until the 30-day
period would have expired under the current law to apply to the
Board.
174. Provided an application is made which complies with the
requirements in subsection 251JE(1) or (2), as appropriate, the
original partnership's registration will be taken not to have
terminated and the transitional arrangements described in paragraph
3.22 will apply to both the partnership and its nominee/s.
New applications for registration as a tax agent or BAS agent
175. The Bill also provides for new applications under the TAS Act for
registration as a registered tax agent or as a registered BAS
agent. The provisions enable certain entities to be eligible for
registration under the TAS Act despite not meeting the
qualifications and relevant experience requirements for
registration.
Registration as a tax agent - entities providing specialist tax
agent services
176. Under the current regulatory regime there may be some entities
providing specialist tax agent services that are not currently
registered. This may include, for instance, individuals providing
tax services in the R&D field and quantity surveyors.
177. In many instances, such entities are competently providing a tax
agent service in a specialised field (in relation to which they are
well qualified) and have found, because of the current registration
requirements, that they are unable to register as a registered tax
agent.
178. The new regulatory regime and these transitional provisions provide
an opportunity to address these issues and ensure that such
specialist tax agent service providers are effectively brought
within the new regime.
179. This is achieved through ensuring that such entities, despite not
meeting the eligibility requirement to be prescribed by the
regulations (see paragraphs 20-5(1)(b), (2)(c) and (3)(d) of the
TAS Act) are still eligible for registration where:
. they apply for registration under the TAS Act within
six months of commencement;
. immediately before commencement, the entity was providing
a tax agent service within a particular area of the
taxation laws; and
. the Board is satisfied that the entity has been providing
that tax agent service to a competent standard for a
reasonable period before making the application (what
constitutes a 'reasonable period' will be determined by
the Board).
[Schedule 2, subitem 13(1)]
180. Despite not meeting the eligibility requirement to be prescribed by
the regulations (including the qualification and relative
experience requirements) the entity will still need to meet the fit
and proper person requirements in the TAS Act. Therefore, the
Board will need to be satisfied that the fit and proper person
requirement is met before an entity can transition into the new
regime via this item. This will enable the Board, for instance, to
distinguish between entities providing a tax agent service that
have failed to register for a bona fide reason and other
unregistered entities.
181. So as to ensure that, prior to the Board making its decision
regarding the entity's registration, the entity can continue to
lawfully provide tax agent services, the entity will be considered
to be registered from commencement until the Board makes its
decision. [Schedule 2, subitem 13(2)]
Period and effect of registration of specialist entities
182. Once the Board makes a decision to grant registration, that
registration is granted under the TAS Act, and is therefore for a
period of at least three years as determined by the Board. This
allows them sufficient time to obtain the necessary qualifications
and/or experience in order to meet all of the registration
requirements at the time of renewal.
1.
Tony is an R&D Specialist. Tony provides a tax agent
service (advice in relation entitlements under section 73B
of the ITAA 1936). (Commencement is 1 January 2010.)
Tony applies for registration as a registered tax agent
under section 20-20 of the TAS Act on 1 March 2010. Despite
not meeting the eligibility requirement to be prescribed by
the regulations (qualification and relevant experience
requirements), Tony is eligible for registration if the
Board is satisfied that Tony has been providing that tax
agent service to a competent standard for a reasonable
period before making the application.
Registration as a BAS agent
183. Entities seeking registration as a registered BAS agent will
benefit from a three-year period during which they can apply for
registration without meeting the educational qualifications and
relevant work experience requirements to be prescribed by
regulations provided certain conditions are met.
184. Again, this is achieved through ensuring that such entities,
despite not meeting the eligibility requirement to be prescribed by
the regulations (see paragraphs 20-5(1)(b), (2)(c) and (3)(d)) are
still eligible for registration where:
. they apply for registration as a registered BAS agent
under the TAS Act within three years of commencement; and
. the Board is satisfied that the entity has been providing
BAS services to a competent standard for a reasonable
period before making the application.
[Schedule 2, item 14]
185. The Board will need to be satisfied that the fit and proper person
requirement is met before an entity can transition into the new
regime via this item.
Period and effect of registration as a BAS agent
186. Once the Board makes a decision to grant registration, that
registration is granted under the TAS Act, and is therefore for a
period of at least three years as determined by the Board.
187. However, the Bill addresses the circumstances where an entity, has
transitioned into the new regulatory regime by virtue of item 5
(that is, they were providing BAS services under the current law
and were not required to be registered - see paragraphs 3.38 to
3.46) but where they are also eligible to apply for registration
without meeting the qualification and experience requirements. In
such instances, the entity's transitional registration of two years
when coupled with a further registration of three years could mean
that the entity could be registered without meeting the required
qualification and experience requirements for up to five years
following commencement.
188. To overcome this situation, the Bill ensures that where an
individual has transitioned into the new regime by virtue of item 5
(and is therefore taken to be registered for two years following
commencement) and has applied for registration under item 14
without the necessary qualification or experience requirements, the
Board is able to grant that additional registration for a period of
12 months (or more). That is, the Board is not restricted to
granting a minimum level of three years registration as would
otherwise be the case. [Schedule 2, subitem 14(2)]
189. This arrangement ensures that entities currently providing
BAS services without the education or experience required by the
new regulatory regime are able to transition into the new regime
and will have sufficient, though not excessive, time to obtain the
necessary qualifications and/or experience in order to meet all of
the registration requirements at the time of renewal.
1.
On commencement, Tony is taken to be a registered BAS agent
under the TAS Act for a period of two years. More than six
months before the end of the two-year period after
commencement, Tony applies to the Board for registration as
a registered BAS agent, although he does not meet the
educational qualifications and relevant experience
requirements for registration.
Despite not meeting the education qualifications and
relevant experience requirements for registration, Tony will
be eligible for registration if the Board is satisfied that
he has been providing BAS services competently for a
reasonable period. If the Board is satisfied that Tony has
been providing services competently for a reasonable period,
Tony will be registered as a registered BAS agent under the
TAS Act for a minimum of 12 months.
In this situation, Tony will have at least, approximately,
three years from commencement to transition into the TAS Act
and obtain the educational qualifications and relevant
experience requirements, provided the Board grants his
registration as a registered tax agent.
Refund of lodgment fees in certain circumstances
190. If an application is made under certain sections of the current
law, being sections 251J, 251JB or 251KB (applications for
registration and re-registration of registered tax agents and
nominees) and the applicant withdraws the application after
commencement, but before a decision is made by the Board in regard
to their application, then the Commissioner is required to refund
the lodgment fees paid under the current law, to the applicant.
[Schedule 2, item 11]
191. This saves the current law so it can be applied to registration
applications that have been made but not decided before
commencement, and those new or pending applications that are made
under the current law after commencement. (Although a similar
provision exists in the TAS Act, it applies only to applications
made under that Act.)
Chapter 4
Transition of the state Tax Agents' Boards to the Tax Practitioners Board
Outline of chapter
192. Part 4 of Schedule 2 to this Bill provides for the transitional
arrangements regarding the references to, and things done by, or in
relation to, a Tax Agents' Board (state Board) under Part VIIA of
the Income Tax Assessment Act 1936 (ITAA 1936) (current law). Part
4 of Schedule 2 to the Bill also provides for the transitional
arrangements to facilitate the continuation of inquiries by the
state Boards.
193. Part 5 of Schedule 2 to the Bill provides for the transitional
arrangements regarding the review of decisions of the state Boards
and transitional decisions of the Tax Practitioners Board (Board)
by the Administrative Appeal Tribunal (AAT).
194. Part 6 of Schedule 2 to the Bill provides for the transitional
arrangements that relate to legal proceedings.
195. Part 7 of Schedule 2 to the Bill provides for the reporting and
disclosure obligations and the transfer of custody of records from
the state Boards to the Board.
196. Part 8 of Schedule 2 to the Bill provides for the making of
transitional regulations by the Governor-General to carry out or
give effect to matters of a transitional nature.
Context of amendments
197. Currently there are six state-based Boards that register tax agents
and administer the current law relating to the registration and
regulation of registered tax agents.
198. The Tax Agent Services Act 2009 (TAS Act) introduces a new
regulatory regime and establishes a national Tax Practitioners
Board (Board) to replace the state Boards. The Board has the
general administration of the TAS Act, a function which is
currently performed (in respect of Part VIIA of the ITAA 1936) by
the Commissioner of Taxation (Commissioner).
199. This Bill provides for the transition of functions of the state
Boards under the current law to the national Board under the TAS
Act.
Summary of new law
200. The Board takes the place of the current state Boards. This means
that:
. things done by the state Boards will become things done by
the Board;
. references to a state Board in an instrument will be taken
to be a reference to the Board;
. inquiries underway by a state Board will be considered by
the Board, and evidence, information or documents required
to be given to a state Board will be required to be given
to the Board;
. the Board will step into the shoes of the state Boards in
any pending legal proceedings; and
. records in the custody of the state Boards will be
transferred into the custody of the Board.
201. Despite the repeal of the current law, a right to review a decision
by a state Board under the current law will remain available after
commencement. In addition, a right to review of a decision will be
available where a decision that would otherwise have been made by a
state Board is made after commencement by the Board under the Bill.
202. Regulations may be made prescribing certain matters related to
Schedule 2 to the Bill and matters of a transitional nature
relating to the amendments or repeals made by Schedule 1 to the
Bill.
Detailed explanation of new law
References to and things done by or in relation to a Tax Agents' Board
Things done by or in relation to a Tax Agents' Board
203. If a thing was done by, or in relation to, a state Board under the
current law, then after commencement, for the purposes of the
operation of any law, the thing is taken to have been done by, or
in relation to, the Board. A thing done includes the making of an
instrument. [Schedule 2, subitems 15(1) and (3)]
204. Among other things, this provision allows the Board to step into
the shoes of a state Board for the purpose of appealing an adverse
decision made against a state Board.
1.
Before commencement, ZYX Tax Services Ltd, a registered tax
agent, seeks review by the AAT of a decision of a state
Board to cancel its registration. The AAT decides to set
aside the state Board's decision to cancel ZYX Tax Services
Ltd's registration and substitutes a decision that ZYX Tax
Services Ltd's registration not be cancelled.
The TAS Act commences shortly thereafter. Following
commencement, the Board decides to appeal the decision of
the AAT to the Federal Court of Australia. The Board is
able to appeal to the Federal Court because the Board is
able to step into the shoes of the state Boards and, had the
current law not been repealed upon commencement, the state
Board would have been able to lodge such an appeal.
205. Despite this general rule, the Minister (being a Treasury portfolio
Minister) may, by writing, determine that a particular thing done
by, or in relation to, a state Board is not to be taken to have
been done by or in relation to the Board. That is, the Minister
may determine that the general rule does not apply in relation to a
specified thing done by a state Board. This provides flexibility
for the Minister to ensure that the appropriate outcome is achieved
in all circumstances. [Schedule 2, subitem 15(2)]
206. The Bill specifies that a determination by the Minister is not a
legislative instrument, because it is not an instrument within the
meaning of section 5 of the Legislative Instruments Act 2003. This
provision is included in the Bill merely to assist readers.
[Schedule 2, subitem 15(4)]
References in instruments to a Tax Agents' Board
207. If an instrument contains a reference to a state Board and the
instrument is in force immediately before commencement, then after
commencement the instrument has effect as if the reference to the
state Board were instead a reference to the Board. [Schedule 2,
subitem 16(1)]
208. Similar to above, the Minister may, by writing, determine that this
general rule does not apply in relation to a specified reference to
a state Board. To assist readers, the Bill specifies that any such
determination is not a legislative instrument, because it is not an
instrument within the meaning of section 5 of the Legislative
Instruments Act 2003. [Schedule 2, subitems 16(2) and (3)]
Continuation of inquiries by a Tax Agents' Board where a 'show
cause notice' has been issued
209. If a state Board had given an entity a 'show cause notice' before
commencement, then the Board must make a decision within 60 days
after commencement as to whether or not to investigate the entity.
[Schedule 2, paragraph 17(1)(a)]
210. A show cause notice means a written notice to an entity that:
. sets out the grounds on which the state Board is giving
the notice;
- In setting out the grounds on which the notice is given,
the notice may include, for example, a reference to the
legislative provisions relevant to the grounds.
. invites the entity to respond in writing to the state
Board addressing the grounds on which the notice has been
given; and
. states the period within which the entity must give the
written response to the state Board.
[Schedule 2, subitem 17(5)]
211. If the Board decides to commence an investigation under the TAS
Act, then it must:
. notify the entity in accordance with section 60-95 of the
TAS Act. This section provides that the notice must be in
writing and must be given within two weeks after the
decision to investigate is made;
. carry out its investigation in accordance with the process
required or allowed by Subdivision 60-E of the TAS Act as
if the Board were investigating conduct that may breach
that Act. Subdivision 60-E provides for such things as
the collection of evidence by the Board, the period during
which a decision must be made following an investigation
and the notification requirements; and
. take whatever action in relation to the entity as is
allowed by the current law (despite its repeal by Schedule
1 to this Bill) and as the Board considers appropriate.
[Schedule 2, paragraph 17(1)(b)]
212. Although the Board must carry out its investigations in such
circumstances in accordance with the process required or allowed by
Subdivision 60-E of the TAS Act, where a formal show cause notice
has been issued it is appropriate for the Board to be bound to
apply sanctions under the current law. Accordingly, following an
investigation, the Board may, in accordance with the current law,
either suspend or terminate the entity's registration or decide to
take no further action.
213. If the Board decides, after carrying out an investigation as
mentioned in paragraph 4.20, to suspend an entity (under the
current law), then the entity is taken not to be a registered tax
agent within the meaning of the TAS Act while it is suspended,
except for the purposes of the following Parts in that Bill:
. Part 2 (Registration);
. Part 3 (The Code of Professional Conduct (Code)); and
. Part 4 (Termination of registration).
[Schedule 2, subitem 17(3)]
214. This ensures that an entity whose registration is suspended may
nevertheless apply for renewal of registration during the period of
suspension, that the entity is bound by the Code and the obligation
to notify the Board of a change in circumstances and that the
grounds for termination of registration continue to apply. This is
consistent with the treatment of entities whose registration is
suspended under section 30-25 of the TAS Act.
215. If the Board decides not to commence an investigation, it must
notify the entity in writing that no further action will be taken
in relation to the show cause notice. This notification in writing
must be made within 30 days of the Board's decision. [Schedule 2,
paragraph 17(1)(c)]
216. If the Board fails to make a decision within 60 days after
commencement, then the Board is taken to have decided not to
investigate the entity. [Schedule 2, subitem 17(2)]
217. The 60-day timeframe will ensure that investigations/complaints
that have already progressed to the 'show-cause notice' phase are
progressed without delay to provide certainty to the entity subject
to the investigation.
218. Complaints or inquiries that may be on foot under the current law
upon commencement may relate to the following provisions:
. section 251BC or 251KC, which relates to whether or not a
person is a fit and proper person to prepare income tax
returns and transact business on behalf of taxpayers in
income tax matters;
. section 251JA or 251JC, which relates to the requirements
for registration and re-registration, respectively; or
. section 251K or 251KE, which relates to the reasons for
which a state Board may cancel or suspend an entity's
registration.
219. If a state Board required a person to provide evidence, information
or any document and it was not provided to the state Board before
the commencement time, then the evidence, information or document
must be provided to the Board. [Schedule 2, subitem 17(4)]
Pre-commencement conduct not subject to a 'show cause' notice
220. Not all conduct that is undertaken pre-commencement that may
warrant investigation or ultimately some form of sanction will be
subject to a formal show cause notice by a state Board.
221. This would include conduct that the Australian Taxation Office
(ATO) or the state Boards are unaware of at the time of
commencement. It would also include investigations underway by the
ATO. Under the current arrangements between the state Boards and
the ATO, it is often the ATO that undertakes preliminary
investigations into conduct that may ultimately warrant a sanction
under the current law. This would include conduct relating to the
provision of tax agent services by an unregistered entity (in which
case, sanctions may be pursued by the Commissioner) or
inappropriate conduct by a registered entity (in which case
sanctions may be pursued by the state Boards).
222. If it considers it appropriate, the Board retains the ability to
sanction such pre-commencement conduct under the current law. This
is a result of Part 4 of Schedule 2 to the Bill (see paragraphs
4.12 to 4.15) and section 8 of the Acts Interpretation Act 1901.
1.
On 30 August 2009, the ATO receives a complaint against
Tony, a registered tax agent, about inappropriate behaviour
that may be relevant to whether he is a fit and proper
person. The ATO commences a preliminary investigation and
notified Tony that he is under review.
On 1 January 2010 the TAS Act commences and the ATO forwards
information about the complaint against Tony to the Board.
After concluding its investigation, the Board determines
that Tony's registration should be suspended, it can make
such a decision under section 251K of the current law.
223. In addition to being able to apply sanctions under the current law
in relation to pre-commencement conduct, the Board also has the
option of imposing sanctions under the TAS Act. Notably, conduct
or events that occurred prior to commencement may be directly
relevant to the Board's decision to terminate a tax agent or
Business Activity Statement (BAS) agent's registration under Part 4
of the TAS Act.
224. This may include pre-commencement conduct that goes to whether or
not a registered tax agent or BAS agent is a 'fit and proper'
person or some other event (such as bankruptcy or the conviction of
an offence) that, under the TAS Act, can form the basis of the
Board's decision to terminate registration. The requirement in the
TAS Act that the Board's discretion to terminate registration where
an event occurs or a tax agent or BAS agent ceases to meet the
requirement to be a fit and proper person should not be taken to
limit the Board's consideration to only conduct or events that
occurs after commencement.
1.
On 31 December 2009, Ricardo, a registered tax agent, is
declared bankrupt. On 1 January 2010, the new regulatory
regime commences and Ricardo transitions into the new regime
as a registered tax agent. Some weeks later the Board
learns of Ricardo's bankruptcy and can terminate his
registration in accordance with Part 4 of the TAS Act.
225. Pre-commencement conduct cannot constitute a 'breach' of the Code.
This is appropriate as a registered tax agent or BAS agent should
not be held to the professional standard required by the Code in
relation to conduct that occurred when the Code did not exist. Of
course, pre-commencement conduct when combined with conduct after
commencement may establish a pattern of behaviour. This could be
relevant to the Board determining an appropriate sanction for a
breach of the Code.
Unregistered entities
226. The Commissioner is currently responsible for investigating and
pursuing action against unregistered entities under the current
law. While this responsibility will be transferred to the Board
after commencement, the Commissioner will remain responsible for
the actions of unregistered entities (such as, unregistered
entities illegally providing tax agent services) that occur prior
to commencement.
Legal proceedings
Continuation of pending legal proceedings
227. If any proceedings were pending in any court or tribunal
immediately before commencement to which a state Board was a party,
the Board is substituted for the state Board, after commencement,
as a party to the proceedings. This ensures that, after
commencement, pending proceedings may continue notwithstanding the
dissolution of the state Boards. [Schedule 2, item 19]
Legal proceedings by taxpayers to recover penalties or interest
charges
228. Section 251M of the ITAA 1936 and section 120 of the Fringe
Benefits Tax Assessment Act 1986 provide a taxpayer with a right to
sue their registered tax agent for the amount of a penalty
(including general interest charge or shortfall interest charge)
where the penalty was imposed as a result of the agent's
negligence.
229. While these provisions will be repealed by Schedule 1 to the Bill
(refer to paragraph 1.10 and 1.17), the effect of these provisions
will be retained in relation to penalties that have been (or will
be) imposed in relation to negligence by a tax agent prior to
commencement. [Schedule 2, item 20]
1.
Anna engages Dan, a registered tax agent, to complete her
income tax return for the 2008-09 income year. Dan submits
Anna's tax return to the ATO in October 2009.
The TAS Act commences in early 2010.
In February, shortly after commencement, Anna receives a
notice from the ATO that she has understated her income
earned in 2008-09 and thus her tax payable has increased.
Anna had provided all relevant information to Dan and his
negligence, before commencement of the TAS Act, caused her
to have a tax shortfall. This tax shortfall has also
exposed her to a shortfall interest charge.
Although section 251M was repealed when the TAS Act
commenced, Anna retains her right to sue for and recover
from Dan the shortfall interest charge that she has incurred
as a result of Dan's negligence.
Special rule relating to the civil penalty for employing or using
the services of a deregistered entity
230. Section 50-25 of the TAS Act provides for a civil penalty where a
registered tax agent or BAS agent:
. employs or uses the services of an entity to provide tax
agent services on its behalf;
. in circumstances where it knows, or ought reasonably to
know, that the entity is not registered and was previously
a registered agent; and
. had its registration terminated within the period of one
year before the registered tax agent or BAS agent first
employed/used the services of the entity.
231. The Bill ensures that this civil penalty will apply where a
registered tax agent or BAS agent employs or uses the services of
an entity (registered tax agent or nominee) whose registration was
cancelled under the current law. [Schedule 2, subitem 21(1)]
1.
In May 2009, Toby is convicted under section 8N of the
Taxation Administration Act 1953 for recklessly making a
false statement to a taxation officer, and, as a result, a
state Board decides to cancel Toby's tax agent registration.
The TAS Act commences in January 2010.
Alistair, a registered tax agent, knowing the circumstances
of the cancellation of Toby's registration, employs Toby in
February 2010 to prepare his clients' business activity
statements on his behalf.
Toby is taken to have been previously a registered tax agent
under the TAS Act, and the cancellation of his registration
is taken to have been a termination of registration under
Part 4 of that Bill for the purposes of the civil penalty in
section 50-25. As such, Alistair may be liable for a civil
penalty under section 50-25 of the TAS Act, for employing
Toby to provide tax agent services on his behalf when he
knew that Toby's registration was cancelled within one year
before he employed Toby.
232. Of note, the civil penalty does not apply where a registered tax
agent or BAS agent employs or uses the services of an entity whose
registration under the current law was cancelled because it ceased
to carry on business as a registered tax agent. This is because
the cancellation of registration did not result from misconduct by
the entity. [Schedule 2, subitem 21(2)]
Review of decisions by the Administrative Appeals Tribunal
233. After commencement, despite the repeal of section 251QA of the
current law (which lists the decisions of the state Boards that are
reviewable by the AAT) applications may still be made to the AAT
under that section for review of a decision by a state Board made
before commencement under a provision of the current law, if, upon
commencement, the period for making an application for review had
not lapsed. [Schedule 2, paragraph 18(1)(a)]
234. The right to apply for review by the AAT allows those entities who
have been affected by a decision of a state Board or the Board to
question the Board's exercise of its powers before an independent
administrative body. For the reviewable decisions listed in item
18 of Schedule 2 to the Bill, the Board is required by section 27A
of the Administrative Appeals Tribunal Act 1975 to give a notice to
the affected entity/entities stating that a decision was made and
that the entity has the right to have that decision reviewed.
Under section 28 of that Act, the Board is required, upon request,
to provide a written statement setting out the findings on material
questions of fact, referring to the evidence or other material on
which those findings were based and giving the reasons for the
decision. A request for the review of a Board decision must be
lodged directly with the AAT, generally by the twenty-eighth day
after the day on which the terms of the decision are given to the
affected person.
235. In addition, after commencement, an aggrieved entity may also
continue to apply under section 251QA for the review of a decision
of the Board where the Board is specifically empowered by this Bill
to make a decision under the current law. These decisions, further
information for which can be found in Chapter 3, are:
. A decision by the Board to reject an application for
registration or re-registration (under section 251JA or
251JC of the current law - requirements for registration).
. A decision by the Board to reject an application for
registration or re-registration (under section 251KC of
the current law - requirements for registration and re-
registration as a nominee).
. A decision by the Board to refuse a request to allow
an application for re-registration to be made at a later
time (under section 251JB or 251KB of the current
law - application for registration as a registered tax
agent or nominee to be made at a later date).
. A decision by the Board to suspend or cancel the
registration of an entity after investigating the entity
in accordance with the TAS Act.
[Schedule 2, paragraphs 18(1)(b) to (h)]
236. Section 70-10 of the TAS Act sets out the decisions of the Board
that may be reviewed by the AAT.
237. To avoid doubt, this Bill specifies that an application may be made
under section 70-10 of the TAS Act for review of any of the
following decisions of the Board:
. A decision under section 20-25 of the TAS Act, as applied
by Schedule 2 to this Bill, to specify a condition to
which registration is subject.
. A decision under section 20-30 of the TAS Act, as applied
by Schedule 2 to this Bill, to require professional
indemnity insurance to be maintained.
. A decision under subsection 60-125(4) of the TAS Act, as
applied by Schedule 2 to the Bill, to extend the period of
time within which an investigation is to be completed.
[Schedule 2, subitem 18(2)]
Transitional reporting and disclosure obligations of the Tax Practitioners
Board
Annual reporting requirement for the first year
238. Under section 60-130 of the TAS Act, the Chair of the Board will be
required to prepare an annual report on the operation of the Board
to be given to the Minister for presentation to the Parliament.
The Bill provides for modified reporting requirements in the first
year of the Board's operation.
239. If commencement occurs during the last three months of a financial
year (normally April, May or June), then, despite section 60-130,
the Chair is not required to prepare a report for that financial
year. Instead, the operation of the Board during the period from
commencement to the end of that financial year will be documented
in the annual report for the next financial year. [Schedule 2,
item 22]
240. The preparation of an annual report is an important duty of the
Board as it allows timely disclosure of information about the
annual operation of the Board (and thereby enhances transparency
and accountability). The modified reporting requirements provided
in the Bill balance the value of timely disclosure with the
competing priorities and significant workload that the Board will
have during the first months following commencement.
Publication of information on the Internet
241. Section 60-135 of the TAS Act requires the Board to establish and
maintain a register on the Internet of registered tax agents and
BAS agents and entities that were previously a registered tax agent
or BAS agent but whose registration was terminated (other than
because they surrendered their registration or because of a reason
prescribed in regulations).
242. The requirements of section 60-135 apply in relation to an entity
if:
. the entity was a registered tax agent or registered
nominee within the meaning of the current law; and
. in the period of 12 months before the commencement time,
the entity's registration was cancelled under section 251K
or 251KE of the current law (which outlines the reasons
for cancellation or suspension of a tax agent's
registration and the reasons for cancellation of
registration of a nominee), other than because they
permanently ceased to carry on a business as a registered
tax agent (as provided in paragraphs 251K(3C)(b) and
251K(4)(c) of the current law).
[Schedule 2, item 23]
243. Consistent with the TAS Act, this provision will facilitate
compliance with the civil penalty for employing or using the
services of a deregistered entity - refer to the explanatory
memorandum to the Tax Agent Services Bill 2008 and to paragraphs
4.39 to 4.41.
Custody of Tax Agents' Boards' records and certain records in the
custody of the Commissioner of Taxation
244. The records and documents that are in the custody of a state Board
immediately before commencement or that relate to the activities of
a state Board but are in the custody of the Commissioner before
commencement must be transferred into the custody of the Board as
soon as practicable after commencement. [Schedule 2, item 24]
245. This provision allows the Board to continue investigations under
the new law in relation to inquiries that have reached the 'show
cause notice' stage. The transfer of records will also give the
Board access to information relating to pre-commencement conduct of
registered tax agents, nominees or persons exempt from
registration.
Regulations
246. The Governor-General may make regulations prescribing matters
required or permitted by Schedule 2 to the Bill to be prescribed or
necessary or convenient to be prescribed for carrying out or giving
effect to Schedule 2 to the Bill. For example, regulations may be
made in connection with the transfer of any records or documents of
a state Board to the Board to ensure that the state Boards are able
to transfer information and records held by them to the Board on
commencement without being subject to objection from other parties.
[Schedule 2, subitem 26(1)]
247. In particular, regulations may be made prescribing matters of a
transitional nature, including saving provisions and application
provisions, relating to the amendments or repeals made by Schedule
1 to the Bill. [Schedule 2, subitem 26(2)]
248. The general regulation-making power described in paragraph 4.55 is
not limited by the particular regulations provided for and
explained in paragraph 4.56. [Schedule 2, subitem 26(3)]
249. It is appropriate for certain matters to be dealt with by
regulations rather than in the Bill itself because they are matters
of technical or procedural detail which support the provisions in
the Bill and do not themselves impose obligations on entities or
impact significantly on individuals' rights and liberties.
Index
Schedule 1: Amendments
|Bill reference |Paragraph |
| |number |
|Item 1, section 195-1 of the A New Tax |1.8 |
|System (Goods and Services Tax) Act 1999 | |
|Item 2, paragraph 766B(5)(c) of the |1.9 |
|Corporations Act 2001 | |
|Item 3, Part IX of the Fringe Benefits Tax |1.11 |
|Assessment Act 1986 | |
|Item 4, subsection 136(1) of the Fringe |1.12 |
|Benefits Tax Assessment Act 1986 | |
|Item 5, subsection 6(1) of the ITAA 1936 |1.13 |
|Item 6, paragraph 16(4)(b) of the ITAA 1936 |1.14 |
|Item 7, Part VIIA of the ITAA 1936 |1.17 |
|Item 8, section 214-185 of the ITAA 1997 |1.18 |
|Item 9, definition of 'recognised tax |1.19 |
|adviser' in subsection 995-1(1) of the ITAA | |
|1997 | |
|Item 10, definition of 'registered tax |1.21 |
|agent' in subsection 995-1(1) of the ITAA | |
|1997 | |
|Item 11, subsection 995-1(1) of the ITAA |1.20 |
|1997 | |
|Item 12, at the end of the definition of |1.22 |
|'taxation law' in subsection 995-1(1) of the| |
|ITAA 1997 | |
|Item 13, section 214-130 of the Income Tax |1.23 |
|(Transitional Provisions) Act 1997 | |
|Item 14, subsection 2(1) of the TAA 1953 |1.26 |
|Item 15, subsection 3B(1C) of the TAA 1953 |1.43 |
|Item 16, subsection 3C(1AB) of the TAA 1953 |1.45 |
|Item 17, paragraph 8AAZLH(2A)(b) of the |1.25 |
|TAA 1953 and item 19, subsection 8J(2A) of | |
|the TAA 1953 | |
|Item 18, section 8AC of the TAA 1953 |1.29 |
|Item 20, subsection 15(3) of the TAA 1953 |1.36 |
|Item 21, subsection 15A(12) of the TAA 1953 |1.39 |
|Item 22, subsection 255-1(2) of Schedule 1 |1.47 |
|to the TAA 1953 and item 25, section 298-80 | |
|of Schedule 1 to the TAA 1953 | |
|Item 23, subsections 284-75(1A) and (1B) of |2.22 |
|Schedule 1 to the TAA 1953 | |
|Item 24, subsections 286-75(1A) and (1B) of |2.24 |
|Schedule 1 to the TAA 1953 | |
|Subitem 26(1) |2.23 |
|Subitem 26(2) |2.28 |
|Item 27, paragraph 20-5(4)(a) of the TAS Act|1.48 |
|Item 28, subparagraphs 50-30(1)(c)(iii) and |1.49 |
|(2)(c)(iii) of the TAS Act | |
|Item 29, subsection 70-40(1) of the TAS Act |1.50 |
|Item 30, subsection 70-40(2) of the TAS Act |1.51 |
Schedule 2: Transitional provisions
|Bill reference |Paragraph |
| |number |
|Subitem 1(1) |3.16, 3.17, |
| |3.19 |
|Subitems 1(2) and (3) |3.15 |
|Subitem 2(1) and item 3 |3.22, 3.25 |
|Subitem 2(2) |3.28, 3.31 |
|Subitem 2(3) |3.32 |
|Subitem 4(1) |3.34 |
|Subitems 4(2), 5(3) and (4) |3.55 |
|Subitem 5(1) |3.41 |
|Subitem 5(2) |3.44 |
|Paragraphs 6(1)(a) to (c) and 7(1)(a) to (c)|3.59 |
|Paragraphs 6(1)(c), 7(1)(c), 8(1)(c) and |3.62 |
|9(1)(c) | |
|Paragraphs 6(1)(d), 7(1)(d), 8(1)(d) and |3.63 |
|9(1)(d) and subitems 6(3), 7(3), 8(3) and | |
|9(3) | |
|Paragraphs 6(1)(e), 7(1)(e), 8(1)(e) and |3.65 |
|9(1)(e) | |
|Subitems 6(2), 7(2), 8(2) and 9(2) |3.67 |
|Subitems 7(4) and 9(4) |3.68 |
|Subitems 7(5) and 9(5) |3.70 |
|Paragraphs 7(5)(d) and 9(5)(d) |3.71 |
|Paragraphs 7(5)(e) and 9(5)(e) |3.72, 3.73 |
|Paragraphs 8(1)(a) to (c) and 9(1)(a) to (c)|3.61 |
|Subitems 10(1) and (2) |3.77 |
|Paragraphs 10(3)(a) to (e) |3.80 |
|Paragraph 10(3)(f) and subitem 10(4) |3.81 |
|Item 11 |3.101 |
|Subitems 12(1) and (3) |3.82 |
|Subitems 12(2) and (4) |3.83 |
|Subitem 13(1) |3.90 |
|Subitem 13(2) |3.92 |
|Item 14 |3.95 |
|Subitem 14(2) |3.99 |
|Subitems 15(1) and (3) |4.12 |
|Subitem 15(2) |4.14 |
|Subitem 15(4) |4.15 |
|Subitem 16(1) |4.16 |
|Subitems 16(2) and (3) |4.17 |
|Paragraph 17(1)(a) |4.18 |
|Paragraph 17(1)(b) |4.20 |
|Paragraph 17(1)(c) |4.24 |
|Subitem 17(2) |4.25 |
|Subitem 17(3) |4.22 |
|Subitem 17(4) |4.28 |
|Subitem 17(5) |4.19 |
|Paragraph 18(1)(a) |4.42 |
|Paragraphs 18(1)(b) to (h) |4.44 |
|Subitem 18(2) |4.46 |
|Subparagraphs 18(2)(a)(i) and (ii) and |3.57 |
|18(2)(b)(i) and (ii) | |
|Item 19 |4.36 |
|Item 20 |4.38 |
|Subitem 21(1) |4.40 |
|Subitem 21(2) |4.41 |
|Item 22 |4.48 |
|Item 23 |4.51 |
|Item 24 |4.53 |
|Item 25 |3.49 |
|Subitem 26(1) |4.55 |
|Subitem 26(2) |4.56 |
|Subitem 26(3) |4.57 |
-----------------------
2 years
5 years
Entity transitions as BAS agent under item 5
After applying for re-registration under item 14, registration is granted
for the three year minimum
Entity's registration lapses and must satisfy all requirements for renewal