The Tax Practitioners Board assuages fears over disclosure obligations under tax code changes

When pressed on the disclosure requirements, Jeanette Lu, TPB Assistant Secretary, clarified that practitioners are not required to disclose personal information, such as mental health issues, to clients. "You don't need to disclose that your spouse might be having a medical issue,” she said. “And in fact, you don't even need to disclose that in relation to yourself as the tax practitioner.”

But she advised tax practitioners to disclose to clients whether they could meet their requirements. "What this obligation does is actually protect you and your practice," Lu said.

Earlier this month, small accounting firms were given a reprieve by the Federal Government. Assistant Treasurer Stephen Jones announced accounting firms with less than 100 employees will have until 1 July 2025 to adhere to the new obligations, while larger firms have until January 1, 2025.

During the webinar, TPB chairman Peter de Cure said the changes would help maintain public trust in the tax system. "These new obligations are about ensuring the highest standards of integrity and transparency in our profession," de Cure said. "We're asking practitioners to be more vigilant, more proactive, and more accountable in their dealings with both clients and government agencies."

The TPB is conducting a public consultation process on the new guidelines and encouraged practitioners to participate to help “inform the revisions that we make”.

Addressing concerns about falling short of the new obligations, Lu said: "We have no intention of taking immediate action against tax practitioners who don't comply with these obligations, particularly for those who are genuinely trying to comply.”

TPB policy and legislation director Tariq Kuma added that “new obligations in the code determination are very much consistent with the existing code principles". He said the size of a business was an important factor that the TPB would consider given small businesses have less sophisticated systems for compliance.

Ethical obligations and reporting false statements

The code changes aimed at closing regulatory gaps include prohibitions around false and misleading statements. They also cover obligations for practitioners to disclose significant matters relating to clients such as tax offences or previous convictions.

De Cure said: "We're now placing a clear obligation on practitioners to act when they become aware of false statements. This isn't about betraying client confidentiality; it's about upholding the integrity of our tax system."

He acknowledged the difficulty practitioners faced in balancing client relationships with their duty. "We understand this may create some uncomfortable situations for practitioners,” he said. “But we have to ask ourselves: do we really want to be representing clients who are determined to make false statements? This is about maintaining the ethical standards of our profession."

Disclosure for “material” conflict of interest

The new rules introduce more stringent requirements for managing conflicts of interest, particularly with government agencies. Practitioners must now take proactive steps to identify, document, and disclose any material conflicts of interest.

"We're not saying you can't have conflicts," de Cure said. "But you must be transparent about them and take active steps to mitigate their impact. This is especially crucial when working with government agencies, where the public interest is at stake."

The code requires practitioners to:

• Identify and document any material conflict of interest related to government activities.
• Disclose these conflicts to the relevant agency as soon as they become aware.
• Take reasonable steps to manage, mitigate, and where possible, avoid such conflicts.

De Cure stressed the importance of materiality in determining whether a conflict needs disclosure. "We're asking practitioners to use their professional judgment,” he said. “Consider whether the conflict could significantly influence your behavior or provide a substantial financial benefit. If in doubt, disclose."

Confidentiality: protecting sensitive information

Rules around confidentiality have been tightened, with practitioners prohibited from disclosing any information received from a government agency unless explicitly authorised or legally required.

"This is about protecting sensitive information and ensuring it's not used for personal or professional advantage," de Cure said. "We're asking practitioners to be extra vigilant about how they handle information obtained through government work."

The code outlines specific circumstances where disclosure is permitted, such as when the government agency has authorised it. De Cure said., "Always err on the side of caution. If you're planning to disclose information to a third party, inform the government agency and obtain their permission first."

The new confidentiality rules do not override legal professional privilege. De Cure encouraged practitioners with any queries to seek legal advice or consult with the TPB.

Implementation and compliance

The TPB is releasing guidance in tranches, with the first covering false and misleading statements, conflicts of interest, and maintaining confidentiality already out for public consultation. Subsequent releases will address record-keeping, competence, quality management systems, and client communication requirements.

De Cure encouraged practitioners to participate in the consultation process. "Your feedback is crucial. We need to ensure these new rules are workable in practice, not just in theory."

IPA's Submission 'Tax Agent Services (Code of Professional Conduct) Determination 2024