A Coalition-led attempt to scrap new rules for tax agents narrowly failed in Parliament on Tuesday, after the government committed to working with accounting industry groups to soften some of its most controversial measures.
For months, tax industry bodies have vocally opposed a suite of new rules signed into effect by Assistant Treasurer Stephen Jones.
His determination, designed to crack down on tax agent misconduct in light of the PwC fiasco, strengthens the rules around the disclosure of false or misleading tax statements made by clients.
It also requires tax agents to tell clients about factors that may influence their decision to do business with them, and ramp up their record-keeping systems.
Industry groups argued those disclosure rules went too far beyond the profession’s existing Code of Conduct, and that they are too onerous for small accounting practices, which may not have the resources of Big Four consultancies.
The dispute came to a head yesterday, when the Senate voted on Liberal Senator Dean Smith’s proposal to disallow the Assistant Treasurer’s determination.
Senators split 31-31 on the motion, with Labor, the Greens, and independent Senator David Pocock among those voting against.
However, the deadlock was enough to scupper Senator Smith’s motion, meaning the determination stays in place.
Immediately before Tuesday’s vote, Labor Senator Anthony Chisholm told the Upper House the government had committed to further changes to the tax determination.
This included reworking new rules requiring tax agents to ‘dob in’ clients who make false or misleading statements, and reducing the number of factors tax agents must disclose to clients, in keeping with other requirements already written into law.
Advice based on those consultations will be finalised in October, Senator Chisholm said.
Independent Senator David Pocock, whose vote proved pivotal, said the government deserved another chance to negotiate in good faith with concerned industry groups.
“I believe the government should have the opportunity to deliver on this, [but] should they not, I’d be very happy to support a disallowance,” Senator Pocock said.
“But at this stage, I won’t be.”
Leading accounting and bookkeeping groups, including CPA Australia and Chartered Accountants ANZ had backed the disallowance motion pending further concessions from the government.
In a statement, a CPA Australia spokesperson said the groups engaged in further discussions with the Assistant Treasurer on Tuesday before the vote.
“Our meetings with the Assistant Treasurer and Treasury have been very constructive and many of our concerns are being addressed, including the sections of the Determination requiring tax agents to ’dob in’ their clients and to advise clients of irrelevant personal information,” they said.
“The Government committed to these changes during the discussion on the motion to disallow the Determination in the Senate.
“This is a significant step in the right direction.
“We thank the Assistant Treasurer’s staff and Treasury representatives for listening to the joint bodies’ reasonable concerns and acknowledging that our suggested changes were aligned with the intent of the government’s reforms.”
Describing the result as a “major advocacy win”, a Chartered Accountants ANZ spokesperson commended the Assistant Treasurer for his “willingness to make the changes to the Code to ensure it will now be clear, practical, and fair for the tax profession” and its clients.
CA ANZ also thanked Senator Smith and Shadow Minister for Financial Services Luke Howarth for standing behind the disallowance motion, which the accounting group said expedited discussions with the government.
Senator Howarth himself was less than enthused by the motion’s failure in the Senate.
Commitments to further changes are “too little, too late,” he said on social media.
“These regulations are defective, poorly drafted and completely unnecessary.”
The Assistant Treasurer has now “repeatedly backflipped and admitted changes are required – with multiple embarrassing mea culpas and backdowns,” he continued.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
