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At the date of this article some significant changes have recently been made to the Tax Agent Services Act (TASA).  The Tax Practitioners Board (TPB) has also released two draft information papers in relation to these changes.  These are TPB(I) D51/2023 and TPB(I) D52/2023.


Further, there are proposed amendments to the laws governing tax agents that have been introduced to federal parliament.  These changes are in the Treasury Laws Amendment (Tax Accountability and Fairness) Bill.  This Bill has not yet passed parliament. 


In addition, a draft legislative instrument has been released called the Tax Agent Services (Code of Professional Conduct) Determination 2023.  When in force, these additions to the regulations to TASA will be part of the Code of Professional Conduct.


The purpose of this article is to respond to a number of issues that tax practitioners have raised with me concerning these changes.  I hasten to add that this law is very new and untested in practice.  These are my views of the implications of this new law as raised by these practitioner questions.  In time, with the benefit of hindsight, some of these views may turn out to be incorrect.


Is there a form now available on the TPB website for application for a disqualified entity to be employed/engaged by a tax practitioner?  Yes.  It can be accessed through the tax practitioner’s portal on the TPB website.


In relation to the disqualified entity changes, has the TPB released any guidance on engaging offshore employees or contractors?  There is little guidance on this issue.  However, there is a reference to “remote supervisory arrangements” in paragraph 14 of TPB(I) D51/2023.  This links to TPB(I) 36/2021 Supervisory arrangements under the Tax Agent Services Act.  The TPB clearly considers such arrangements to come within the scope of Code Item 15. 


On the assumption the offshore entity has never been a registered tax or BAS agent or is out of the “reach” of the TPB, there appears to be possibly only one event that could result in an offshore entity being considered to be a disqualified entity.  This is where the entity has been convicted of an offence involving fraud or dishonesty.  The TPB says that the phrase “offence involving fraud or dishonesty” takes its ordinary meaning and is determined by reference to community standards.  It does not specify that this means an Australian community.  Accordingly, this event appears not to have an Australian territorial limitation as what appears to be the case with all of the other events that cause an entity to be a disqualified entity.


The TPB needs to give much fuller guidance on this issue.  In the meantime, I would err on the side of caution and require contracting parties and offshore parties to confirm that they are not disqualified entities and to also enter into contracts that enable the tax practitioner to terminate a contract if an entity (whoever they are) becomes a disqualified entity.  The contract should also require the contracting party to advise the tax practitioner that they have become a disqualified entity.


I would also consider TPB(PN) 2/2018, which is on the topic of outsourcing and offshoring of tax services.


Do you take an entity’s response about being a disqualified entity at face value?  In summary, yes.  This is provided the tax practitioner has made all of the enquiries that the TPB says are now required.  These are [1] visiting the TPB tax agent’s register [2] undertaking proof of identity checks [3] requiring the entity to be engaged to positively confirm they are not a disqualified entity [4] having a contract that enables a tax practitioner to immediately cease engagement with an entity if the entity becomes a disqualified entity [5] having a contract that puts an obligation on disqualified entities to disclose that they have become a disqualified entity to the tax practitioner [6] keeping appropriate file notes of any conversation with an entity about their disqualified entity status.


Is the TPB, in conjunction with the accounting bodies, going to publish a list of disqualified entities?  No, I don’t think this is going to happen.  The closest you will get to this is the information on the TPB tax agent register.


Is the consideration of a disqualified entity only if they have been disqualified on or after 1 January 2024?  No.  You must consider whether in the last 5 years an entity has had a disqualifying event apply to them.  So, if you are in January 2024 considering the engagement of an entity, you must look back to January 2019.


If an entity is a currently registered tax agent or BAS agent, can they be a disqualified entity?  No. 


If someone applies to be a tax agent but are denied on the basis that they have an outstanding tax debt, does that make them a disqualified entity?  Yes.  However, note, if registration is denied because the person fails to meet the qualifications or relevant experience requirements, this will mean the entity is not a disqualified person.


Where is the register of tax agents located?  This is located at Public Register | Tax Practitioners Board (


What is the responsibility on a tax practitioner if a client of the tax practitioner engages a disqualified entity to produce information to be used by the tax practitioner?  This is a difficult question because I am not sure that the TPB thinks new Code Items 15 and 16 apply to this situation.  The issue is whether the tax practitioner is providing a tax agent service in connection with an arrangement with an entity that you know, or ought reasonably to know, is a disqualified entity (Code Item 16).  This is very likely to be the case, even if the client has engaged the entity.  This is due to the very broad definition of “arrangement”.


The TPB does not consider this type of arrangement in TRPB(I) D52/2023.  The TPB seems to think that Code Item 16 is about the situation where a disqualified entity runs a tax practice through a properly registered tax practitioner.  In my view, the wording of Code Item 16 is much wider than that.


Would a tax practitioner need to get confirmation from tax training providers that they are not a disqualified entity?  I think not.  This is because the tax agent services being provided by the tax practitioner are not in connection with the tax training provider.  (Disclosure – I provide tax training services).


The TPB has given strong recommendations that tax practitioners take legal advice on the employment law issues related to the changes in contracts required by the TPB.  Should not the TPB provide guidance on this from an employment law perspective?  It’s a good thought, and would be helpful, but the TPB would not be permitted by law to do this.  The TPB would also see itself as unqualified to produce such information.


Is it the case that people employed by a tax practitioner must be questioned as to whether they are disqualified entities even though they are not tax practitioners?  Yes.  That is the clear intention of Code Item 15.  Every time a new employment contract is entered into or renewed, the person being employed is required to confirm that they are not a disqualified entity.


Do remote supervisory arrangement entities get penalised if they do not disclose they are disqualified entities?  If the remote arrangement is in an offshore location, there will be a jurisdictional problem with fining such entities in Australia.  However, the tax practitioner in Australia would be required to cease using those services if the offshore entity did come within the definition of a disqualified entity.


What is the position in relation to auditors of SMSFs with regard to the disqualified entity status?  I will start from the position that I do not consider an audit opinion of a SMSF is a tax agent service.  However, the tax practitioner that engages the auditor clearly is providing a tax agent service.  This issue then becomes whether the tax agent services of the tax practitioner are provided in connection with an arrangement with the auditor.  The answer to this is very likely to be “yes”.  However, as I said before, the TPB seems to think Code Item 16 is for dealing with the “tame agent” scenario whereby a disqualified entity uses the resources of a registered tax agent to run the disqualified entity’s business.


Until the TPB clarifies this situation, I would err on the side of caution and get SMSF auditors to confirm that they are not disqualified entities.


Can a client be a disqualified entity?  Yes, that is possible.  They could be, for example, an undischarged bankrupt or in external administration.  The issue is whether the tax agent services being provided to this client breach Code Item 16 if the client is a disqualified entity.  In my view, in the plain words of Code item 16, it is a breach of this item if tax services are provided to a disqualified entity.  This is due to the very broad definition of “arrangement”.  However, I am quite sure that this is not the intention of the law.  This matter needs to be clarified by the TPB urgently.


What needs to be done in relation to proof of identity checks?  I would follow the guidelines in TPB(PN) 5/2022 Proof of identity requirements for client verification.


What is the position when tax agents use quantity surveyors?  Quantity surveyors are required to be registered tax agents.  If a quantity surveyor is a registered tax agent, then it cannot be, by definition, a disqualified entity – however, it can become one, given certain events.  Tax practitioners should create contracts with quantity surveyors that enable immediate termination of the contract should the quantity surveyor become a disqualified entity.  It should also require the quantity surveyor to inform the tax practitioner should it become a disqualified entity.


What is the position with financial advisers?  These people are known as “qualified tax relevant providers”.  These people are controlled through the Corporations Act and not TASA.  These people can become disqualified entities in certain circumstances.  Presumably the Corporations Act (through ASIC) has ways of dealing with poor behaviour by such people.  I am not expert in this.


Once a person is a disqualified entity, do they always remain so?  No.  There is a 5 year time limit on events that can cause an entity to be disqualified.  That is, if no event causing disqualification has occurred within the last 5 years, the entity is not a disqualified entity.


Do software providers need to be asked whether they are disqualified entities and appropriate contracts entered into with these companies?  I am reasonably certain that the changes to TASA are not supposed to apply to software houses.  However, I cannot escape the conclusion that Code Item 16 can apply to these arrangements.  Is the tax practitioner providing tax agent services in connection with an arrangement with the software producer?  The answer has to be “yes” unless you are going to substantially “read down” the meaning of those words.  Again, the TPB needs to give clarification and make it plain that software providers cannot be within the disqualified entity definition (at least from the point of view of the TPB).


What happens in the situation where an employee is a registered tax agent and is employed by another entity in a tax practice?  If the entity has a tax agent registration (apart from the employee’s registration) there is no issue.  One registered tax agent can employee another person with a tax agent registration. A registered tax agent cannot be a disqualified entity. 


If the entity uses the employee’s tax agent registration to lodge its tax returns, further questions will need to be asked.  If the entity is not a registered tax agent and is using the services of an employee who is a registered tax agent to lodge the entity’s tax returns, there is a problem.  The problem is not due, necessarily, to the disqualified entity provisions.


If the entity is providing tax agent services and is not a registered tax agent, this is prohibited by TASA (see s.50-5).  Further, if the entity is a “disqualified entity”, this will also be prohibited by Code Item 16.


If I am a recently retired tax practitioner and I am no longer a registered tax agent, does that mean I have become a disqualified entity?  No, not solely because of those circumstances.  The mere lapsing of your tax agent registration does not mean you become a disqualified entity.


Do we all need to report PwC for their recent misconduct?  This question is a little “tongue in cheek”.  However, from 1 July 2024, when the “significant breach” notification provisions come into operation, it is not an entirely silly question.  Just ignoring PwC for a moment, it will be the case that tax practitioners will be under a requirement from TASA to report another tax practitioner where there are reasonable grounds to believe the other tax practitioner has breached the Code of Professional Conduct and the breach is a “significant breach”. 


When combined with the requirement to “work collectively with other registered tax agents and BAS agents” to “take reasonable steps to hold each other accountable for compliance with the Code…” it will be seen that there is a strong obligation that will be placed on tax practitioners to report issues to the TPB.  The requirement that I have just quoted comes from the proposed legislative instrument that will very likely come into effect in a few months.  This is the (exposure draft) Tax Agent Services (Code of Professional Conduct) Determination 2023.


When one tax practitioner (the first practitioner) finds an error or problem with another tax practitioner’s work, is there an obligation on the first practitioner to contact the other practitioner?  At present, I would say that strictly the answer is “no”.  However, the soon to be required part of the Code of Professional Conduct that I have just quoted to hold each other accountable, might be interpreted as requiring this.  The TPB will need to clarify this.


What happens if a client does not want you to report another tax practitioner for misconduct?  There is still an obligation to report.  There is no contemplation in the law of client wishes or confidentiality.


If you report a tax practitioner to the TPB, could you be disclosing confidential information illegally?  This is a valid question.  I predict the TPB will design a form that enables a significant breach to be reported (perhaps in general terms) and that discourages you from disclosing confidential information.  Then, when the TPB investigates the issue, it will use its own information gathering powers under TASA to find out all of the necessary information.  I note in this regard that the whistleblower protections that are proposed for disclosures to the TPB will be of limited use.


With regard to the reporting of significant breaches of the Code of Professional Conduct, will that include breaches that occurred prior to 1 July 2024?  The answer is “yes” according to my reading of the provisions.  However, the obligation to report does not occur until 1 July 2024.  There is nothing in new s.30-40 that relates to the time at which the significant breach occurred or is thought to have occurred.  The timing issue only relates to the commencement of the provision and the obligation to report.


Closing comments


These changes raise many unresolved issues.  I trust the TPB will continue to inform tax practitioners of its views as to how the new law will operate.  Much of the practical impact of these changes on tax practitioners will be determined by what the TPB thinks these changes mean.  I sincerely hope the TPB will produce numerous examples of what they expect in a variety of fact scenarios.


The above is not intended to be advice.  This article is simply my view of how the new law operates at this point in time.  Where these issues apply to your situation, I encourage you to take advice from an appropriately qualified person.



John Jeffreys


John Jeffreys Tax Pty Ltd

18 January 2024