Treasury mulls increased powers for TPB

Treasury is seeking feedback on draft legislation that would give the Tax Practitioners Board (TPB) stronger regulatory powers and enable greater sanctions.

The draft legislation proposes to introduce criminal penalties for unregistered tax return preparers; increase the maximum amounts for civil penalties; allow infringement notices for alleged breaches of some civil penalty provisions; enable enforceable voluntary undertakings; and allow contingent and interim suspensions of registration in certain circumstances.

It also seeks to introduce new civil penalties for breaches of the Code of Professional Conduct by registered tax practitioners and false or misleading statements by unregistered preparers.

Th consult also suggests extending the maximum period before a terminated practitioner can reapply for registration from five years to 10 years.

"The amendments implement a stronger compliance framework that more effectively penalises and deters inappropriate conduct by both registered tax practitioners and unregistered preparers," the exposure draft said.

"The reforms improve protections for taxpayers against tax agent misconduct, including poor and unlawful tax advice, and maintain community confidence in the integrity of the tax system."

The proposed five new criminal offenses for unregistered tax preparers include providing tax agent services for a fee; providing BAS services for a fee; advertising tax agent services; and advertising BAS services.

Maximum penalty unit amounts for breaches of civil penalty provisions would also be increased to 2500 penalty units for individuals (up from 250) and 50,000 penalty units for bodies corporate and significant global entities (up from 1250).

"Unregistered practitioners pose a heightened risk to the integrity of the tax system as they have not been approved by the TPB to provide tax or BAS agent services and may not meet the high professional and ethical standards that registered practitioners must abide by," the consultation said.

"Criminal offences are necessary and appropriate for punishing and deterring this higher risk conduct due to the availability of imprisonment terms for courts to impose on offenders in circumstances where monetary penalties may not be a sufficient penalty for the offending conduct in the most serious circumstances."

The consultation added that the 2023 PwC tax leaks scandal exposed limitations in the current regulatory framework for tax practitioners and the broader system in which they operate.

Following the scandal, the government announced a significant package of reforms to crack down on misconduct and rebuild confidence in the systems and structures that keep the tax system and capital markets strong. The current consultation forms part of those reforms.

"As part of the government's response to the PwC matter, the government consulted on proposed enhancements to the TPB's sanctions regime from December 2023 to January 2024," the consultation said.

"The government subsequently announced the reforms to the regime in the 2025-26 Budget as part of the Enhancing Tax Practitioner Regulation and Compliance receipt measure. The measure also implements recommendations of the 2019 review of the TPB."