TPB Guide on Conflicts of Interest
The Tax Practitioners Board (TPB) has released an information sheet (TPB(I) 19/2014), which provides guidance for registered agents on managing conflicts of interest, which is one of the requirements under Code item 5 of the Code of Professional Conduct (Code), as contained in the TASA. It details the principles, provides practical examples and outlines consequences for failing to comply with this particular Code item.
The following are excerpts from two of the four examples contained in the information sheet.
Example 1 – Marital break-up
Terrence and Sandra have recently divorced. They have used the same registered tax agent, Craig, for the past seven years.
In preparing their respective income tax returns for the current financial year, it becomes apparent to Craig that claiming a rebate or offset by Terrence would prevent Sandra from claiming it.
Conflict of interest
Craig has a conflict of interest if he acts for both Terrence and Sandra because they have competing interests in relation to the claim for a rebate or offset.
Managing the conflict of interest
In applying his professional judgment, Craig determines that the rebate or offset is more properly claimable by Terrence. However, Craig also identifies that he is in a position wherein his duty to Sandra is in conflict with his duty to Terrence.
Craig appropriately discloses his conflict of interest to Terrence and Sandra and receives a waiver from both parties in relation to the conflict. In this case, Craig has satisfied his obligations under Code item 5 by appropriately disclosing his conflict of interest and obtaining a waiver from Terrence and Sandra prior to preparing their respective income tax returns.
Note: If Craig was not able to obtain the waiver from both Terrence and Sandra, he should consider declining to act for one or both of them.
Example 2 – Registered agent has a personal interest
Anthony is a long time client of Lucia’s, a registered BAS agent. Anthony asks Lucia to assist him to identify an appropriately qualified tax agent to provide advice in relation to his self managed superannuation fund.
Lucia is aware of a number of suitable registered tax agents but refers Anthony to Nathan Accounting Pty Ltd because she receives a commission for the referral from this firm.
Conflict of interest
Lucia has a financial incentive in referring Anthony to Nathan Accounting Pty Ltd as opposed to another registered tax agent and, therefore, has a conflict of interest in the circumstances.
Managing the conflict of interest
Lucia appropriately discloses her conflict to Anthony by advising him that she will receive a commission if he engages the services of Nathan Accounting Pty Ltd. In this case, Lucia has satisfied her obligations under Code item 5 by disclosing her conflict of interest to Anthony when referring him to Nathan Accounting Pty Ltd.
Ref: TPB Media Release 24 January 2014
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