The Australian Law Reform Commission recommended the creation of tax advice privilege in 2007 to protect advice given by independent professional accounting advisors from the “coercive information-gathering power” of the Commissioner of Taxation, according to an IPA statement.
The statement indicated a follow-up in 2011 saw the government produce a paper entitled Privilege in relation to tax advice but it has since made no recommendations.
IPA chief executive Andrew Conway said seven years of inaction since the Law Reform Commission’s recommendation is “unsatisfactory”.
“Consumers seeking independent and objective taxation advice must have access to legal protections and safeguards, whether they seek that advice from a lawyer or an accountant,” he said.
“Extending legal privilege would enable honest and open conversations between tax payers and their tax agents,” he added.
According to the IPA, the ATO currently has a non-statutory administrative arrangement that provides a narrow and restrictive form of legal protection which is “inadequate”.
“The IPA recommends a model to extend legal privilege to registered tax agents who are members of professional accounting associations,” said Mr Conway.
“These members are qualified accountants who have undertaken further studies, hold a practising certificate and are held to higher professional and ethical standards than non-members.”
Overseas precedent on extending legal privilege to accountants indicates Australia is out of step, according to the IPA.
“It is time for legal privilege to be extended to tax advice and bring Australia in line with other progressive industrialised nations such as the USA, UK,” he said.
