Tax agents have to act in the client’s ‘best interests’: s 30-10 TASA But what does that mean? What about a ‘conflict of interest’? Can you break the law to protect the client? The Tax Practitioners Board (TPB) expresses its views in Information Sheets. Legal Consolidated has summarised the TPB’s view below:
- TPB(I) 27/2016: Acting lawfully in your client’s best interests – Tax (financial) advisers must act ‘lawfully’ in the best interests of their client (Code item 4). This is to be of the upmost good faith. However, this is only to the extent that your actions are consistent with the law. So, ‘acting in your client’s best interests’ can’t justifying you contravening or disregarding the law. You must act within the law even if this harms or is not in your client’s best interest.
- TPB(I) 28/2016: Only ‘Reasonable’ to know your client – Registered tax (financial) advisers and tax agents must ‘know their client’. But how far must you go. TPB states that you must take ‘reasonable care’ to ascertain your client’s state of affairs. This is to the extent of ascertaining the state of those affairs as is relevant to the statement or advice you give: Code item 9. Do you have to be perfect? No, the care taken need not be perfect or to the highest level of care possible. Instead, the TPB uses the ‘negligence’ test used in Donoghue v Stevenson  UKHL 100. The standard requires you to only act in a way consistent with how a competent and reasonable person, possessing the knowledge, skills, qualifications and experience of a registered tax (financial) adviser, objectively determined, would act in the circumstances. This means you need to exercise sound judgment in applying your professional knowledge and skill in the performance of such a service.
- TPB(I) 29/2016: Reasonable care to ensure taxation laws are applied – You must take ‘reasonable care’ that taxation laws are applied correctly. But only in the circumstances for which advice is provided: Code item 10. What is ‘reasonable care’? It involves giving appropriate attention under a taxation law to a standard expected of a ‘reasonable person’, objectively determined. This involves you exercising your own professional skills and judgment.
- TPB(I) 30/2016: Dealing with conflict of interest – You must have a system to identify and manage conflicts of interest: Code item 5. When does a conflict arise? It is a question of fact having regard to the particular circumstances of the matter in question. In other words, you have to consider every situation on its own merits.
What if you breach the Code? The TPB has a number of levels of punishment:
- a written caution
- an order requiring you to do something
- suspension of your registration (for a set period)
- termination your registration (gone forever)