MODULE 1: LEGAL, ETHICAL AND REGULATORY
FUNDAMENTALS
TAX LAW ENVIRONMENT – PAGE 2
POWER TO RAISE PAGE 3
TAXES IN
AUSTRALIA
PROGRESS OF PAGE 4
TAXATION BILLS 1. Preparation of Bill. Proposals for tax legislation are considered by the prime minister and cabinet,
who initiate most proposed laws for debate in parliament. The Treasurer is the minister responsible
THROUGH for arranging the preparation of Bills relating to raising revenue. The Office of Parliamentary Counsel
PARLIAMENT drafts the Bill in accordance with instructions from Treasury.
2. First reading. The Bill is introduced to the House of Representatives with a first reading, where the
long
title is read out. Copies of the Bill and any explanatory memoranda are given to members of parliament
and made publicly available. The Treasurer will then move that the Bill be read a second time.
3. Second reading. The second reading speech explains the purpose and principles of the Bill. The
second
reading debate gives an opportunity for the opposition and other non-government members to speak
before voting on whether to agree to the Bill in principle. The Bill is then examined in detail, with the
opportunity for members to suggest amendments.
4. Third reading. The third reading is the final stage. If the Bill is likely to pass the House of
Representatives, then this is a mere formality. The second reading speech, any explanatory
memoranda and a record of any debate may provide assistance to the courts in determining the
meaning or intention of the Act (Acts Interpretation Act 1901 (Cwlth), s. 15AB).
5. Three readings in Senate. The Bill is then presented to the Senate, where it again has three readings.
However, the Senate has no power to amend the Bill, although it may request that the House of
Representatives make an amendment. If agreement cannot be reached with the House of
Representatives, the Bill is laid aside.
6. Royal assent. If the Bill passes both houses, it is then presented to the Governor-General for royal
assent, at which time it becomes an Act of parliament.
7. Commencement. An Act may specify the date of commencement but, if not, the default
commencement is the 28th day after receiving assent.
Retrorspective of Taxation Law – page 5
If a law doesn’t commence from the date of the announcement, but from a stated date in the Act,
which applies before the law receives assent, then it is said to apply retrospectively.
1
,TAXATION AND
ADMINISTRATIVE
LAW
ETHICAL PRINCIPLES AND BEHAVIOUR – page 11
ETHICAL APES 110 CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS – page 13
PRINCIPLES – Fundamental principles:
page 12 (a) Integrity — to be straightforward and honest in all professional and business relationships.
(b) Objectivity— not to compromise professional or business judgements because of bias, conflict of
interest or undue influence of others.
(c) Professional competence and duecare— to:
– attain and maintain professional knowledge and skill at the level required to ensure that a client or
employing organisation receives competent Professional Activities, based on current technical and
professional standards and relevant legislation; and
– act diligently and in accordance with applicable technical and professional standards.
(d) Confidentiality— to respect the confidentiality of information acquired as a result of professional
and business relationships.
(e) Professional behaviour — to comply with relevant laws and regulations and avoid any conduct
that the Member knows or should know might discredit the profession (APES 110 Code of Ethics for
Professional Accountants (including Independence Standards)
FUNDAMENTAL THREATS
NOCLAR STANDARD: Accountant can set aside Confidentiality of APES 110
Under NOCLAR, accountants are now able to set aside the APES 110 fundamental principle of
confidentiality when it is in the public interest to report non-compliance with laws and regulations,
and where the conditions for reporting NOCLAR are met. First, the non-compliance must have a
direct and material effect on the financial statements of the client or employer. Second, if the non-
compliance is not qualitative, then the non-compliance must be fundamental to the business and its
operations. There needs to be credible evidence of serious negative consequences for employees,
creditors, investors or the general public in financial or non-financial terms.
When these conditions are met, the standard not only enables, but places a responsibility upon, all
professional accountants to disclose NOCLAR to public authorities. The NOCLAR standard came into
effect in Australia on 1 January 2018.
APES 220 TAXATION SERVICES
• fundamental responsibilities when the Member performs a Taxation Service for a Client or
Employer;
• preparation and lodgement of returns to Revenue Authorities [such as the ATO];
• association with tax schemes and arrangements;
• the use of estimates;
• false and misleading information;
• professional Engagement matters;
2
, • Client Monies;
• professional fees; and
• documentation
TAX PRACTITIONERS BOARD CODE OF PROFESSIONAL CONDUCT
1. Honesty and integrity
2. Independence
3. Confidentiality
4. Competence
5. Other responsibilities (TPB 2019a).
APPLYING THE CONCEPTUAL FRAMEWORK TO IDENTIFY ETHICAL DILEMMAS –
page 16
The following steps suggest an approach for conflict resolution.
1. Gather and record relevant facts.
2. Assess the ethical issues involved.
3. Decide if the issue is legal in nature.
4. Identify any fundamental principles that may be affected.
5. Identify any affected parties.
6. Consider possible courses of action.
7. If necessary, seek professional or legal advice.
8. Refuse to be associated with the conflict.
TAX PRACTITIONER OBLIGATIONS – page 19
TAX PAGE 19
PRACTITIONERS
BOARD
TAX AGENT LIST OF EXAMPLES OF TAX AGENT SERVICES – PAGE 21 TABLE 1.2
BAS AGENT LIST OF EXAMPLES OF TAX AGENT SERVICES – PAGE 23 TABLE 1.3
3
, TAX (FINANCIAL) Provide tax and financial advise. Must hold AFS licence and register with TPB
ADVISER Page 24-25
TAX PRACTITIONERS BOARD CODE OF PROFESSIONAL CONDUCT – page
26
TAX PLANNING, AVOIDANCE AND EVASION – page 29
DISTINGUISHING
BETWEEN TERMS
4
FUNDAMENTALS
TAX LAW ENVIRONMENT – PAGE 2
POWER TO RAISE PAGE 3
TAXES IN
AUSTRALIA
PROGRESS OF PAGE 4
TAXATION BILLS 1. Preparation of Bill. Proposals for tax legislation are considered by the prime minister and cabinet,
who initiate most proposed laws for debate in parliament. The Treasurer is the minister responsible
THROUGH for arranging the preparation of Bills relating to raising revenue. The Office of Parliamentary Counsel
PARLIAMENT drafts the Bill in accordance with instructions from Treasury.
2. First reading. The Bill is introduced to the House of Representatives with a first reading, where the
long
title is read out. Copies of the Bill and any explanatory memoranda are given to members of parliament
and made publicly available. The Treasurer will then move that the Bill be read a second time.
3. Second reading. The second reading speech explains the purpose and principles of the Bill. The
second
reading debate gives an opportunity for the opposition and other non-government members to speak
before voting on whether to agree to the Bill in principle. The Bill is then examined in detail, with the
opportunity for members to suggest amendments.
4. Third reading. The third reading is the final stage. If the Bill is likely to pass the House of
Representatives, then this is a mere formality. The second reading speech, any explanatory
memoranda and a record of any debate may provide assistance to the courts in determining the
meaning or intention of the Act (Acts Interpretation Act 1901 (Cwlth), s. 15AB).
5. Three readings in Senate. The Bill is then presented to the Senate, where it again has three readings.
However, the Senate has no power to amend the Bill, although it may request that the House of
Representatives make an amendment. If agreement cannot be reached with the House of
Representatives, the Bill is laid aside.
6. Royal assent. If the Bill passes both houses, it is then presented to the Governor-General for royal
assent, at which time it becomes an Act of parliament.
7. Commencement. An Act may specify the date of commencement but, if not, the default
commencement is the 28th day after receiving assent.
Retrorspective of Taxation Law – page 5
If a law doesn’t commence from the date of the announcement, but from a stated date in the Act,
which applies before the law receives assent, then it is said to apply retrospectively.
1
,TAXATION AND
ADMINISTRATIVE
LAW
ETHICAL PRINCIPLES AND BEHAVIOUR – page 11
ETHICAL APES 110 CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS – page 13
PRINCIPLES – Fundamental principles:
page 12 (a) Integrity — to be straightforward and honest in all professional and business relationships.
(b) Objectivity— not to compromise professional or business judgements because of bias, conflict of
interest or undue influence of others.
(c) Professional competence and duecare— to:
– attain and maintain professional knowledge and skill at the level required to ensure that a client or
employing organisation receives competent Professional Activities, based on current technical and
professional standards and relevant legislation; and
– act diligently and in accordance with applicable technical and professional standards.
(d) Confidentiality— to respect the confidentiality of information acquired as a result of professional
and business relationships.
(e) Professional behaviour — to comply with relevant laws and regulations and avoid any conduct
that the Member knows or should know might discredit the profession (APES 110 Code of Ethics for
Professional Accountants (including Independence Standards)
FUNDAMENTAL THREATS
NOCLAR STANDARD: Accountant can set aside Confidentiality of APES 110
Under NOCLAR, accountants are now able to set aside the APES 110 fundamental principle of
confidentiality when it is in the public interest to report non-compliance with laws and regulations,
and where the conditions for reporting NOCLAR are met. First, the non-compliance must have a
direct and material effect on the financial statements of the client or employer. Second, if the non-
compliance is not qualitative, then the non-compliance must be fundamental to the business and its
operations. There needs to be credible evidence of serious negative consequences for employees,
creditors, investors or the general public in financial or non-financial terms.
When these conditions are met, the standard not only enables, but places a responsibility upon, all
professional accountants to disclose NOCLAR to public authorities. The NOCLAR standard came into
effect in Australia on 1 January 2018.
APES 220 TAXATION SERVICES
• fundamental responsibilities when the Member performs a Taxation Service for a Client or
Employer;
• preparation and lodgement of returns to Revenue Authorities [such as the ATO];
• association with tax schemes and arrangements;
• the use of estimates;
• false and misleading information;
• professional Engagement matters;
2
, • Client Monies;
• professional fees; and
• documentation
TAX PRACTITIONERS BOARD CODE OF PROFESSIONAL CONDUCT
1. Honesty and integrity
2. Independence
3. Confidentiality
4. Competence
5. Other responsibilities (TPB 2019a).
APPLYING THE CONCEPTUAL FRAMEWORK TO IDENTIFY ETHICAL DILEMMAS –
page 16
The following steps suggest an approach for conflict resolution.
1. Gather and record relevant facts.
2. Assess the ethical issues involved.
3. Decide if the issue is legal in nature.
4. Identify any fundamental principles that may be affected.
5. Identify any affected parties.
6. Consider possible courses of action.
7. If necessary, seek professional or legal advice.
8. Refuse to be associated with the conflict.
TAX PRACTITIONER OBLIGATIONS – page 19
TAX PAGE 19
PRACTITIONERS
BOARD
TAX AGENT LIST OF EXAMPLES OF TAX AGENT SERVICES – PAGE 21 TABLE 1.2
BAS AGENT LIST OF EXAMPLES OF TAX AGENT SERVICES – PAGE 23 TABLE 1.3
3
, TAX (FINANCIAL) Provide tax and financial advise. Must hold AFS licence and register with TPB
ADVISER Page 24-25
TAX PRACTITIONERS BOARD CODE OF PROFESSIONAL CONDUCT – page
26
TAX PLANNING, AVOIDANCE AND EVASION – page 29
DISTINGUISHING
BETWEEN TERMS
4
