The Tax Practitioners Board (TPB) recently hosted a webinar dealing with whistleblowing and confidentiality within the tax practitioner industry. The webinar — you can view a recording below (one hour CPD value) — explained a practitioner’s obligations in relation to confidentiality when making disclosures, situations that qualify for whistleblower protection and other options.
The new arrangements to protect individuals who disclose information on tax avoidance behaviour came into effect on 1 July this year.
While the webinar was being held, as well as immediately after, the TPB received many questions from participants regarding further aspects of the whistleblower regulations, eligibility for recipients of protection as well as other practical issues around the disclosure of information.
In the interests of tax agents and other practitioners generally, some of the more pertinent questions, along with the TPB’s answers, are reproduced below.
Whistleblowing and confidentiality: Q&A
I’m a tax agent and my client ignores my advice to act lawfully and instructs me to stop work. The client then engages a new tax agent. What can I do to inform the new tax agent?
You cannot disclose any information to the new tax agent. It will be for the new tax agent to ascertain whether the deductions claimed are lawful. You are, however, able to advise the ATO because you had a previous relationship with the client and may be eligible for whistleblower protections. This will not contravene the Code of Professional Conduct, in particular Code item 6, which relates to confidentiality of client information.
To reduce their taxable income, a client has instructed me to claim deductions that I know they are not legally entitled to. What action do I have to take under the code?
You should explain to the client what their legal obligations are and if this does not resolve the issue, we suggest you decline the engagement of that client. If you think the client may be acting illegally (from a tax perspective), you do not have an obligation to notify the ATO, however you may wish to “blow the whistle” to an eligible recipient, such as the ATO.
Is it ok to get a client’s approval to disclose information by giving them a phone call?
It is recommended that consent be in writing.
How do things work within a practice when an employee of a client discloses to their tax practitioner? Is the practitioner allowed to speak to employees involved in doing the work for that client?
It is illegal for anyone to disclose the identity of the eligible whistleblower or any information that is likely to lead to their identification. Only the eligible whistleblower themselves can consent to sharing their identity. You are required to take all reasonable steps to reduce the risk that the eligible whistleblower’s identity will be revealed.
If a tax agent has a confidentiality clause with a client, would they be indemnified against any action taken by the client relating to a breach of confidentiality or contract?
Whistleblowers are not subject to civil, criminal or administrative liability for making a disclosure and an entity cannot be sued for a breach of a confidentiality clause in a contract.
Given the TPB is not an eligible recipient at the moment, how is it getting around receiving disclosures?
At the moment we are not allowed to receive information from an eligible whistleblower or eligible recipient, however we can receive disclosures if the whistleblower gives us consent. For example, if a whistleblower reports their tax practitioner to the ATO, we can only receive that information from the ATO if the whistleblower consents to it. Therefore, if you are providing information as an eligible whistleblower, please ensure that you advise the ATO that you give your consent for them to share the information with the TPB. We do hope that this will be a temporary workaround and through law changes, the TPB will be able to receive information directly from an eligible whistleblower.
Is a tax agent still an eligible whistleblower when a potential client contacts you and their past tax returns were not done correctly, and the potential client wants to continue completing their returns using the same inappropriate methods?
As there is currently no relationship between the tax agent and the potential client the tax agent would not be considered an eligible whistleblower. Under the legislation, the tax agent must have provided a tax agent service to the entity to be considered an eligible whistleblower.
Are ASIC and APRA eligible recipients?
They are eligible recipients, but it is important to note these two agencies are eligible recipients for disclosures in relation to the Corporations Act 2001 not disclosures in relation to tax matters under the Taxation Administration Act 1953.
Is the State Revenue Office an eligible recipient?
The State Revenue Office is not an eligible recipient under the legislation (Taxation Administration Act 1953).
Does the whistleblower legislation cover behaviour that occurred before it was enacted?
Yes, the legislation can cover behaviour that took place before 1 July 2019.
Do tax practitioners have an obligation to notify the ATO if they are aware of someone doing the wrong thing?
A tax practitioner is not obligated to notify the ATO, but they will be protected under the whistleblower legislation if they do blow the whistle.
Do you have to take the information from the whistleblower? For example, if they say I have some information about a business, do you have to let it go further?
The new laws do not include mandatory reporting for tax practitioners.