The Tax Practitioners Board (TPB) is concerned that tax time loans, from tax practitioners, may not be fair or in their clients’ best interests. Tax practitioners providing improper tax time loans may harm consumers, especially vulnerable members of our community. TPB reviews and investigations will address integrity issues and ensure tax advice is provided with care, competence and independence.
Tax time loans may vary in structure, but in substance can involve a tax practitioner, or associated lender, providing a short-term loan or advance on an estimated tax refund to a client.
The TPB is putting all tax practitioners on notice of potential harm to consumers from improper conduct, including:
- high fees that may not be fully transparent to clients
- not managing conflicts of interest when tax practitioners are paid percentage fees based on tax refund estimates
- not addressing client confidentiality in sharing client’s tax and financial information between tax practitioners and associated lenders
- failure by tax practitioners, or their associates, in exercising competence and reasonable care
- not acting lawfully, in the best interests of their clients, by making ‘incentive’ payments to staff when they promote or sell tax time loans.
The TPB recognises consumers and clients may have pressing financial needs, but it is vital consumers are well informed, so they can assess the benefits and risks associated with tax time finance.
The Australian Taxation Office (ATO) is committed to supporting taxpayers, with most online returns processed within 2 weeks. In promoting tax time loans, tax practitioners must ensure their clients are aware of the risks, including the lender’s debt recovery action if their tax refund is delayed, or if it is less than their tax practitioner’s estimate. In addition, the ATO reassures taxpayers that there are options available for those experiencing vulnerable circumstances. They should discuss any support they need with the ATO, as early as possible. Taxpayers experiencing difficult circumstances can talk to the ATO or visit ato.gov.au/crisissupport
The Government is committed to protecting vulnerable Australians from acquiring unsuitable products. The TPB regularly has discussions with other government agencies, including the ATO and Australian Securities & Investments Commission, on consumer protection issues to ensure that the most appropriate regulator takes action to warn the community.
TPB Chair, Peter de Cure AM advises, ‘Tax practitioners need to consider if they can truly act in their clients’ best interests when they profit from tax time loans. Tax practitioners must carefully consider their legal and ethical obligations and inform their clients of the potential risks when engaging in or recommending tax time finance. It is crucial to maintain transparency and uphold the highest standards of professional conduct to ensure the protection of client interests and the Australian community.’
Mr de Cure went on to say, ‘We are extremely concerned that these products can harm financially vulnerable consumers, and we are addressing these issues directly with tax practitioners associated with tax time loans. If you have concerns about the tax services provided to you, discuss these with your tax practitioner first, wherever possible. If your concerns are not addressed, you can contact us by lodging a complaint.’
‘Tax practitioners offering these services are on notice. If you are associated with these tax time loans, review your services as a priority to ensure you comply with the law and professional standards. We expect tax practitioners to address any compliance issues in a transparent and cooperative manner. Be warned, if we detect breaches of the law, we will take further action.’
About the Tax Practitioners Board
The TPB regulates tax practitioners in order to protect consumers and ensure the integrity of the profession and the tax system. The TPB aims to assure the community that tax practitioners meet appropriate standards of professional and ethical conduct. Follow us on LinkedIn and Facebook.
About the Australian Taxation Office
The ATO collects tax so that government can deliver services for the Australian community.
About the Australian Securities & Investments Commission
ASIC is Australia's integrated corporate, markets, financial services and consumer credit regulator.