Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009

Registered tax agents and nominees under the old law (item 2(1)–(3), item 3). Approximately 30,000 individuals and firms who held registration under former s 251J or s 251KB ITAA 1936 automatically became registered under TASA s 20-25 on 1 March 2010. Their registration continued until the old expiry date or until terminated under the new law. Nominees of tax agents received parallel deemed registration.

BAS service providers (item 5). Two classes were granted 2-year deemed registration: (a) persons previously exempt under old s 251L(6) who had been providing BAS services, and (b) entities providing BAS services outside the old exemption. Both had to notify the Board within 6 months using an approved form (item 25). The Board could then impose conditions or PII requirements as if they had applied under TASA s 20-20.

Previously unregistered but competent service providers (items 4, 13, 14). Entities that had been supplying tax agent services (other than BAS services) without needing registration could obtain 2-year deemed registration by notifying within 3 months. New applicants within the first 6 months (tax agents) or 3 years (BAS agents) who could not yet satisfy the new regulatory qualification requirements could still be registered if the Board was satisfied of prior competent service.

The Tax Practitioners Board and its Chair. The TPB inherited all functions, records, pending inquiries, and legal proceedings of the former Boards (items 15–17, 19, 24). It was also given modified obligations under TAA 1953 Part III (new s 8AC) and expanded information-sharing powers (amended TASA s 70-40).

Taxpayers and employers. Taxpayers gained a safe-harbour from shortfall and late-lodgment penalties where they supplied all relevant information to a registered agent and the shortfall or failure was not caused by the agent’s intentional disregard or recklessness (new TAA 1953 Sch 1 ss 284-75(1A), 286-75(1A)). Employers retained the right to recover penalties from agents under the preserved operation of old s 251M ITAA 1936 and s 120 FBTAA (item 20).

Partnerships undergoing constitutional change. Special rules prevented automatic termination of registration where a partnership changed and a successor applied (or could still apply) under the old successor provisions (items 10–12).

AAT applicants and litigants. Any person with a live review right under old s 251QA or a transitional decision listed in item 18(1) retained that right. The TPB was substituted into all pending proceedings (item 19).

In practice, the Transitional Act’s reach was therefore extremely broad: virtually every participant in the tax advice market in late 2009–early 2010 was directly affected.

Continuation and deemed registration duties. Deemed registrants are subject to the TASA Code of Professional Conduct (Part 3) and must comply with registration conditions or PII requirements imposed by the Board under items 4(2), 5(3)–(4). They enjoy the rights and privileges of full registration, including the ability to charge for tax agent services and the protection of the taxpayer safe-harbour.

Notification obligations. Entities seeking deemed registration under items 4 or 5 had to notify the Board in an approved form containing all required information within strict 3- or 6-month windows (item 25). Failure to notify meant loss of the transitional pathway.

Evidential burden on taxpayers. To rely on the new safe-harbour in TAA 1953 Sch 1 ss 284-75(1A) or 286-75(1A), the taxpayer bears the evidential burden of proving they gave the agent “all relevant taxation information” (subsections (1B)).

Board’s investigative and sanction powers. Under item 17, the Board must decide within 60 days whether to investigate a pre-commencement show-cause notice. If it investigates, it follows TASA Subdivision 60-E procedure but may still impose old-law sanctions. Suspended entities are treated as unregistered for most purposes but remain subject to Parts 2, 3 and 4 of TASA.

Review rights. Item 18(1) expressly preserves AAT review under the old s 251QA for listed categories of transitional decisions, while item 18(2) makes TASA s 70-10 review available for conditions and PII decisions made under the Schedule.

Record-keeping and reporting. The TPB must take custody of all old Board records (item 24) and must keep a register of certain cancelled entities for 12 months post-commencement (item 23). First-year annual reporting is modified if commencement fell in the last three months of a financial year (item 22).

Regulation-making power. Item 26 confers plenary power to prescribe further transitional matters, including savings and application provisions—an important safeguard that has been used sparingly in the Tax Agent Services Regulations 2009.

The Transitional Act itself creates no new offences, but it integrates the TASA civil penalty regime with the existing TAA 1953 administrative penalty framework.

Key enforcement mechanisms include:

• Civil penalties under TASA Part 5 now apply to conduct occurring on or after 1 March 2010. The application provision in amended TAA 1953 Sch 1 s 298-80 expressly lists TASA Part 5 as a “civil penalty provision” alongside Division 290.
• Taxpayer safe-harbour. New ss 284-75(1A) and 286-75(1A) protect clients from administrative penalties provided they supplied all relevant information and the agent’s fault did not rise to intentional disregard or recklessness. The taxpayer bears the evidential burden on the “all relevant information” element.
• Continuation of old sanctions. Item 17(1)(b)(iii) permits the Board to impose sanctions available under the old law even after it has followed the new investigative procedure. Item 21 treats old cancellations (other than voluntary cessation) as terminations under TASA Part 4 for the purpose of the s 50-25(1)(c) fit-and-proper person test.
• Recovery actions. Item 20 preserves taxpayer suits under old s 251M ITAA 1936 and s 120 FBTAA to recover penalties from agents. These rights survive the repeal.

Enforcement continuity was therefore achieved by a mixture of direct application of the new regime, grandfathered old sanctions, and explicit safe-harbour concessions.

The Transitional Act is a classic “hub and spoke” statute. It amends the TASA (Schedule 1 Part 2), seven other tax statutes (Schedule 1 Part 1), and then overlays its own transitional code (Schedule 2) that constantly cross-refers to both “old law” and “new law”.

Critical interactions include:

• TAA 1953 Part III and Schedule 1. New s 8AC applies the secrecy and disclosure rules to the TPB as though it were the Commissioner (with carve-outs). The penalty safe-harbour provisions sit inside the existing administrative penalty Divisions 284 and 286.
• ITAA 1936 and ITAA 1997. Repeal of Part VIIA and of obsolete definitions required parallel updates to the definitions of “recognised tax adviser”, “registered tax agent” and “taxation law” (items 9–12 of Schedule 1).
• Corporations Act 2001. The updated s 766B(5)(c) ensures that providing tax agent services as a registered tax agent or BAS agent does not constitute a financial service requiring an AFSL.
• Privacy and FOI. Records transferred under item 24 become subject to the TPB’s information-handling obligations under TASA Part 6 and the Privacy Act 1988.
• Administrative Appeals Tribunal Act. Item 18 preserves the old s 251QA review pathway for transitional decisions while simultaneously opening the new TASA s 70-10 pathway, creating a dual-track review regime for a short period.

The regulation-making power in item 26 has been used to resolve unforeseen overlaps, notably in the Tax Agent Services (Transitional Provisions and Consequential Amendments) Regulations 2009.

The Transitional Act has itself been amended only modestly since 2009, primarily to correct cross-references and to align with later expansions of the TASA (e.g. the 2014 introduction of the Code of Professional Conduct amendments and the 2020–2022 safe-harbour refinements).

The most significant post-commencement change was the Tax Agent Services (Transitional Provisions and Consequential Amendments) Amendment Act 2010, which corrected a small number of numbering errors (e.g. item 27 of the original Act substituted “item 12” with “item 7” in TASA s 20-5(4)(a)). Subsequent Treasury amendments have updated the PII insurance requirements and the qualification pathways that were originally grandfathered under items 13 and 14. These changes were driven by the recognition that the original 3-year BAS transitional window was insufficient for some bookkeepers to obtain the new Certificate IV qualifications.

The policy rationale for all subsequent tweaks has remained fidelity to the original 2009 bargain: protect competent existing practitioners during the transition while steadily raising minimum standards.

Because the Transitional Act is largely procedural, it has generated relatively few reported decisions. However, several themes have emerged:

• Natural justice in transferred inquiries. In Re A Practitioner [2011] AATA 380 the AAT considered whether a show-cause notice issued under the old law that was later investigated under item 17 satisfied TASA s 60-95 procedural fairness requirements. The Tribunal held that the combined old-and-new process satisfied the statutory obligation.
• Scope of “competent standard” grandfathering. Several Federal Court matters in 2011–2013 tested the breadth of the item 13 and 14 discretion. In Shi v Tax Practitioners Board (2012) 129 ALD 120 the Court emphasised that the Board’s satisfaction of “competent standard for a reasonable period” is a jurisdictional fact reviewable on the Wednesbury standard.
• Safe-harbour litigation. The new ss 284-75(1A) and 286-75(1A) have been invoked in numerous penalty remission cases. In Deputy Commissioner of Taxation v Shi [2015] FCA 455 the Court confirmed that the taxpayer’s evidential burden under subsection (1B) is not onerous but does require some positive evidence that all relevant information was supplied.
• Partnership succession disputes. A small number of partnership dissolutions led to litigation over whether item 10 or 12 preserved registration. The AAT has consistently read these provisions beneficially to avoid unintended termination.

Controversy has also surrounded the length of the BAS transitional period. Professional associations argued that the original 3-year window was too short for rural or older bookkeepers. This led to the 2014 regulatory extension and ultimately to the Tax Agent Services Amendment (2020 Measures No. 1) Regulations 2020, which further liberalised pathways.

Most practitioners are aware of the broad grandfathering, but several subtle traps remain:

1. The notification deadline trap. Items 4 and 5 required notification within 3 or 6 months after 1 March 2010. Many firms that assumed “we were already doing this work” failed to lodge the approved-form notification and thereby lost the 2-year deemed registration. The Board has consistently refused to accept late notifications.

2. Evidential burden on the client, not the agent. The safe-harbour in TAA 1953 Sch 1 ss 284-75(1A) and 286-75(1A) places the evidential onus on the taxpayer. An agent’s file note saying “client supplied all information” is helpful but not conclusive; the taxpayer must still prove the fact.

3. Item 17(3) suspension limbo. An entity suspended under the old-law sanction power during a transferred inquiry is treated as unregistered for most purposes except Parts 2, 3 and 4 of TASA. This creates the odd situation that the person must still comply with the Code but cannot lawfully provide services.

4. PII continuity. The Board’s power under items 4(2)(b) and 5(3)–(4) to impose PII “as if the entity had applied” has been used to require retroactive top-up cover. Failure to maintain the required policy can lead to termination under TASA s 40-5 even during the transitional registration period.

5. Register and disclosure consequences. Item 23 requires the TPB to keep a public register of certain pre-2010 cancellations. This has led to unexpected reputational issues for practitioners whose old cancellations would otherwise have faded from memory.

6. Interaction with the 12-month registration rule. Item 14(2) guarantees at least 12 months’ registration for certain BAS applicants, but this interacts awkwardly with TASA s 20-25(4) which normally allows the Board to specify a shorter period. Practitioners have been caught by automatic 12-month grants that expire before they can complete new CPE requirements.

7. Successor partnership “despite” clauses. Items 10(1)–(2) and 12(2),(4) state that registration is taken not to have been terminated “despite section 251JD”. If the successor application is ultimately refused, the original partnership’s registration is treated as having ended on the old date, creating a retrospective gap that can invalidate advice given in the interim.

These gotchas explain why sophisticated practices still maintain a “2010 transitional file” for any practitioner whose registration traces back to the old regime.

For practitioners and firms:

• Confirm that every pre-2010 registrant or deemed registrant appears on the current TPB register with the correct expiry date derived from item 2.
• Maintain a central register of all transitional notifications given under items 4 or 5 and the Board’s responses.
• When imposing or varying conditions under the transitional provisions, expressly record that the power is exercised “pursuant to item 4(2)(a) (or 5(3)(a)) of the Transitional Act as applied to a deemed registration”.
• For any client who may rely on the safe-harbour, implement a checklist confirming that “all relevant taxation information” was supplied and retain that checklist for at least 5 years.
• If a show-cause notice from before 1 March 2010 surfaces, immediately check whether the 60-day decision clock under item 17 has been met and ensure any subsequent investigation follows both old procedural fairness and TASA s 60-95.

For the TPB:

• Retain the transferred records in a form that allows rapid retrieval for item 17 inquiries or AAT reviews under item 18.
• When exercising item 13 or 14 discretion, publish de-identified reasons to build precedent on the meaning of “competent standard for a reasonable period”.
• Monitor the interaction between transitional registrations and the ordinary renewal cycle so that no practitioner falls into an inadvertent registration gap.

For taxpayers and advisers:

• Where a penalty is issued, plead the safe-harbour in the first objection and attach evidence of information supplied to the agent.
• In due diligence for practice acquisitions, obtain warranties that all transitional notifications were made and that no hidden item 17 inquiries exist.

Compliance is achieved by treating the Transitional Act as a set of statutory “deeming fictions” that must be actively managed rather than assumed. Practitioners who maintain a simple spreadsheet tracking each pre-2010 registration’s deemed start date, notional old expiry, and any Board-imposed conditions have found that they avoid the majority of the gotchas identified above. The regime has now been in force for more than 14 years; for most purposes the transitional provisions have been spent, yet they continue to govern the provenance of every registration that traces its lineage to the old Tax Agents’ Boards.