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NTAA . . . the future

The NTAA and its Board would like to express its best wishes to all members of the NTAA as we head into this New Year.  2006 was an extremely successful year for the NTAA and 2007 is shaping up to be the same.

Over the last few years, the association has cemented its relationship with the ATO and other professional bodies.  The maturity of these relationships allows us to better represent the needs and interests of members.

Expansion of the NTAA and its services

As part of its commitment to members, the NTAA is continuing its growth and expansion plans. Some of these are:

Member Hotline

The NTAA's Hotline continues to support members by offering an excellent reference point for members' tax queries.

As you are all no doubt aware, each member is entitled to four calls as part of their $245 annual subscription which has not increased since 1993.

We currently have seven full-time professional staff operating the Hotline, which receives some 20,000 calls a year.

The increased demand for the Hotline has meant additional experienced staff are needed to continue this much needed and popular service.

NTAA to become an RPA

Another area of planned expansion for the NTAA involves the Government's new regulatory regime for tax agents.

We understand that the draft legislation for this 'Tax Agent Services Bill' is set to be issued for public comment early this year

Under this new regime, tax agents will have to register with the new Tax Practitioners Board and comply with a Code of Professional Conduct. Failure to comply with the Code may result in sanctions being applied.

Editor: We will go around Australia and consult with members when the legislation is tabled.

However, with the advent of the new legislation, the NTAA is poised to form a new Recognised Professional Association (RPA) which will be set up to specifically cater to the interests of tax agents and their practices.

We envisage that this new RPA will:

• provide practising certificates to suitably qualified and/or experienced tax agents;
• assist members in their dealings with the ATO in relation to their lodgment programs;
• help members whose practices are struggling to keep abreast;
• provide one-on-one support and, if necessary, practice management assistance; and
• help members' transition out of the profession and achieve maximum return on their goodwill.

More seminars

The NTAA's seminars are widely recognised as the best in the country and the dedication of our staff to maintaining their high quality is unparalleled.

Over the past couple of years, we have introduced the two-day Super Schools and the Back to Basics series.

Two more new seminars are set to be introduced to the Back to Basics series this year and other new seminars are scheduled for 2008 and 2009.

New member focused products

To help members with issues they face in their practices on a daily basis, the NTAA has staff investigating:

• additional practice focused software to ease the compliance burden; and
• one-on-one business/practice coaching for those members looking to improve business practices (their own and clients) and to improve their lifestyle.

New premises

Naturally, an increase in member services and plans for future growth require a significant increase in resources and it is for this reason that the NTAA Board decided some time ago to seek out larger premises.

For 18 months now, the NTAA has operated from its new headquarters in South Melbourne and the directors are pleased to report that these new larger premises will form the launch pad for the NTAA's expansion plans.

We now have more than double the space to accommodate our expansion plans over the next few years but, of course, have necessarily incurred increased rental costs.

However, leaving our former premises in St. Kilda Road has meant a significant reduction in the per square metre cost. The building also comes with 23 undercover car parks, resulting in additional savings for the NTAA and security for our staff.

Capping seminar costs

The NTAA's seminar prices have remained pretty much constant for the past seven years. In fact, the current member price is $418 (including GST) compared to $376 (incl. GST) in 2000.

However, in the middle of last year, increasing venue and seminar costs put pressure on the Board to increase seminar prices.

The Board therefore decided to restructure the seminar division of the NTAA to keep a lid on prices. Seminar presenters have effectively become a subcontractor at a cost which allows the NTAA to continue to provide seminars to members for $418 for some time yet.

Maintaining the quality of seminars

The other challenge faced by the Board was continuing to maintain the quality of its seminars while expanding its services and seminar range.

This problem has also been addressed as part of the subcontracting arrangements above, as the same presenters have entered into agreements to safeguard the continued delivery of existing and new NTAA seminars. This means that the same high quality will be maintained at the same cost to members.

Reinvesting back into Members

When the annual accounts were sent out, some members queried the level of the NTAA's reserves which stood at about $4 million on 30 June.

There is a simple answer to those queries - the funds are there to be reinvested in members.

As we stated before, the NTAA is poised to form a new Recognised Professional Association (RPA) which will specifically serve the interests of tax agents and their practices.

The resources and additional staff will be substantial and it is just for such an eventuality that the NTAA has built up its reserves over the last 14 years.

Editor: Many members might not be aware that the concept of the NTAA was created in 1992 when the ATO advised that a new regime was being considered under which tax agents could be penalised and fined up to $20,000.

This threat, coupled with the need for a truly service-based organisation, were key factors behind the formation of the NTAA.

RPA . . . the way forward

After many years of consultation with the ATO, Treasury, and the other professional bodies, this new regime is set to become a part of the tax landscape.

The legislation is in the final stages of drafting and will soon become available for public comment.

Nonetheless, we believe that, once legislated, this new regime offers a huge opportunity for the NTAA to form a much closer working relationship with its members.

One member's problems

For example, last year the NTAA undertook a pilot program to help one member who had been placed into Case Management by the ATO.

This member was on the verge of closing his practice down as he could not cope with the backlog of work that had amassed over the past two or three years.

As can happen, the backlog had occurred not from business issues but was due mainly to personal problems involving family illness.

The NTAA contacted the ATO and negotiated a deferral of any action on the basis that it would appoint another practitioner to directly assist the member. The ATO agreed.

After four solid months, the member and the practitioner had worked together to bring all lodgments totally up to date.

There are other members who have received similar assistance from the NTAA.

In recent discussions with the ATO, we understand that they are extremely interested in continuing this program and taking it nationwide.

The Board envisages that the new RPA will concentrate on these sorts of issues and work closely with members and the ATO for the overall good of the profession.

More to come?

Of course. We do have other plans for the NTAA's expansion but they are either on the drawing board or commercially sensitive.

Should members wish to provide any feedback or suggest other services please contact Peter McGinty, Member Services Manager, to have your request or submission brought to the direct attention of the Board.

SMSFs and Water Rights - and so it continues . . . .

Many members will be aware the NTAA has been lobbying for the ATO to allow SMSFs to purchase water rights from a related party of the fund.

The NTAA has also asked for water rights to be excluded from the in-house asset rules where they are leased to a related party.

Thankfully, our dialogue with the ATO on this issue has been very positive and they understand the importance of the issue.

The ATO has committed to considering whether or not there are any powers available to the Commissioner under the SIS legislation that could result in a workable solution to the current problem.

Unfortunately, the ATO has indicated that devising blanket exclusions for water rights has been complicated by the inconsistent definition of "water rights" on a state-by-state basis.

As a result, the ATO has asked the NTAA to identify trustees of SMSFs that are willing to write to the Regulator (i.e., the ATO), requesting the Commissioner issue a determination under S.66 and S.71 of the SIS Act in which he accepts that these provisions do not apply to the specific water rights.

The ATO is particularly interested in cases where trustees of an SMSF have acquired water rights from a related party and where an SMSF leases water rights to a related party.

The ATO has indicated that these requests may also form the basis of a series of ATO IDs about these transactions.
Any member who is willing to nominate their client as noted above should contact Andrew Gardiner on (03) 9209 9999.

Helping to Clear Tax and Other Debts

Editor: Many members would now be aware that InterPrac Ltd.* is providing equity-based finance to help members' clients clear their tax debts.

The arrangement provides for finance at near home loan rates.

Note(*): For those not aware, InterPrac was formed to provide financial and related services to members and their clients and has now been operating for nearly seven years.

Help with tax debts

A member of the NTAA recently referred InterPrac to a client who had accumulated a tax debt in excess of $150,000.

The client had a primary tax debt of $70,000 and over time the penalties on that debt had risen to $80,000.

With plenty of equity on her investment property she:

• refinanced the loan she had with a major bank;
• paid out her tax liability; and
• paid her outstanding accounting fees of $10,000.

This significantly reduced all monthly commitments and greatly improved her cash flow. The transaction appeared complicated due to a listed credit default less than 12 months before.

InterPrac not only assisted with clearing the debt, but also saved her money in interest by restructuring the new investment loan to an interest rate of 7.55% which was lower than what she was paying on her loan on her residence.

For members who also wish to encourage their clients to clear their tax debt, the NTAA has a contact within the ATO who can look at reducing the client's secondary debt (penalties, etc.), provided the client commits to a clear-out of these debts.

Your client may also find that their other suppliers could offer discounts for early payment.

If you have a client who feels that a consolidation of debts could benefit their situation, speak with Peter McGinty (Member Services Manager) on 1800 808 105 or InterPrac on 1800 700 666.