Ethical Issues Facing Tax Professionals: A Comparative Survey of Tax Agents and Big 5 Tax Practitioners in Australia

Abstract

The move towards a full self-assessment tax regime in Australia has brought with it a greater representation of, and expanded role for tax practitioners. Given that the resolution of many tax issues present significant ethical dilemmas for tax practitioners in their role as the moral agent of their clients, and the close relationship of ethics and tax compliance, an evaluation of the nature and extent of ethical concerns as identified by tax practitioners themselves has important implications both for the tax profession and tax administration. There have, however, been few empirical studies reported in Australia as to the range of ethical issues encountered in tax practice. Further, there has been a tendency in the literature to treat the tax profession as a homogeneous group, notwithstanding that tax services are provided through a variety of organisational structures ranging from sole-practitioners to large international public accounting firms (Big 5 firms). To investigate whether such a view of the tax profession in Western Australia is accurate or inappropriate, tax professionals were partitioned into the broad body of tax practitioners in general practice (registered tax agents), in one group, and tax practitioners engaged by the Big 5 firms, in a second group. The aim of this research was to investigate whether there were significant differences in the ethical perceptions between tax agents and Big 5 tax practitioners. A mail - questionnaire was used to elicit data as to the frequency and importance of a range of ethical issues in tax practice. For analysis, the list was subsequently reduced to a ÌTop 10Ì inventory. Overall, the practical differences were not dramatic with significant percentages of both groups rating those issues which related primarily to the conduct of professional responsibilities e.g., ensuring reasonable enquiries are undertaken, maintaining an appropriate level of technical competence, continuing to act for a client when it is not appropriate, as of most concern to tax practitioners. One issue on which there was a significant difference between the two groups was the ranking of loophole seeking on the frequency dimension. A tentative explanation for this difference (ranked Ì1Ì and Ì11Ì for Big 5 and tax agent respondents respectively) is offered in terms of client expectations of a "tax exploiter" role for Big 5 practitioners in contrast to a "tax enforcer/compliance" role for their tax agent counterparts.