Aqabani and Tax Agents' Board of NSW

[2004] AATA 1095

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1095

ADMINISTRATIVE APPEALS TRIBUNAL      )
  )           N2004/636

)              

GENERAL ADMINISTRATIVE DIVISION
Re		DEEB AQABANI

Applicant

And TAX AGENTS’ BOARD OF NSW

Respondent

DECISION

Tribunal   Ms N Isenberg, Member

Date                18 October 2004
Place               Sydney

Decision   The Administrative Appeals Tribunal sets aside the decision under
  review and the matter is remitted to the Respondent

[Sgd] Ms N Isenberg, Member

CATCHWORDS

TAXATION – tax agents – application for registration as a tax agent refused – academic qualifications – interpretation of qualifications required

LEGISLATION

Income Tax Assessment Act 1936 ss. 251JA and 251BC

Income Tax Regulations 1936 Regulation 156

CASE LAW

John William Brough Wright v Tax Agents’ Board Victoria No. V93/1319 AAT No. 9841

Al Mughrabi and Secretary, Department of Immigration and Multicultural Affairs [1999] AATA 164

REASONS FOR DECISION

18 October 2004  Ms N Isenberg, Member

DECISION UNDER REVIEW

1.      On 31 July 2003 the Tax Agents' Board of New South Wales (‘the Board’) refused Mr Aqabani’s application for registration as a tax agent in New South Wales.

LEGISLATION

2.      The statutory provisions related to the refusal to register a tax agent are contained in Part VIIA of the Income Tax Assessment Act 1936 (“the Act”). Section 251JA of the Act states relevantly:

“Section 251JA

(1)      The Board shall register an applicant as a tax agent if the applicant satisfies the Board that:

(a)  if the applicant is a natural person:

(i)  the applicant is a fit and proper person to prepare income tax

returns and transact business on behalf of taxpayers in income

tax matters;

(2)      The Board shall refuse to register the applicant in any other case.” 

3. The factors related to whether a person is a “fit and proper” person for the purposes of the legislation are contained in section 251BC of the Act, which states relevantly:

“Section 251BC

(1)      … a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters, as at a particular time, if:...

(b)      both the following conditions are satisfied:-

(i) the person was not registered as a tax agent, or as a nominee, for the purposes of this Part immediately before the commencement of section 39 of the Taxation Laws Amendment Act (No 2) 1988;

(ii)     the person does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed;”

4.      The following regulation prescribes certain elements of academic qualifications:-

“Regulation 156…

156(1) For the purposes of subparagraph 251BC(1)(b)(ii) of the Act, the following qualifications are prescribed:

(a)      the person:

(i)        shall have completed the academic requirements for the award of a degree, diploma or other qualification from an Australian university, college of advanced education or other tertiary institution of an equivalent standard, and have passed examinations in such subjects, under whatever name, which an appropriate authority of the university, college of advanced education or other tertiary institution certifies to the Board to represent a course of study n accountancy of not less than 3 years’ duration and in commercial law of not less than 18 months’ duration or shall possess such other qualifications as the Board regards as equivalent to those qualifications; (Tribunal’s bold)

(ii) shall have:

(A)      been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years;

(B)      otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or

(C)      been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A); and

(iii)shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board;”

5.      The Board has issued a series of Guidelines (‘Appendices’) for the assistance of prospective tax agents (T4, pp. 12-15)

BACKGROUND

6.      In refusing Mr Aqabani’s application for registration as a tax agent the Board contended that he does not meet the requirements of Regulation 156(1)(a):

7.      The Board was of the opinion that Mr Aqabani’s academic qualifications record him as having completed a subject titled ‘Income Tax & Aspect Co Law’, which it estimates as being equivalent to one third commercial law or two months study, and two thirds Australian income tax law or four months study which does not comply with the requirements of Regulation 156(1)(a).

ISSUE

8.      It was conceded that Mr Aqabani met all other requirements for registration as a tax agent, other than the academic requirements set out in Regulations 156(1)(a)(i) and 156(1)(a)(iii).

9.      The issue for decision was whether Mr Aqabani met the academic requirements for registration as a tax agent as specified in those subsections.

THE HEARING

10.     A hearing was held on 22 September 2004 at which Mr Aqabani was self-represented and the Board was represented by Ms J Maurer of the Australian Government Solicitor's Office.

11.     Mr Aqabani gave evidence and was cross-examined on behalf of the Board.  I also asked him questions.

12.     I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence, together with the Board’s statement of facts and contentions.  Mr Aqabani tendered a number of letters and other material in relation to his academic achievements and employment history, as well as a very detailed submission.  These also were taken into evidence.

CONSIDERATION OF THE EVIDENCE AND FINDINGS

13.     In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.

14.     There was no dispute as to Mr Aqabani’s academic qualifications:

·  Bachelor of Science in Accounting (University of Jordan)

·Master of Business Administration (University of Jordan)

·CPA examination (University of Illinois)

·Income Tax and Aspect Co Law subject (University of Southern Queensland)

15.     There was no dispute as to Mr Aqabani’s professional qualifications:

·Member: Jordanian Association of CPAs (“JACPA”)

·Member: American Institute of Certified Public Accountants (“AICPA”)

·Certified Practising Accountant (“CPA”)

·Chartered Accountant (member of The Institute of Chartered Accountants in Australia (“ICAA”))

16.     There was no dispute as to Mr Aqabani’s teaching achievements:

·Lecturer: business law and professional responsibilities; Auditing; Accounting and Reporting: Taxation, Managerial, Governmental, and Not-For-Profit Organizations; Financial Accounting and Reporting: Business Enterprises. Certified Auditors: Jordan

·Casual tutor in Accounting: The University of Sydney

• Part-time teacher in Accounting and Finance: St George TAFE
• Facilitator in Chartered Accounting (“CA”) for The Institute of Chartered Accountants:  Australia

17.     There was no dispute as to Mr Aqabani’s work experience as set out in his resume and in the letter from Mr Le, formerly of Rothsay Accounting Services, where Mr Aqabani was a business and tax advisor:

Does Mr Aqabani meet the requirements of Regulation 156(1)(a)(i)?

18.     The Board’s contention relied on an interpretation of Regulation 156(1)(a)(i) that not only must an applicant have academic qualifications but those qualifications must include 18 months study in commercial law. 

19.     Mr Aqabani referred me to the Board’s Guidelines (‘Appendix E’) which interpret the subsection as follows:

“1.       a course of study in Accountancy of not less than three years; (sic) AND a course of study in commercial law of not less than eighteen months duration;

OR

2.        possession of such other qualifications as the board regards as equivalent to the above qualifications;”

20.     Ms Maurer submitted that that entry in Appendix E was by way of introduction only and that Annexure E in fact relates to the requirement of subsection 156(1)(a)(iii), that is, completion of a course of study in Australian income tax law.

21.     Appendix C is the appendix which refers to the requirement of subsection 156(1)(a)(i).  Curiously, in relation to applicants with overseas qualifications (such as Mr Aqabani) it is silent in relation to the study of commercial law.

22.     I do not accept the interpretation put forward on behalf of the Board.  The subsection is a very wordy one and in my view is punctuated poorly.  It is open to me to interpret the discretion as applying to the whole of the subsection, and not to individual components of it, as was the Board’s position.  I am supported in coming to this view by the setting out of the Board’s guidelines at Appendix E as discussed above, and the omission of the commercial law requirement in Appendix C for applicants with overseas qualifications.  This finding is consistent with the approach taken in John William Brough Wright v Tax Agents’ Board Victoria No. V93/1319 AAT No. 9841 to which Mr Aqabani referred me.

23.     Mr Aqabani also submitted that, in any event, he has undertaken studies in commercial law aggregating in excess of 18 months.

24.     I turned to consider if the studies undertaken by Mr Aqabani are ‘equivalent’ to the qualifications set out in the Regulation.

25.     In Wright, the Tribunal said:

“Each case will need to be assessed on its merits, and it would not be wise

for the Tribunal to set out in any comprehensive manner what may amount to an equivalent qualification to those set out in the regulation. The Board needs

flexibility to deal with a myriad of circumstances. All that needs be said is

that in this particular case not any of the qualifications which the applicant

possesses, either individually or in combination, are sufficient to amount to

"an equivalent qualification" as contemplated by the regulation.”

26.     Wright involved the Tax Agents’ Board of Victoria, (“Victorian Board”) which organisation, unlike the NSW Board, does not have Guidelines, according to Ms Maurer.  It is useful to note, in those circumstances, what the Tribunal recorded the evidence of a representative of the Victorian Board, as to what was considered to be ‘equivalent’:

“The applicant has asked the Tribunal to set out what would amount to an

"equivalent" qualification. Mr Pietka told the Tribunal that the Tax Agents'

Board referred to a number of other organisations as a guide to what might be

equivalent, e.g. whether universities accept particular qualifications as

amounting to a three year accountancy course, or whether the National Office

of Overseas Skills Recognition was prepared to recognise a particular

qualification as being equivalent to the completion of a three year accounting

course at a tertiary institution. One of the institutions to which the Board

referred was the Australian Society of Certified Practising Accountants

("ASCPA"). It was not necessary for an applicant to be a member of ASCPA but sufficient for registration of the Taxation Board that the former body would

accept his or her qualifications in accounting.”

27.     Mr Aqabani pointed out that the ICAA and CPA Australia require candidates for ‘associate’ membership to study commercial law in Australia in order to become ‘associate members’.  He is not an associate member, but a full member.  Mr Aqabani noted that in Wright, the Victorian Board had considered acceptance of accounting qualifications by the CPA to suffice to meet the Board’s admission requirements.

28.     Mr Aqabani had also passed the American Uniform CPA Examination in November 1998.  Consequently he became a member of the American Institute of CPAs (AICPA).  His unchallenged evidence was that for candidates to pass this examination they must demonstrate a high level of understanding of all aspects of commercial and business law.   (T6, pp. 19-22)

29.     From June 1999 to May 2000 he worked as CPA lecturer in an overseas private institute where he lectured in commercial and business law, as well as other accounting subjects. (Applicant’s documents - p. 23).

30.     His evidence was that business and commercial law were covered in different courses during his studies for his Bachelor Degree at the University of Jordan, although there was, at that time, no course specifically described in that manner. (Applicant’s documents - academic transcripts. pp. 24-25)

31.     Mr Aqabani has worked as a facilitator in chartered accounting for ICAA.  He has tutored in accounting at University of Sydney and he teaches accounting and finance at St George TAFE.

32.     Taken together, his academic qualifications, in my view, are equivalent to those specified in Regulation 156(1)(a)(i).  In coming to this view I particularly note that he has been exempted from further requirements by both the professional bodies in the Accountancy profession, and that he in fact has taught, or teaches accounting subjects, including commercial law.

33. Further, Mr Aqabani had submitted that section 251BC(1)(b)(ii) provides for a person to be a ‘fit and proper person’ notwithstanding that he or she does not have the qualifications specified. Having come to my view above it was not necessary for me to make a decision in relation to that submission.

Does Mr Aqabani meet the requirements of Regulation 156(1)(a)(iii)?

34.     It was submitted on behalf of the Board that Mr Aqabani had not completed a course of study in Australian income tax law. 

35.     As discussed above, there was no dispute that he had completed a course in ‘Income Tax and Aspect Co Law’ at the University of Southern Queensland.  However the Board estimated that the tax aspect of the course was four months study ‘which does not comply with the requirements of Regulation 156(1)(a), (T2, p 3)  However, the duration of the course is not, in fact specified by Regulation 156(1)(a)(iii).  For that matter, it is not a requirement of the Guidelines either.

36.     One criterion the Guidelines purport to introduce is that the course should involve ‘approximately three hours contact per week’.  Mr Aqabani’s evidence, which was not challenged, was that the CPA Taxation module and the Institute of Chartered Accountants Taxation Module, courses identified as some courses which are acceptable to the Board do not require face-to-face attendance at all.  Many other university courses also do not require attendance at all. 

37.     In relation to the Guidelines I observe that in Al Mughrabi and Secretary, Department of Immigration and Multicultural Affairs [1999] AATA 164 Deputy President Purvis said (referring to Guidelines under section 13 of the Australian Citizenship Act 1948):

“It is fair to say that guidelines … are in aid of exercising a discretion conferred by the Act… Each case must be decided on its merits and the discretion cannot be so truncated by policy as to preclude consideration of the merits of a specified class of cases. … The decision-maker must be free to consider any unique circumstances of the particular case and no part of a policy can determine in advance the decision which is to be made in the circumstances of a given case. Whilst appropriate policy providing a guide is apposite, one that attempts to control the making of decisions is not. ….”

38.     The guidelines provide examples of course, ‘currently acceptable’.  One is:

“2) Institute of Chartered Accountants Taxation Module of the PY Programme
     + a semester of study from a tertiary institution;”

39.     Mr Aqabani has been exempted from the CA program.  Not only has he been exempted from the program but he also worked as a facilitator in that program. (Applicant’s documents, p. 27).  One of the subjects in which he teaches at St George TAFE is Taxation.  Of lesser relevance was his evidence that a major part of his studies for the American CPA covered American Taxation Law.  (T6, pp. 23-24)

40.     He has also undertaken ‘a semester of study’ from a tertiary institution.  The course undertaken was in fact at postgraduate level. 

41.     Mr Aqabani’s evidence was that the subject concentrated on the Australian income tax system, particularly the Income Tax Assessment Acts of 1936 and 1997.  Topics covered included the concepts of income and capital, assessable income, exempt income, deductions, capital gain tax, tax accounting, tax ethics, GST and other major tax topics that are designed to help in the preparation of income tax returns for individuals and other entities and the provision of tax advice. (T6, pp 25-31)

42.     From the internal confidential working document recommending against Mr Aqabani’s registration (T6 p.18), it appears that the course he undertook had not previously been considered by the Board. 

43.     His evidence was that the course was one completed by written examination, which is the only stated criteria for the course which appears in Regulation 156(1)(a)(iii).  That he may not strictly come within the Guidelines because of his exemption, does not, in my view defeat his application.  The Guidelines have been shown to be internally inconsistent, and rather than amplifying the requirements of the Regulation in fact purport to impose requirements that are simply absent from the Regulations.

44.     I therefore find that he had, by written examination, successfully completed a course of study in Australian income tax law, as required by Regulation 156(1)(a)(iii). 

CONCLUSION

45. As discussed above, the only issue in determining whether Mr Aqabani was a fit and proper person under section 251JA of the Act was whether he met the criteria for Regulation 156(1)(a)(i) and (iii). In view of my findings in relation to those sub-Regulations I find that Mr Aqabani is a fit and proper person for the purposes of section 251JA of the Act.

DECISION

46.      The Administrative Appeals Tribunal sets aside the decision under review and the matter is remitted to the Respondent.

I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg,
Member

Signed:         D Anderson              .....................................................................................
  Associate

Date of Hearing  22 September 2004   
Date of Decision        18 October 2004

Representative for the Applicant       Mr Deeb Aqabani
          Representative for the Respondent    Ms Jodie Maurer