Assaf and Tax Practitioners Board (Taxation)
[2020] AATA 4972
•9 December 2020
Assaf and Tax Practitioners Board (Taxation) [2020] AATA 4972 (9 December 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2020/5334
Re:Alex Assaf
APPLICANT
Tax Practitioners BoardAnd
RESPONDENT
DECISION
Tribunal:Deputy President B W Rayment OAM QC
Date:9 December 2020
Place:Sydney
Pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975, the decision of the Respondent to terminate the Applicant’s registration as a tax agent is stayed until further order subject to the following conditions:
1.The Applicant undertakes that he will not take on any new clients except for those informed by letter that the Tax Practitioners Board has made a decision terminating the Applicant’s registration as a tax agent and that decision has been stayed until further order by the Administrative Appeals Tribunal.
2.The Applicant is to notify the respondent each time a new client is engaged and confirm the letter has been provided.
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Deputy President B W Rayment OAM QC
CATCHWORDS
PRACTICE AND PROCEDURE – stay application – where matters in Scott and Australian Securities and Investments Commission [2009] AATA 798 considered – whether income tax liability assessment should be treated as conclusive – where income tax liability may be reduced pending other appeals – impact on applicant and other parties – whether in the public interest – where applicant will not take on new clients until determination of application – whether appointing another registered tax agent will assist – stay granted with conditions
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 41
Tax Agent Services Act 2009 (Cth) ss 40-5, 60-125
CASES
Civil Aviation Safety Authority v Hotop [2005] FCA 1023
Scott and Australian Securities and Investments Commission [2009] AATA 798
Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047
REASONS FOR DECISION
Deputy President B W Rayment OAM QC
9 December 2020
Application is made by the applicant to stay the decision of the respondent (‘the Board’). The Board decided that the registration of the applicant as a tax agent be terminated in accordance with ss 60‑125(2)(b)(ii) and 40-5(1)(b) of the Tax Agent Services Act 2009 and that the applicant may not apply for registration for a period of three years. The stay is sought pending the hearing and determination of the application to review that decision.
The application is made under s 41(2) of the Administrative Appeals Tribunal Act 1975 (‘the Act’), which is in the following terms:
(2)The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relations or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
The Federal Court examined that provision in Civil Aviation Safety Authority v Hotop [2005] FCA 1023 in the course of considering whether it permitted the Tribunal to make an order having positive effect. During the course of discussing that question, Siopis J said at [46]–[49]:
Third, the argument advanced by Senior Counsel for the applicant, would substantially undermine the Tribunal’s capability to provide effective relief in cases where the operation of the impugned decision would result in the applicant for review having to cease carrying on an existing business pending the hearing of the application for review. The difficulties facing a review applicant that is not allowed to continue in business pending the hearing of an application were described by Tamberlin J in Shi [v Migration Institute of Australia Ltd (2003) 134 FCR 326]. He said at 333:
‘It is evident that if a decision favourable to an applicant is made by the AAT in relation to the application to renew, then the agent in this case will have been wrongfully deprived of the opportunity to earn his livelihood from that time up to the time of the favourable determination. There may also be damage to his practice and reputation. There is no provision for the recovery of this loss or for any disruption to the practice, or loss of reputation or goodwill. A favourable decision to the applicant by the AAT would also mean that the applicant had been wrongfully refused registration and these are important considerations; see the remarks of Davies J in Dekanic v Tax Agents’ Board (NSW) (1982) 6 ALD 240 at 242‑243. These observations were applied in Re Nelson and Tax Agents’ Board (Qld) (1993) 30 ALD 317.
If the applicant in the present case is not granted a stay, the effectiveness of the hearing and determination of the application for review will be diminished.’
Similar sentiments were expressed by the first respondent in his reasons for decision to which I have referred above, and by Deputy President Handley in the case of Re Medtest Pty Ltd and Minister for Health and Ageing [2002] AATA 317 where he said:
‘I am concerned…that unless a stay order is granted, the utility of the hearing will be significantly undermined if there is a possibility of the Applicant being put out of business.’
Section 15AA of the Acts Interpretation Act 1901 (Cth) provides that:
‘(1)In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.’
The purpose of [the Act] is to afford a review applicant an effective means of obtaining a merits review of an administrative decision (Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd [1979] 41 FLR 338 at 367‑368). I agree with the tenor of the dicta of Tamberlin J, Deputy President Handley and the first respondent referred to above. I am of the view that a construction which would afford the Tribunal the power to make orders under s 41(2) of [the Act] to positive effect in the sense referred to above, would be a construction which promotes the purpose of [the Act], and is to be preferred over a construction which would deny the Tribunal such a power.
In Scott and Australian Securities and Investments Commission [2009] AATA 798, Downes J, then President of this Tribunal, observed at [4] that:
Application having been made for a stay of proceedings under s 41 of the Administrative Appeals Tribunal Act 1975, it is nevertheless incumbent upon me now to consider whether a stay is appropriate. In considering the application, it is appropriate for me to consider a range of matters, including:
1The prospects of success.
2The consequence for the applicant of the refusal of a stay.
3The public interest.
4The consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not.
5Whether the application for review would be rendered nugatory if a stay were not granted.
6Other matters that are relevant, amongst which I would include the length of time that the ban has already been in place and the gap between today and the hearing of the application.
His Honour’s list of relevant matters to be taken into account under s 41(2) of the Act has often been applied in applications under s 41(2) of the Act and I do so in this case. The prospects of success are inevitably a relevant matter, even though the application for a stay is an interlocutory proceeding. A seriously arguable case need not necessarily be shown by an applicant, although if such a case were made, it would undoubtedly be of assistance to an applicant. An applicant for an interim injunction would need to show a seriously arguable case but would usually be required to give an undertaking as to damages. The power of the Tribunal to receive an undertaking as to damages is absent, as would be the Tribunal’s power to enforce any such an undertaking. Perhaps in recognition of those facts, s 41(2) of the Act requires the Tribunal, when considering the grant of a stay or making an order otherwise affecting the operation or implementation of the decision in question, to take into account the interests of any persons who may be affected by the review before making any such order.
In one of the cases in this Tribunal, Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047, Senior Member Cameron, applying earlier decisions, remarked that while it is not necessary to conduct a preliminary hearing (sometimes referred to as a “mini trial”), the task of the Tribunal is to consider whether there exist facts and circumstances to provide some basis for success. While there is no onus of proof in the circumstances of a stay application, one would expect a party to ‘put their best foot forward’ at any rate in a case where the applicant is legally represented. Those remarks are not inconsistent with the wide language in which the discretion conferred by s 41(2) of the Act is expressed.
The applicant was assessed to an income tax liability by the Commissioner of Taxation (‘the Commissioner’). Despite a submission to the contrary by the respondent, I decline on these proceedings to treat the assessments as conclusive. Such a view would defeat the applicant’s opportunity to show the prospects of success of his review and thus tend to show that he should not have a stay despite the terms of s 41(2) of the Act.
Mr Assaf swore an affidavit and submitted himself to cross-examination on this application. He was represented by Mr Marshall of counsel and the respondent was represented by Mr Arnold of counsel.
He swore to a series of matters which, if ultimately proved to be correct, would reduce his income tax liability as determined by the Commissioner. The tax liability would not be reduced to nil, even if the applicant’s affidavit were entirely upheld. I was told by Mr Marshall that other aspects of the applicant’s tax liability would be put in issue in a forthcoming AAT review sought by the applicant of the Commissioner’s decision. A taxpayer has an onus of proof in a challenge to the rejection of an objection by the Commissioner. Reduction of his tax liability would assist the applicant in this review, to an extent that cannot now be reliably assessed. I would not reject the present application solely on the issue of prospects of success.
The Commissioner also found that Mr Assaf had failed to declare substantial taxable supplies over a number of years with respect to two controlled entities, Zazzelle Trust and Quest Business Advisors Pty Ltd. Mr Assaf also failed to register Zazzelle Trust for GST. Mr Marshall said that these findings would also be disputed with the Commissioner. The outcome of that dispute will also be relevant to this review.
Mr Assaf also answered a question falsely to the Board about his tax liabilities. He frankly admits that error and says that his answer was premised on his intention to challenge the assessments. His honesty in relation to the answer will be an issue on the review which will involve assessments of his credibility at the final hearing.
As to the issue of the interests of the applicant, his former spouse, children and employees, Mr Assaf’s affidavit satisfies me that their interests will be adversely affected by the refusal of the stay.
Two other matters gave me concern on the present application. The first and more serious question is that of the public interest, and the possibility that if the Board’s decision is ultimately upheld, his clients may be adversely affected in the interim if the applicant is dishonest in his dealings with their affairs. The second question is whether the applicant can keep his business afloat by employing a registered tax agent to replace him.
On the first question, it is to be noted that the tax affairs of the applicant’s clients have not been alleged to have been adversely affected by the activities of the applicant in the past. His clients are aware of these proceedings and of the Board’s determinations as a result of terms imposed by Deputy President McCabe on the interim stay granted pending the hearing of this application. Also, as a result of an election made by the applicant, no new clients will be accepted pending the hearing and determination of this review.
Appointing a registered tax agent will not necessarily assist the applicant to avoid financial difficulties for himself and his own family.
The applicant’s financial position if the stay is not granted may directly affect his ability to fund the final hearing of the review, thus potentially making the review nugatory.
In the result, I find myself satisfied that it is desirable to continue the interim stay on such of the existing conditions as remain relevant pending the hearing and determination of the application for review.
I certify that the preceding 17 (seventeen) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM QC
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Associate
Dated: 9 December 2020
Date(s) of hearing: 4 November 2020 Counsel for the Applicant: Mr W Marshall Solicitors for the Applicant: KDA Legal Counsel for the Respondent: Mr T Arnold Solicitors for the Respondent: Tax Practitioners Board
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