AUZ TAXATION PTY LTD and TAX PRACTITIONERS BOARD
[2025] ARTA 1711
•5 September 2025
AUZ TAXATION PTY LTD and TAX PRACTITIONERS BOARD [2025] ARTA 1711 (5 September 2025)
Applicant/s: AUZ TAXATION PTY LTD
Respondent: TAX PRACTITIONERS BOARD
Tribunal Number: 2024/1525
Applicant:SUMIT BAGGA
Respondent: TAX PRACTITIONERS BOARD
Tribunal Number: 2024/1527
Tribunal:Senior Member M Harrowell
Place:Sydney
Date:5 September 2025
Decision:
1.The decisions of the Respondent made 24 January 2024 are set aside.
2.Pursuant to s 30-15(2)(b) of the Tax Agent Services Act 2009, each of the Applicants, Auz Taxation Pty Ltd (the Company) and Sumit Bagga (Mr Bagga) is provided a written caution in respect of the contraventions of the Code of Professional Conduct.
3.Pursuant to s 30-20 of the Tax Agent Services Act 2009, the Applicants are to take the following actions:
(a)Within 1 month of the date of these orders, the Applicants must inform:
(i) all existing clients – being those that are linked to the Applicants on the Tax Agent Portal as at the date of these orders; and
(ii) all existing and any new employees and contractors,
of the Tribunal’s reasons for decision and of these orders, by sending or providing copies of those reasons and these orders to them.
(b)Within 14 days after notifications pursuant to order 3(a)(i) are complete, the Applicants must notify the Respondent of the same and must provide a list of all clients, employees and contractors to whom the documents were sent.
(c)Within 2 months of the date of these orders, the Applicants must arrange for all employees and contractors of the Company to undergo compulsory training conducted by or on behalf of the Applicants concerning the terms of use and requirements of use of myGovID and of the online services for agents platform, including with reference to the Australian Taxation Office’s online publication “Online services for agents terms and conditions” dated 20 March 2025.
(d)Within 3 months of the date of these orders, the Applicants must arrange for the appointment of at least one additional director(s) of the Company, which appointee(s) must be a registered tax agent, and must notify the respondent of the person or persons so appointed;
(e) Within 6 months of the date of these orders, the Applicants must take all reasonable and necessary steps to ensure that:
(i) there is at least one registered tax agent employed or engaged by or on behalf of the first applicant at each of the business’ branches at which it operates; and
(ii) that each of those agents are instructed or required to individually review any documents to be lodged with the Australian Taxation Office on behalf of a client for the first applicant before they are lodged by the Applicants; and
must notify the Respondent of the persons appointed to those roles.
(f)Within 12 months of the date of these orders, Mr Bagga must undertake and complete remedial education in the following courses, and to provide details of his satisfactory completion to the Respondent within 7 business days after doing so:
(i) "TASA 2009 and The Code of Professional Conduct Course" offered by The Tax Institute.
(ii) A Certificate IV in Human Resource Management offered by Swinburne University.
........................................................................
Senior Member M Harrowell
Catchwords
Tax Agents – Tax Practitioners Board – registration as a tax agent – review of decision to cancel registration of a tax agent – requirements for registration – fit and proper person – good fame, integrity and character – compliance with Code of Conduct – whether circumstances warranting termination – sanctions where tax agent ceases to meet requirements for registration – sanctions where tax agent breaches the Code of Conduct
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) (repealed)
Administrative Review Tribunal Act 2024 (Cth)
Tax Agent Services Act 2009 (Cth)
Tax Agent Services Regulations 2009 (Cth) (repealed)
Tax Agent Services Regulations 2022 (Cth)Cases
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 94 ALR 11
Clifford v Tax Practitioners Board (No 2) [2024] FCA 557
Cross and Tax Practitioners Board [2021] AATA 441
Ham v Tax Practitioners Board [2018] FCA 1652; 108 ATR 869
Hill and Tax Practitioners Board [2020] AATA 678
Hughes & Vale Pty Ltd v New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127
Kishore and Tax Practitioners Board [2017] AATA 271
Middlebrook and Tax Practitioners Board [2020] AATA 3698
Li and Tax Practitioners Board [2014] AATA 299
Re: Su v. Tax Agents Board of South Australia [1982] AATA 127; (1982) 13 ATR 192Stasos v Tax Agents’ Board of New South Wales [1990] FCA 379; (1990) 21 ATR 974
Secondary Materials
Explanatory Paper TPB 01/2010 – Code of Professional Conduct
Statement of Reasons
INTRODUCTION
These proceedings relate to applications for review of two decisions by the Tax Practitioners Board (Board) made on 25 January 2024 (collectively “Board’s decisions”) in which the Board terminated the registration of a company and an individual as tax agents under the Tax Agent Services Act 2009 (Cth) (TAS Act).
One decision (the “Company decision”) related to Auz Taxation Pty Ltd (Company). The second (the “Bagga decision”) related to Mr Sumit Bagga (“Mr Bagga”).
The Board’s decisions to which the applications relate are part of the joint hearing bundle (Tender Bundle/TB) provided to the Tribunal for the purpose of determining the applications.
In its reasons dated 16 February 2024[1] the Board summarised the Company decision as follows:
Decision
On 25 January 2024, the Board decided that, Auz Taxation Pty Ltd (the Company), failed to comply with subsections 30‑10(1), 30‑10(2), 30‑10(4), 30‑10(7) and 30‑10(14) of the Code of Professional Conduct (the Code) in the TASA. The Board also decided that the Company no longer meets the tax practitioner registration requirements that it satisfy the Board that:
1. each director is a fit and proper person as required by paragraph 20-5(3)(a) of the TASA
2. it has a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements as required by paragraph 20-5(3)(d)(i) of the TASA.
As such, the Board decided to terminate the Company's registration as a tax agent in accordance with subparagraph 60-125(2)(b)(ii) and subsection 40-15(1)(b) of the TASA. The termination will take effect from 15 March 2024.
The Company may re-apply for registration as a tax agent in the future. However, to be eligible for registration under the TASA in the future, the Company must meet the eligibility requirements of the TASA. Please ensure that the Company can demonstrate that the Company meets all the requirements, including the director's fitness and propriety if appropriate, prior to any new application.
From the date of effect of this termination the Company must not provide tax agent services for fee or reward in its own name, or advertise tax agent services, or represent that it is a registered tax agent when it is not. Civil penalties may apply.
[1] TB p. 755 and following.
In its reasons dated 16 February 2024[2] the Board summarised the Bagga decision as follows:
Decision
On 25 January 2024, the Board decided that you, Mr Bagga, failed to comply with subsections 30-10(1), 30-10(2), 30-10(4), 30-10(7) and 30-10(14) of the Code of Professional Conduct (the Code) in the TASA. The Board also decided that you no longer meet the tax practitioner registration requirement that you satisfy the Board that you are a fit and proper person as required by paragraph 20-5(1)(a) of the TASA.
As such, the Board decided to terminate your registration as a tax agent in accordance with subparagraph 60-125(2)(b)(ii) and subsection 40-5(1)(b) of the TASA.
The termination will take effect from 15 March 2024.
The Board also decided under section 40-25 of the TASA that you may not apply for registration under the TASA for a period of one (1) year from the date the termination of your registration takes effect.
From the date of effect of this termination you must not provide tax agent services for fee or reward in your own name, or advertise tax agent services, or represent that you are a registered tax agent when you are not. Civil penalties may apply.
[2] TB p. 1034 and following.
Each of the Company and Mr Bagga filed applications for review (applications) in the Administrative Appeals Tribunal as permitted by the Administrative Appeals Tribunal Act 1975 (Cth) (repealed) (AAT Act). Following the repeal of the AAT Act and the enactment of the Administrative Review Tribunal Act 2024 (Cth), the Administrative Review Tribunal was authorised to determine the applications.
BACKGROUND AND THE BOARD’S DECISION
Mr Bagga is an accountant having commenced in the profession in 2016. In that year, on 13 July 2016, he became a tax agent registered under the TAS Act.
Initially, he practised as a sole practitioner under a business name “Affordable Accounting Solution”. In January 2021 he incorporated the Company, which is the trustee of a family trust. Mr Bagga has operated his accounting business through the Company since that time. The Company is a registered company tax agent under the TAS Act.
Mr Bagga is the sole director of the Company and is the nominated tax agent for the company.
As a tax agent, Mr Bagga has access to the Australian Taxation Office (ATO) portal known as the Online Services for Agents portal (portal). It is through this system that a tax agent is able to electronically lodge returns and activity statements and obtain records of clients and other information relating to their tax affairs for the purpose of providing tax agent services.
On 19 April 2022, Mr Amit Kumar commenced employment with Auz Taxation.
For the purpose of Mr Kumar carrying out his work, Mr Bagga provided Mr Kumar with his credentials, known as his myGovID login credentials (Bagga credentials), for accessing the portal. He had also provided access to the portal by Mr Kumar using the credentials of Mr Bagga’s wife Neetu (Neetu credentials), although Mr Bagga’s wife was not an employee of the Company. Mr Bagga says this was done because Mr Kumar had recently arrived in Australia and, due to some issues concerning providing relevant identification documents, Mr Kumar was not able to obtain his own myGovID.
Using the Bagga credentials, Mr Kumar gained full access to the portal being access equivalent to Mr Bagga. In respect of the Neetu credentials, Mr Bagga said in his statement to the Tribunal dated 9 September 2024 (TB 1292 at para 31):
My wife’s account did not have lodgement authority connected to it: this meant that while [Mr Kumar] could view information concerning AUZ Taxation’s clients, Mr Kumar could not lodge documents (such as BAS) using my wife’s myGov account.
This position was confirmed in oral evidence provided by Mr Bagga at the hearing before the Tribunal.
I note in passing that this last statement concerning the level of access granted to the Neetu credentials appears incorrect. In the ATO document entitled “Intermediary Incident Response: Profile”,[3] which records investigation of the ATO which gave rise to Mr Bagga being informed of fraudulent conduct by Mr Kumar, the ATO said:[4]
Sumit Bagga-Principal Authority
1. AM History log (saved in sharedrive folder)
The dates where FID was added, end dated and BAS lodged were matched to two authorised users.
·Sumit Bagga is the first user who accessed the client account and likely added the FID of concern of both clients.
·Neetu Bagga is the second user who accessed the client account and likely to have lodged a refundable BAS on the client’s account.
[3] TB 494 and following.
[4] TB 105.
Following that statement is the client information and times particular transactions were entered into the portal.
Be that as it may, using the credentials, Mr Kumar fraudulently lodged activity statements on behalf of two companies and directed GST refunds from those companies to be paid into a bank account controlled by Mr Kumar. The refunds were paid on 27 May and 8 June 2022. The frauds were identified by the ATO who, on 10 June 2022, advised Mr Bagga this had occurred. The anomalous transactions were detected through the ATO’s internal processes.
In short, the fraudulent conduct consisted of linking the two taxpayers as clients of the Company, recording the taxpayers’ bank details as an account controlled by Mr Kumar and lodging fraudulent returns for the two companies in respect of the March 2020 two quarter.
Despite his fraudulent conduct, Mr Kumar was not dismissed from his employment. Rather Mr Kumar was issued with a warning letter by Mr Bagga and was permitted to continue working for the Company. Mr Kumar was then permitted by Mr Bagga to use the myGovID of Mr Kumar’s wife, Ms Sayeesha Monga (Ms Monga), for the purpose of accessing the portal (Ms Monga’s credentials). In effect, Ms Monga had access to the portal although she was not an employee of the Company as did Mr Kumar using Ms Monga’s credentials.
During the period of Mr Kumar’s continued employment, two things occurred.
First, Mr Kumar sought to be registered as a tax agent. For this purpose, on 9 February 2023[5] Mr Bagga signed what is referred to in these proceedings as a Statement of Relevant Experience (SRE), certifying Mr Bagga had supervised and controlled the work of Mr Kumar. It is common ground in these proceedings that the SRE was signed by Mr Bagga although it contained errors, being the date Mr Kumar commenced employment with the Company and the answer to section 7 – Summary of tax agent services provided. Mr Bagga says he directed the errors to be corrected before the SRE was submitted to the Tax Practitioners Board by Mr Kumar. However, this did not occur. Rather, the application for registration of Mr Kumar as a tax agent was apparently lodged on about 9 February 2023 with the erroneous SRE.
[5] TB 494 and following.
As necessary, the circumstances in which this occurred are set out in more detail below.
Secondly, using Ms Monga’s credentials, Mr Kumar registered a further taxpayer as a client of the Company on 7 November 2022. This was done in circumstances where the new client said it had not provided its written authorisation and in circumstances where Mr Bagga was not aware of the new client and had not given any authority to Mr Kumar to do so.
It would appear Mr Bagga first became aware of Mr Kumar’s action when advised by the Board in a letter dated 6 March 2023[6] (6 March letter). Inter alia, the Board’s letter stated that a complaint had been made by the new client to the ATO that no authority had been given to the Company to act on its behalf.
[6] TB 334.
The 6 March letter from the Board concerned an enquiry then being made by the Board of Mr Bagga and the Company about the conduct of Mr Bagga as the sole director of the company and the conduct of him and the Company as registered tax practitioners.
Following what Mr Bagga has described as him confronting Mr Kumar on 7 March 2023 about these two matters, the employment of Mr Kumar was terminated on 8 March 2023. However, Mr Kumar was permitted to return to the office on 9 March 2023 “to gather his belongings and conduct a handover of files” during which time Mr Bagga “stayed at the office until Mr Kumar had completed his handover and left the office”.[7]
[7] September Statement [70] – TB 1297.
Access using Ms Monga’s credentials was not removed from the portal by Mr Bagga until 10 March 2023.
In addition to the complaint referred to above, in its 6 March letter the Board identified several other matters about the conduct of Mr Bagga and the Company about which it had concern and sought comment from Mr Bagga. These included:
(a)The application of Mr Kumar for registration as a tax agent and the accuracy of the SRE signed by Mr Bagga;
(b)A referral received by the Board from the ATO on 17 June 2022 concerning the GST refund fraud by Mr Kumar;
(c)Late lodgement of income tax returns and activity statements for companies associated with Mr Bagga as well as late lodgement of his personal tax returns;
(d)Supervision and control by Mr Bagga of Mr Kumar and staff of the Company in general;
(e)Whether there was current professional indemnity insurance for each of the Company and Mr Bagga. In this regard, the information provided by Mr Bagga to the Board through the Board’s portal indicated that insurance for the Company had expired on 24 February 2022 and insurance for Mr Bagga had expired on 24 February 2023.
(f)Whether the conduct of Mr Bagga was otherwise in breach of the TAS Act and whether his registration as a tax agent and that of the Company should be terminated.
By a letter from his former lawyers, Waterhouse Lawyers, dated 3 April 2003 (TB 366), Mr Bagga provided a response on behalf of himself and the Company to the questions asked by the Board (3 April response).
After considering the material provided, the Board’s issued notices dated 13 June 2023 under subdivision 60-E of the TAS Act to commence an investigation about the conduct of the Company and Mr Bagga. The Board identified the potential failure to comply with provisions of the Code of Professional Conduct (Code) found in s 30 of the TAS Act and a failure to meet registration requirements as follows:
(a)Subs 30-10(1) – act honestly and with integrity;
(b)Subs 30-10(2) – comply with taxation laws in the conduct of personal affairs;
(c)Subs 30-10(4) – act lawfully in best interests of client;
(d)Subs 30-10(7) – ensure that a tax agent service is provided competently;
(e)Subs 30-10(14) – must respond to requests and directions from Board;
(f)Subs 20-5(1)(a) – an individual must be a fit and proper person; and
(g)Subs 20-5(3)(a) – each director of a company must be a fit and proper person.
The Code applies to registered tax agents and BAS agents, being individuals and companies. Subsection 20-5(1) sets out the requirements for eligibility for registration of an individual. Subsection 20-5(3) sets out the requirements for eligibility for registration of a company.
Following investigation, a submission to the Board was prepared by the Board’s Investigation Manager dated 27 October 2023[8] (October Investigation Report). In addition to the matters above, the report raised an additional matter, non-compliance with s 20-5(3)(d)(i) of the TAS Act, that is the Company did not have a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements.
[8] TB p. 38 and following.
A copy of the October Investigation Report was provided to the Applicants by letter dated 27 October 2023.[9] The letter gave notice of potential sanctions which would be recommended to the Board, namely:
(a)Termination for not satisfying fitness and propriety requirements.
(b)No longer meeting the registration eligibility requirements.
(c)Termination for Code breaches.
(d)Prohibition on applying for reregistration for a period of 1 to 5 years.
[9] TB p. 34 and following.
Following an extension of time to complete the investigation and allow the Applicants time to respond, the Applicants provided a response to the October Investigation Report by letter from the then solicitors, Robertson O’Gorman dated 15 January 2024.[10] In short, the Applicant said that the Board should not be satisfied the matters identified in the October Investigation Report constitute failures to comply with the Code “other than in relation to compliance with tax legislation in [the Applicants’] personal affairs”.
[10] TB p. 585.
As to sanctions, in a letter of the same date, Robertson O’Gorman said:[11]
[11] TB p. 727.
3. Mr Bagga and Auz Taxation submit:
(a) The Board would exercise its discretion under section 30-15(2) of the TASA to give a written caution, or alternatively to give an order under section 30-20(1) (a); and
(b) The Board would not be satisfied that Mr Bagga has ceased to be a fit and proper person to hold tax agent registration;
(c) The Board would be satisfied that Auz Taxation has sufficient registered tax agents to provide competent tax agent services; and
(d) The Board would not exercise its discretion to suspend or terminate Mr Bagga’s or Auz Taxation’s tax agent registration.
4. Those submissions are made because Mr Bagga and Auz Taxation submit that:
(a) They are both of good character;
(b) Mr Bagga has undertaken further training in relation to ethics, governance and fraud since Mr Kumar’s fraud was discovered in June 2022 and is compliant with his continuing professional education requirements;
(c) Any breaches were a result of mistake, or less than perfect procedures rather than deliberate wrongdoing;
(d) When issues have been raised with Mr Bagga or Auz Taxation, they have cooperated fully with the ATO and TPB;
(e) When issues have been raised with Mr Bagga or Auz Taxation, they have taken steps to amend their business procedures to ensure those issues do not arise again.
The Board did not accept the Applicants’ submissions in relation to meeting the requirements for registration or in respect of the sanctions to be imposed. Rather the Board made the decisions outlined above.
In doing so, the Board made the following findings:
(a)Subs 30-10(1) – act honestly and with integrity;
The Company and/or Mr Bagga did not act honestly and with integrity in that:
(i)they failed to ensure the security of confidential taxpayer information by sharing the personal myGov credentials of the Company’s director Mr Bagga and his wife, with Mr Kumar and allowed him unsupervised access to the portal;
(ii)they allowed Mr Kumar access to confidential taxpayer information which enabled him to lodge false and/or misleading business activity statements and to obtain GST refunds to a bank account controlled by Mr Kumar;
(iii)they allowed Mr Kumar to use myGov credentials of his wife, Ms Monga (who was not an employee of the Company) to access the portal from 14 June 2022 until 9 March 2023, one day after his employment with the Company was terminated.
(iv)Mr Bagga signed the SRE without first having Mr Kumar correct errors concerning the date of his employment and the information concerning the number of returns which Mr Kumar had completed. In this regard the Board found the number of returns said to have been completed “was significantly high and included work Mr Kumar had done prior to his employment commencing with the Company”.
(b)Subs 30-10(2) – comply with taxation laws in the conduct of personal affairs;
The Company and Mr Bagga failed to comply with taxation laws in the conduct of their personal affairs in that:
(i)income tax returns for the Company for the years ending 30 June 2021 and 30 June 2022 were not lodged by their respective due dates;
(ii)instalment activity statements for the Company required to be lodged quarterly in the periods ending 30 June 2022 to 31 December 2022 were not lodged by the due dates;
(iii)Mr Bagga, in his individual capacity, failed to lodge the business activity statement for the quarterly reporting period ending 30 June 2021 by the due date;
(iv)in his capacity as sole director, Mr Bagga failed to ensure:
A.in respect of the Company, failed to ensure various income tax returns and instalment activity statements were lodged by due dates relating to financial years ending 30 June 2021, 30 June 2022 and in the period ending 31 December 2022;
B.in respect of a company known as Foxcell Accounting Pty Ltd, failed to lodge various income tax returns and income activity statements by their due dates in financial years ending 30 June 2020, 30 June 2021 and in the period ending 30 September 2021;
C.in respect of a company known as Foxcell Accounting Pty Ltd, failing to lodge by their due date various quarterly business activity statements in the periods ending 30 June 2016 and 30 June 2017 and various monthly income activity statements and the financial years ending 30 June 2016, 30 June 2017, 30 June 2018, 30 June 2019
D.in respect of the company known as Secure Payroll Pty Ltd, failing to lodge by the due date an income activity statement for the period ending 30 September 2020;
E.in his capacity as a trustee for the Bagga Family Superannuation Fund, failing to lodge by the due date an income tax return for the financial year ending 30 June 2020 by the due date
(c)Subs 30-10(4) – act lawfully in best interests of client;
The Company and Mr Bagga failed to act lawfully in the best interests of their clients in that they failed to advise the two companies who were victims of Mr Kumar’s fraud that, without authorisation:
(i)those entities had been linked as clients of the Company on the portal without the authorisation;
(ii)seven business activity statements had been lodged on behalf of those entities using access which the Company had to the portal;
(iii)updated bank account details in respect of an account controlled by Mr Kumar had been provided to the ATO for each of those entities; and
(iv)those entities had been “delinked … from the Company’s client list on ATO records once Mr Kumar had received the refunds into his bank account”.
(d)Subs 30-10(7) – ensure that tax agent service is provided competently;
The Company and Mr Bagga failed to ensure tax agent services provided by them or on their behalf were provided competently. Failure to provide adequate supervision and control by a registered tax agent resulted in:
(i)Mr Kumar being able to undertake the activities listed in subparagraph (c) above and thereby defraud the two companies;
(ii)Mr Kumar, on 7 November 2022, linking on the portal a third company as a client of the Company without authorisation;
(iii)“The failure to advise [the two companies referred to in subparagraph (c) above] either prior to or after they became clients of the Company that they had been victims of GST fraud undertaken by Mr Kumar” in the circumstances outlined above; and
(iv)the failure to remove the MyGovID credentials for Ms Monga in a timely manner after Mr Kumar’s employment had ceased on 8 March 2023.
(e)Subs 30-10(14) – must respond to requests and directions from Board;
The Company and Mr Kumar failed to respond to requests and directions from the Board in a timely, responsible and reasonable manner in that they failed “to provide adequate responses to some questions in preliminary enquiry letters from the Board dated 6 March 2023 and 13 June 2023, from which identified conduct the Board found “it appeared the Company was trying to conceal the fact that Mr Kumar was using his wife, Ms Monga’s, myGovID and not his own”. This, the Board said, “showed a lack of due regard to the Board as a professional regulator and the statutory requirements under the Code”.
(f)Subs 20-5(1)(a) – an individual must be a fit and proper person;
Mr Bagga was not a fit and proper person by reason of:
(i)his contraventions of the Code identified above, which due to the multiple instances was said to “demonstrate a pattern of consistent disregard for honesty and integrity”;
(ii)as the sole director and supervising agent of the Company, causing the company to engage in conduct in contravention of the Code identified above;
(iii)the failure to comply with personal obligations under the taxation law in respect of his individual affairs and those of the companies for which he was responsible;
(iv)as sole director and sole supervising agent of the Company, failing to comply with the terms and conditions for use of myGovIDs by providing his credentials and those of his wife to Mr Kumar to access confidential information and by allowing Mr Kumar to use the credentials of his wife, Ms Monga;
(v)signing the SRE in circumstances where it was known to be false and without first requiring it to be corrected, which conduct the Board considered “as strongly lacking integrity and unbecoming of a tax practitioner”.
(g)Subs 20-5(3)(a) – each director of a company must be a fit and proper person
The Company ceased to meet the tax practitioner requirements under this section because Mr Bagga, as the sole director and supervising agent of the Company, was not a fit and proper person for the reasons outlined above. In this regard the Board reiterated that the conduct amounting to contraventions of the Code “occurred over an extended period of time” and that, in respect of the SRE, Mr Kumar could not have provided such a statement in support of his application for registration as a tax agent had Mr Bagga not signed the SRE.
(h)Subs 20-5(3)(d)(i) – sufficient number of individuals, being registered tax agent, to provide taxation services to a competent standard and carry out supervisory arrangements.
The Company has ceased to meet the tax practitioner registration requirement to have sufficient number of individuals to provide tax agent services or supervise those employees providing such services. The Company then had approximately 6900 clients under the supervision of its sole supervising registered tax agent, Mr Bagga. The lack of supervision permitted Mr Kumar unauthorised access to the portal and permitted Mr Kumar to permit the frauds identified above.
PROCEEDINGS BEFORE THE TRIBUNAL
Following the commencement of the proceedings, on 11 April 2024 the AAT made the following interlocutory orders (Stay Order):
1.The implementation of the Respondent’s decision of 16 February 2024 to terminate Auz Taxation Pty Ltd’s (the Company) registration as a tax agent is stayed until the decision of the Tribunal on the application for review comes into operation or until further order of the Tribunal;
2.The Applicants will not take on any new clients, including any related entities of existing clients, unless there was a formal retainer in place with that client on or before close of business on 20 March 2024;
3.The Applicants must inform all existing clients, being those that are linked to the Applicants on the Tax Agent Portal as at 12 April 2024, that the Respondent has made decisions terminating the Company’s tax agent registration and Mr Sumit Bagga’s tax agent registration, the details of the Respondent’s findings and decisions, and that these decisions have been stayed pending final determination of the Applications for Review by the Administrative Appeals Tribunal, by:
a.within 7 days, providing to the Respondent the proposed text of a letter to be sent to existing clients for its approval;
b.within 14 business days of the letter being approved by the Respondent, sending the letter to all existing clients; and
c.within 3 business days of issuing the letters to its clients, providing the Respondent a list of all clients to whom the letter was issued (or copies of the letters/emails sent);
4.The Applicants must inform all existing and any new employees that the Respondent has made decisions terminating the Company’s tax agent registration and Mr Bagga’s, the details of the Respondent’s findings and decisions, and that these decisions have been stayed pending final determination of the Applications for Review by the Administrative Appeals Tribunal, by:
a.within 7 days, providing to the Respondent the proposed text of a letter to be sent to existing and any prospective new employees for its approval;
b.within 14 business days of the letter being approved by the Respondent, sending the letter to its existing employees;
c.within 3 business days of issuing the letters to existing employees, providing the Respondent a list of all clients to whom the letter was issued (or copies of the letters/emails sent); and
d.for any new employees, within two weeks of the commencement of their employment, issuing the letter as approved at paragraph 4(a).
Directions were also made for the preparation of the applications for hearing by the Tribunal.
As noted above, the parties provided the Tender Bundle. That bundle included the documents required under s 37 of the AAT Act (colloquially known as the “T Documents”) and the evidence of the parties to be relied upon in this application.
Evidence included the following witness statements:
(a)statement of Mr Bagga dated 15 March 2024 (Bagga March statement)[12];
(b)second statement of Mr Bagga dated 9 September 2024 (Bagga September statement)[13];
(c)third statement of Mr Bagga dated 15 November 2024 (Bagga November statement)[14] concerning events subsequent to the Bagga September statement.
(d)statement of Dr Nalini Prasad dated 9 September 2024 providing character evidence (Prasad statement)[15];
(e)statement of Dheeraj Singh dated 6 September 2024 providing character evidence (Singh statement)[16]; and
[12] TB p. 784.
[13] TB p. 1286.
[14] TB p. 1480.
[15] TB p. 1476.
[16] TB p. 1478.
Statements were also provided by employees or former employees of the Company concerning their qualifications, work and their supervisory roles. An example is that of a former employee, Deva Bodi dated 15 January 2024[17] who gives evidence concerning his role as senior accountant, the manner in which he was trained and the supervisory work undertaken. Another example is the statement of Marwa Cheema dated 15 January 2024[18], a current employee who is also a senior accountant.
[17] TB p. 626.
[18] TB p. 632.
In addition:
(a)each of the parties provided a statement of facts, issues and contentions (SFICS) setting out their respective positions.
(b)The Applicants also provided a reply to the Board’s SFICS.
(c)The Board provided a document entitled Respondent’s Outline of Submissions dated 15 April 2025 (Respondent’s submissions/RS).
The Applicants’ submissions are contained in their SFICS, no separate written submissions being provided by the Applicants.
The hearing of the application occurred on 29 and 30 April 2025. The Applicants were represented by Mr Brown SC and Mr Fitzgerald of Counsel. The Board was represented by Mr Molesworth of Counsel.
At the hearing, Mr Bagga was sworn and gave oral evidence. He was cross-examined concerning his statements and relevant events. No other witnesses were required for cross-examination.
In addition to the Tender Bundle, the Board provided a cross-examination bundle (CB) and a supplementary cross-examination bundle (SCB). The following documents became exhibits in the proceedings:
Exhibit 1Terms and Conditions of the ATO relating to the use of online services for agents.[19]
Exhibit 2A document from the ATO as at 14 April 2025 entitled “Access Manager” setting out permissions in respect of access to the portal[20]. An earlier printout is found at TB 256 and following.
Exhibit 3A document from the Board’s online system setting out professional indemnity insurance details recorded for Aux Taxation, including policy expiration dates.
[19] SCB p. 27-34.
[20] CB p. 6-12.
Following the conclusion of the oral evidence of Mr Bagga, the parties provided oral submissions. As necessary, I will deal with the evidence and submissions below under the heading “Findings and Decision”.
At this stage it is convenient to briefly set out the effect of the oral evidence of Mr Bagga.
Mr Bagga’s oral evidence
Following Mr Bagga being sworn, the three statements (referenced above) were identified as his written evidence for the purpose of these proceedings.
Mr Bagga gave oral evidence concerning:
(a)corrections to his statements;
(b)employees and contractors of the Company, both present and past;
(c)the circumstances in which he was introduced to Mr Kumar;
(d)why, following detection of the fraud by Mr Kumar, Mr Kumar was not dismissed. Here, Mr Bagga gave evidence concerning Mr Kumar having a small child, illness of Mr Kumar’s parents, Mr Kumar stating he would lose everything and Mr Kumar requesting a second chance. The discussions with Mr Kumar resulted in a warning letter dated 14 June 2022 (TB 453) being issued to Mr Kumar.
(e)what action Mr Bagga took in relation to the ongoing employment of Mr Kumar following the fraud. Mr Bagga said:
(i)he stopped sharing the Bagga credentials with Mr Kumar;
(ii)he permitted Mr Kumar to use the Monga credentials. While this authority did not permit lodgement of returns, Mr Kumar still had access to the portal.
(iii)Mr Bagga checked the work of Mr Kumar, although it would appear following positive feedback from clients that they were happy with the work Mr Kumar was doing.
(iv)After a period of time, Mr Bagga ceased supervising the work of Mr Kumar, at least in respect of adding new clients. Subsequently, as noted above, a new client was added to the portal on 7 November 2022 which occurred without authorisation of Mr Bagga.
(v)It was following a complaint from the new client that in February 2023 Mr Bagga became aware Mr Kumar had added a new client. In consequence of this action and having found out around the same time the SRE had been lodged without correction that Mr Kumar’s employment was terminated.
(vi)The circumstances of Mr Kumar’s termination and revocation of authority to access the portal are set out above.
(f)The completion of the SRE. Mr Bagga said at the time he was asked to sign this document his daughter was in hospital and that he was stressed. He accepted that he was foolish signing the document and said this was “obviously … negligence on my side.”
(g)the supervision of staff and his work practices concerning lodgement of returns. Mr Bagga said:
(i)Mr Bagga is the only person who now has authority to lodge returns on the portal. This occurs following online client approval of documents to be lodged. In short, he says he does not authorise the lodgement of a return unless the online process has been completed.
(ii)Preparation of documents for lodgement is done by his staff who work in six offices, including one in Queensland. Mr Bagga accepted that he rarely visits these offices, predominantly working at the Mount Waverley office. For the purpose of carrying out their work, as necessary employees have access to the portal.
(iii)Although there are two current employees who are registered tax agents (and possible another to be qualified in the next month or so), Mr Bagga is the sole registered agent in the business and, as such, has responsibility for all supervision. There is no tax agent in the Queensland office.
(iv)In relation to the undertaking and management of client work, and supervision of staff, Mr Bagga gave the following evidence concerning the present operations:
·Due to the number of clients, it is not possible for him to keep track of all clients added or removed from the portal.
·He is presently working long hours, 7 days per week.
·Currently there are close to 5000 clients of the Company.
·There are in excess of 22,000 returns lodged every year, that is Mr Bagga is required to personally lodge about 480 returns every week.
·Mr Bagga conducts random checks of work done by others. Mr Bagga accepted that he cannot check 100% of the documents before lodgement. However, it is the task of supervisors to check the correctness of documents to be lodged.
·Mr Bagga accepted that in the last 12 months there have been no checks by the ATO or him in respect of work carried out in the Queensland office. However, he said that office was staffed by accountants who have worked for him for many years.
·When asked about his supervision methods, Mr Bagga indicated there were policies which the Company had relating to employees’ work, that checks were made to ensure employees were competent to interview clients and that ATO checks had not suggested any problems with the work being undertaken. Documents entitled “Auz Taxation Pty Ltd Supervisory Plan” and “Auz Taxation Whistleblower Policy” are found at TB 651 and following.
(v)Mr Bagga intends to improve supervision in the future. In this regard Mr Bagga accepted he needed more tax agents to check the work being undertaken by the Company. When asked in cross-examination why this had not occurred, Mr Bagga suggested that the uncertainty concerning registration of the Company meant that he did not want to take the risk that those persons who might be appointed directors of the Company might be in some way prejudiced if the registration was cancelled.
(vi)Mr Bagga was asked about access to the portal by his employees and contractors. While Mr Bagga said they do not have authority to lodge returns through the portal, Mr Bagga accepted that they could change details (for example banking information for ATO refunds) without Mr Bagga knowing. In this regard, Mr Bagga said there was presently no system in place to check what changes were made by employees. However, Mr Bagga suggested this was not an issue because the approval process (that required clients to sign returns before they were lodged) would mean that if funds were misdirected the client would contact the Company if not received.
(vii)Access to the portal, authority granted to employees and contractors and compliance with its terms of use was also the subject of cross-examination Mr Bagga was cross-examined concerning the portal access records entitled Access Manager, particularly the schedules recording authorisations granted at TB 256 and following. As to the terms and conditions for use of the portal, Mr Bagga said that employees were made aware of the ATO terms and conditions but were not given a copy. Mr Bagga also said that employers are told not to share their myGovID. As to whether access is immediately removed following an employee ceasing to work with the company, Mr Bagga said sometimes, although he could not recall any employee’s access that had continued after the date of termination (other than Mr Kumar).
(h)In relation to professional indemnity insurance, Mr Bagga said insurance was current and had not lapsed. However, he accepts that the Board’s portal had not been updated to record expiry dates for current policies and that he should have done so.
THE LAW
These applications relate to termination of the registration of each of the Company and Mr Bagga. It is appropriate to briefly identify some of the legal considerations relevant to determining the proceedings.
As is evident from the Board’s decisions, findings were made against the Applicants, both in connection with the Code and in connection with eligibility for registration. In particular, adverse findings were made concerning whether the Company and Mr Bagga acted honestly and with integrity and/or whether Mr Bagga was a fit and proper person as that expression is used in the legislation.
Where there has been a failure to comply with the Code, the Board (or this Tribunal on review) may do one or more of the following:[21]
·give a written caution;
·give an order under section 30-20;
·suspend registration under section 30-25;
·terminate registration under section 30-30.
[21] TAS Act s 30-15.
In addition, under Part 4 of the TAS Act, registration of a company or individual may be terminated if:[22]
·an event affecting their continued registration, as described in section 20-45, occurs; or
·they cease to meet one of the *tax practitioner registration requirements; or
·they breach a condition of their registration.
[22] TAS Act ss 40-5 and 40-15.
Under Part 4, a person or company may also be prevented from applying for registration for a period up to 5 years after termination.[23]
[23] TAS Act s 40-25.
These are separate powers.[24] The powers serve the object of the TAS Act, namely:[25]
to support public trust and confidence in the integrity of the tax profession and of the tax system by ensuring that *tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct.
[24] Clifford v Tax Practitioners Board (No 2) [2024] FCA 557 at [98].
[25] TAS Act s 2-5(1).
The provisions of the Code of which the Board says the Applicants failed to comply are set out above. So are the requirements for eligibility for registration as a registered tax agent which the Board says the Applicants no longer meet.
In relation to eligibility for registration, this includes a requirement that the individual (as a registered tax agent) or the individual (as a director of a company seeking registration) must be a fit and proper person.[26] In deciding whether an individual is a fit and proper person, s 20-15 of the TAS Act relevantly provides:
20-15 Criteria for determining whether an individual is a fit and proper person
In deciding whether it is satisfied that an individual is a fit and proper person, the Board must have regard to:
(a) whether the individual is of good fame, integrity and character; …
[26] TAS Act s 20-5(1)(a) and s 20-5(3)(a) respectively.
In Ham v Tax Practitioners Board[27] (Ham), Logan J said of the expression “good fame, integrity and character”:[28]
The expression “good fame, integrity and character” is one of wide import. The meaning of each constituent part is obvious enough as a matter of ordinary English and that, in turn, leads to a conclusion that those constituent parts are not necessarily mutually exclusive. Emphatically, the expression is not confined in its application only to those who have been convicted of criminal offences. Further, it is possible to conceive of adverse circumstances, be they criminal conviction grounded or otherwise, which, viewed in an overall context, perhaps in respect of a period of many years duration and years after those adverse circumstances, do not inexorably dictate a conclusion that a person is not of good fame, integrity and character.
[27] [2018] FCA 1652; 108 ATR 869.
[28] Ham at [38].
Logan J then noted that the mandatory requirements of s 20-15 did not confined the enquiry into whether a person was fit and proper.[29] Rather, accepting as still applicable the approaches of Hill J[30] and Davies J[31] in respect of earlier legislation regulating tax agents, His Honour said:
That present statutory context therefore means that an observation with respect to the earlier regime made by Hill J in Stasos v Tax Agents’ Board of New South Wales [1990] FCA 379; (1990) 21 ATR 974 (Stasos) remains apt. His Honour accepted, as had Davies J before him in Re: Su v. Tax Agents Board of South Australia [1982] AATA 127; (1982) 13 ATR 192 (Su), that a tax agent needed to be a person of such competence and integrity that persons may entrust their taxation affairs to him or her. He added that a tax agent would almost invariably have dealings with officers of the Australian Taxation Office and perhaps also the Tribunal, observing (Stasos, at 984):
Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate. This is particularly so now that the Commissioner has proceeded to a system of self assessment, with inaccuracies only coming to light in case of random audit or, presumably, other information coming to the hands of the Commissioner.
[29] Ham at [43].
[30] Stasos v Tax Agents’ Board of New South Wales [1990] FCA 379; (1990) 21 ATR 974 (Stasos).
[31] Re: Su v. Tax Agents Board of South Australia [1982] AATA 127; (1982) 13 ATR 192 (Su).
In Su, Davies J had said:[32]
The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. he should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.
[32] Re: Su v. Tax Agents Board of South Australia [1982] AATA 127; (1982) 13 ATR 192 at 195 line 28 and following.
Integrity is not simply judged by asking the question whether or not there is some dishonest conduct. The use of the expression “integrity” throughout the TAS Act, particularly the requirement in s 30-10(1) that “You must act honestly and with integrity”, does not support such a view.
On the other hand, the plain English meaning of each word does not suggest honesty and integrity are mutually exclusive concepts. In Kishore and Tax Practitioners Board (Kishore),[33] Deputy President Frost observed:
Integrity is defined in the Macquarie Online Dictionary as, relevantly, ‘soundness of moral principle and character; uprightness; honesty’.
[33] [2017] AATA 271.
As such, in my view there may be a lack of integrity and therefore an individual may not be fit and proper, if their conduct is such as to bring into question the trust that their clients, the ATO or the public might place in that individual. This is so even where no dishonesty is involved.
This analysis is consistent with the statement of Toohey and Gaudron JJ in the Australian Broadcasting Tribunal v Bond,[34] where they said:[35]
"The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question."
[34] [1990] HCA 33; (1990) 94 ALR 11 at [56].
[35] [2017] AATA 271 at [9].
To like effect was the statement of Dixon CJ and McTiernan and Webb JJ in Hughes & Vale Pty Ltd v New South Wales (No 2)[36] who said:
… The expression "fit and proper person" is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. "Fit" (or "idoneus") with respect to an office is said to involve three things, honesty knowledge and ability: "honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it" - Coke. …
[36] [1955] HCA 28; (1955) 93 CLR 127 at [9], 156.
It is also consistent with more recent decisions of the AAT.[37]
[37] see e.g. Middlebrook and Tax Practitioners Board [2020] AATA 3698 at [30].
Further, a determination of whether a person is fit and proper requires consideration of the nature and extent of any breaches of the Code. As stated by then Senior Member Redfern in Li and Tax Practitioners Board:[38]
The Code establishes professional standards for tax agents and, while a breach of the Code does not preclude eligibility, repeated or serious breach may demonstrate that the tax agent is not of good fame, integrity and character and thereby, not fit and proper.
[38] [2014] AATA 299 at [47].
In this regard the cases referred to in the Explanatory Paper TPB (EP) 01/2010 Code of Professional Conduct (Explanatory Paper)[39] are examples of enquiries that might be made or conduct that might give rise to a finding an individual is not a fit and proper person in the context of the requirement to act honestly and with integrity.
[39] Explanatory Paper TPB (EP) 01/2010 Code of Professional Conduct (T18 at P. 1058).
As stated by Deputy President Boyle in Cross and Tax Practitioners Board[40] (Cross), the time to assess whether an individual is fit and proper is at the time the Tribunal decides an application. In this regard, the requirement for registration under the legislation is protective in nature. The following observations of Senior Member Taylor SC in Hill and Tax Practitioners Board,[41] set out in Cross at [51]-[52], are relevant to the evaluative task:
[40] [2021] AATA 441 at [46].
[41] [2020] AATA 678.
51. Senior Member Taylor SC in Hill and Tax Practitioner Board (Hill), having cited the passage from Stasos quoted in [48] above, said (at [105]–[106]):
[105] The last sentence in the immediately preceding passage, with its apparent emphasis on the likelihood of future compliance, has been particularly influential in subsequent decisions that have focussed on the protective nature of the registration function – and in the Explanatory Paper itself (see [62]). But, as the full context of Hill J reasoning, and the earlier cited passages from the reasons in Bond [Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321] and Su show, the considerations relevant to the protective function are not limited to subjective confidence in the unlikelihood of future misconduct. Reputation and perceptions are also permissibly relevant considerations. In Stasos, Hill J emphasised that the person’s subjective contrition was not conclusively determinative. His Honour also said that fitness depended on satisfaction that others (clients and tax officers) could confidently be satisfied of his honesty (and competence). The relevance of both actual and reputed honesty and competence was apparent in Hughes and Vale Pty Ltd, as in Bond, Su and Stasos, and it has continued to be apparent in subsequent decisions.
[106] The passages I have cited from the reasons in Su and Stasos, highlight the proposition that satisfaction about a person’s honesty is fundamental to a determination of the contemporary fitness for registration as a tax agent. Emphasis on that proposition is implicit in TASA ss 20-15(b) & 20-45(b). It is an emphasis repeatedly found in other matters. ...
53. At [110] of Hill Senior Member Taylor SC observed:
Where integrity has been called into question by past dishonesty, satisfaction about contemporary good character and fitness, assessed in a forensic context, may properly be influenced (though not determined) by a degree of scepticism. Part of the reason for that scepticism is the self-interested nature of subjective assertions of contrition. Regret about the consequences of discovered and sanctioned past misconduct is one thing, insightful determination and capacity to avoid future misconduct is another:- see Frost – discussed in paragraph 107 above. As Walsh JA said In Ex parte Tziniolis; Re the Medical Practitioners Act (1966) 67 SR (NSW) 448 at 461:
... Reformations of character and of behaviour can doubtless occur but their occurrence is not the usual but the exceptional thing. One cannot assume that a change has occurred merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred. If a man has exhibited serious deficiencies in his standards of conduct and his attitudes, it must require clear proof to show that some years later he has established himself as a different man
and at [117] observed that:
The question whether, and in what circumstances, lapse of time, asserted contrition and the apparently exceptional nature of past misconduct suffice to permit satisfaction of a person’s contemporary fitness and propriety, permits a wide scope for judgment. The answer to the question is correspondingly difficult and admits of different conclusions, about which minds may reasonably differ...
As to sanctions that may be imposed, Deputy President Boyle said in Cross:[42]
[42] Cross at [83]-[84].
83. In considering what sanction was appropriate, Senior Member Redfern in Li at [73]–[74] observed:
73. In Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004-5) 220 CLR 129 at 155, McHugh J commented on the nature of disqualification proceedings and noted that the jurisdiction under the Corporations Act 2001 (Cth) could not be properly characterised as “purely protective”. While the central issue in the case was whether the privilege against exposure to penalties and forfeitures was available to the defendant in civil penalty proceedings, McHugh J cited with approval the principles set out in the decision of Santow J in Australian Securities and Investments Commission v Adler and ors (2002) 42 ACSR 80; [2002] NSWSC 483 at [55]–[56]. In that case, Santow J helpfully set out the guiding principles to be taken into account when the disqualification of a director is being considered. These principles have subsequently been adopted in a number of disqualification cases unrelated to directors’ duties.
74. In Adler Santow J identified the factors relevant to disqualification. I am of the view that these matters are similarly relevant to my consideration of whether termination is appropriate in the circumstances of this case and, if so, whether disqualification of Mr Li from re-applying for registration for a period of three years is also appropriate. The factors referred to by Santow J, that would also be relevant to this case, can be summarised as follows:
(i) banning orders are designed to protect the public from the harm;
(ii) the banning order is protective against present and future breach;
(iii) a banning order has a motive of personal deterrence, though it is not punitive;
(iv) the objects of general deterrence are also sought to be achieved;
(v) in assessing the fitness of a person to be permitted to provide tax agent services, they have an understanding of their role and obligations;
(vi) in assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;
(vii) longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;
(viii) it is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;
(ix) a mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;
(x) it is necessary to assess matters such as the character of the person, the nature of the breaches, risks to others from the continued registration of the person; and
(xi) factors which lead to the imposition of the longest periods of disqualification include large financial losses, high propensity for the person to engage in similar conduct and lack of contrition or remorse.
84. The Tribunal agrees, for the same reasons set out by Senior Member Redfern, that the principles enunciated by the courts in the above cases apply in considering termination or suspension of a tax agent’s registration under TASA.
To the above should be added the following statement of Deputy President Frost in Kishore:[43]
Termination of registration should be reserved for the most serious cases of wrongdoing. That is because, except in the most serious cases, the public and the regulated industry can generally be adequately protected, and the public interest adequately served, by a sanction less severe than termination, or by no sanction at all.
[43] [2017] AATA 271 at [20]
It is against this background that the conduct of the Applicants and any sanctions to be imposed must be considered.
FINDINGS AND DECISION
The Applicants say that the decisions should be set aside. In a document provided to the Tribunal at the hearing of the applications the Applicants propose the following orders:
1. The decisions of the respondent made on 25 January 2024 be set aside.
2. The applicants’ registration as registered tax agents be reinstated, subject to compliance with the following conditions of registration and on the provision of the undertakings from the applicants recorded in these orders:
a. the business of the first applicant taking all reasonable and necessary steps to employ or engage at least three registered tax agents during the period of its registration;
b. all employees and contractors of the first applicant undergoing compulsory training conducted by or on behalf of the applicants concerning the terms of use and requirements of use of myGovID and of the online services for agents platform, including with reference to the Australian Taxation Office’s online publication “Online services for agents terms and conditions” dated 20 March 2025; and
c. the second applicant fulfilling the requirements of paragraph 3 below.
3. Pursuant to s 30-20 of the TASA, the second applicant be directed to undertake, and satisfactorily complete, remedial education in the following courses, and to provide details of his satisfactory completion to the respondent within 7 business days after doing so:
a. "TASA 2009 and The Code of Professional Conduct Course" offered by The Tax Institute.
b. A Certificate IV in Human Resource Management offered by Swinburne University.
4. The stay orders and conditions imposed on the applicants by orders made on 11 April 2024 by Deputy President McCabe be revoked.
AND IT IS NOTED THAT:
A. During the hearing on 30 April 2025, the applicants – by their counsel – proffered the following undertakings to the Tribunal:
(i) Within 1 month of the date of these orders, the applicants will inform:
a. all existing clients – being those that are linked to the applicants on the Tax Agent Portal as at the date of these orders; and
b. all existing and any new employees and contractors,
of the Tribunal’s reasons for decision and of these orders, by sending or providing copies of those reasons and these orders to them.
(ii) Within 14 days after notifications pursuant to the undertaking recorded at paragraph A(i) are complete, the applicants will notify the respondent of the same and will provide a list of all clients, employees and contractors to whom the documents were sent.
(iii) Within 3 months of the date of these orders, the applicants will take all reasonable and necessary steps to effect the appointment of at least one additional director to the first defendant with any such appointee(s) being a registered tax agent.
(iv) Within 12 months of the date of these orders, the applicants will take all reasonable and necessary steps to ensure that:
a. there is at least one registered tax agent employed or engaged by or on behalf of the first applicant at or for each of the business’ branches; and
b. that each of those agents are instructed or required to individually review any documents to be lodged with the Australian Taxation Office on behalf of a client for the first applicant before they are to be lodged by the applicants.
The Board says that its decisions should be affirmed. In particular, the Board says the contraventions of the Code are established on the evidence, as are the circumstances enabling the Board, and the Tribunal on review, to:
(a)terminate the registration of each of the Applicants under ss 40-5 (individuals) and 40-15 (companies) which provisions relate to a tax agent ceasing to meet one of the tax practitioner registration requirements. Those requirements are found in Part 2 – Registration of the TAS Act; and
(b)impose conditions concerning seeking re-registration under s 40-25 of the TAS Act.
The requirements the Board submitted were not met were as follows:
(a)In the case of Mr Bagga, he ceased to satisfy the registration requirements under subs 20-5(1)(a) of the TAS Act, that he be a fit and proper person, in that:
(i)in his capacity as an individual and, also, in his capacity as both the sole director and sole supervising agent of the Company, he had engaged in conduct that breached subsections 30-10(1), 30-10(2), 30-10(4), 30-10(7) and 30-10(14) of the Code;
(ii)he demonstrated a pattern of behaviour of failing to comply with taxation obligations under the taxation laws in relation to his individual affairs and the affairs of entities for which he is responsible;
(iii)in his capacity as sole director and sole supervising agent for the Company he failed to comply with the ATO terms and conditions for use of myGovIDs in that he provided credentials of himself and his wife to Mr Kumar to access the portal and, subsequently, allowed Mr Kumar to use the Monga credentials to access the portal after Mr Kumar had admitted that he had use the credentials of Mr Bagga and his wife to commit GST fraud.
(b)In the case of the Company, it ceased to satisfy the registration requirements under subs 20-5(3)(a) of the TAS Act, that each director of the Company be a fit and proper person, on the following bases:
(i)by his conduct set out in (a)(i) above, Mr Bagga had because the Company to engage in conduct which constituted a breach of the Code;
(ii)Mr Bagga had engaged in the conduct set out in (a)(ii)-(iii) above;
(iii)Mr Bagga had signed the SRE for Mr Kumar before Mr Kumar had corrected errors relating to the start date of his employment with the Company and corrected the number of returns listed as being completed by him, which number was “significantly high and included work Mr Kumar had done prior to his employment commencing with the Company”;
(c)In the case of the Company, it ceased to satisfy the registration requirements under subs 20-5(3)(d)(i) of the TAS Act, the Company have a sufficient number of individuals registered as tax agent, so as to provide tax agent services to a competent standard and to carry out supervisory arrangements. In this regard, tax agent services were provided to “6,919 clients of the Company under the sole supervision of its sole supervising registered tax agent, Mr Bagga” and the lack of supervision and control resulted in:
(i)Mr Kumar gaining unauthorised access to ATO records of taxpayers who were not clients of the Company at the time;
(ii)Mr Kumar committing GST fraud including by the unauthorised addition of clients, updating financial information concerning those clients, lodging BAS without the taxpayers’ knowledge or consent and misappropriating tax refunds and then removing those taxpayers from the Company’s client list once refunds had been received.
Matters not in dispute
A number of matters were not in dispute.
First, the Applicants accepted that there had been a failure both by the Company and by Mr Bagga in complying with their personal tax obligations. Of these matters, the Applicants say corrective action had been taken and systems implemented to avoid recurrence.
Secondly, the Applicants accepted that the process for correction of the SRE was inadequate. Further, Mr Bagga says that the document he was asked to sign was an online generated document and that he had directed Mr Kumar to make corrections to the sections which required adjustment as set out above prior to the document being lodged. Mr Kumar failed to comply with this direction. Mr Bagga said this occurred in circumstances where he was seeking to deal with medical issues in connection with his daughter, who was in hospital.
Thirdly, there was no dispute that Mr Bagga had authorised use of the Bagga credentials, Neetu credentials and the Monga credentials by Mr Kumar to access the portal or that this was contrary to the ATO’s terms and conditions for use of the portal. While the Applicants accepted this may constitute a breach of the ATO terms and conditions, it did not constitute failure to comply with any law nor did it constitute conduct that contravened the obligation to act honestly and with integrity in s 30-10(1) of the Code.
Fourthly, Mr Bagga accepted that there were issues concerning supervision and control of employees and contractors of the Company. In this regard, the Applicants relied on evidence concerning the registered tax agents working for the company (other than Mr Bagga) who might be prepared to act as additional directors or, as tax agents, undertake relevant supervisory work of the Company’s employees and contractors in the future. So much is recognised by the undertaking the Applicants have proposed in the orders which they contend should be made by the Tribunal, set out above.
On the aspect of supervision, I note in his oral evidence Mr Bagga said:
I can't like stand behind every employee of mine considering like different branches and so many employees and I can't do everything by myself.
This oral evidence was, to some extent, contrary to the Bagga September statement where he said of corrective action taken following Mr Kumar’s fraud:[44]
50. I also implemented additional checks in Auz Taxation’s business to prevent future errors for frauds. I directed that senior staff members, Mrs Cheema and Mr Bodi, check all lodgement prepared by staff members and gave them a checklist to do so. If they were not satisfied with the work, they were directed to immediately highlight the mistakes and ask the staff member to corrected.
51. Once Mrs Cheema and Mr Bodi were satisfied with lodgement’s, they were directed to send a list of the lodgement and copies of them to me, so that I could check them personally.
[44] TB p. 1295 at [50]-[51].
Fifthly, the Company had offices in various locations throughout Australia. Five were identified in Victoria. A sixth office was identified in Queensland.
Sixthly, the Company has approximately thirteen contractors and employees. Of those identified in para 13 of the Bagga September statement, Deve Bodi had left the business. Two new employees have commenced since September 2024.
Seventhly, the Company currently has approximately 5500 clients, a reduction of about 1000 clients which occurred following the Applicants notifying existing client of these proceedings as required by the Stay Order.
Fit and proper person
A significant dispute is whether Mr Bagga is a fit and proper person.
The Applicants say Mr Bagga has not been dishonest- any fraud being that of Mr Kumar. Further, other conduct identified by the Board does not demonstrate a lack of integrity.
In my view Mr Bagga has demonstrated a lack of integrity. This is evidenced by the following matters:
(a)Providing the Bagga credentials and those of Mr Bagga’s wife to Mr Kumar to access the portal. These simple acts permitted Mr Kumar to interact with the ATO in the guise of Mr Bagga and his wife. As stated above, the grant of access, at least when using the Bagga credentials was unconstrained.
(b)After Mr Kumar’s fraud had been detected, permitting Mr Kumar to access the portal using the credentials of Mr Kumar’s wife. Again, this authorisation allowed Mr Kumar to interact with the ATO under the guise of a different person.
(c)Each of the acts in a) and b) were contrary to the terms and conditions for use of the portal and provided access in a manner that put at risk the confidential dealings of clients with the ATO. They were also a breach of security. Mr Bagga’s actions enabled Mr Kumar to engage in fraudulent conduct and/or permitted Mr Kumar to hold himself out to the ATO that he was Mr Bagga or someone else who had authority to transact business on the portal.
(d)Signing the SRE and leaving that document in possession of Mr Kumar. The document was, to Mr Bagga’s knowledge, incorrect. Mr Bagga knew the purpose of the document and knew it constituted his personal declaration about the matters stated therein to the regulatory body responsible for registration of tax agents. As with the credentials for accessing the portal, Mr Bagga, in effect, allowed Mr Kumar to use his name and to represent a false state of affairs to the Board concerning Mr Kumar’s experience.
As noted in the authorities to which I have referred and having regard to the legislation in question, a high degree of trust is placed in Mr Bagga as a tax agent in his dealing with clients and the ATO. While it can be accepted that Mr Bagga had no knowledge of Mr Kumar’s fraud, this trust is not met by the actions Mr Bagga has taken and the permissions he has given to Mr Kumar in the use of the portal and permitting Mr Kumar to retain uncorrected documents which Mr Bagga has signed.
As to use of the portal, on any view what Mr Bagga did was to permit Mr Kumar to misrepresent who was using it. Even after the fraud committed by Mr Kumar was detected, Mr Bagga permitted Mr Kumar to access the portal using different credentials, namely Ms Monga’s credentials.
As to the SRE, what occurred is not adequately explained by the injury suffered by his child or the actions of Mr Kumar submitting the document despite any direction by Mr Bagga to correct its content. In short, a document that was not correct should not have been signed by Mr Bagga until any errors were rectified.
Counsel for Mr Bagga submitted that the conduct of Mr Bagga was not dishonest and that he had been candid in admitting mistakes. In this regard reference was made to character witnesses and their evidence Mr Bagga was of good reputation. To some extent, this submission diverts attention from the conduct required of Mr Bagga in satisfying the requirements for being a fit and proper person. While it may go to contrition and any sanction to be imposed, his contrition and acknowledgement of mistakes does not avoid a conclusion that his conduct demonstrates a lack of fitness and propriety.
Further, a failure to comply with the Code may also demonstrate a lack of integrity and, therefore, a lack of fitness and propriety.
Code breaches
In respect of the Code breaches, I make the following findings
subs 30-10(1) – act honestly and with integrity
For the reasons outlined above, the evidence establishes each of Mr Bagga and the Company have failed to comply with the obligation in subs 30-10(1) – act honestly and with integrity.
subs 30-10(2) – comply with taxation laws in the conduct of personal affairs
A breach of the obligation in subs 30-10(2) – comply with taxation laws in the conduct of personal affairs is admitted by the Applicants. However, there is no evidence of continuing breaches, the Applicants submitting past non-compliances have been corrected.
subs 30-10(4) – act lawfully in best interests of client
In relation to subs 30-10(4) – act lawfully in best interests of client, the Board said that there had been a failure to notify the particular clients following the fraudulent conduct of Mr Kumar been detected.
The Applicants said that those affected by the fraud were aware of the fraud after it was detected by the ATO, that there was no ongoing risk to those companies and they suffered no loss- any loss being suffered by the ATO. Prior to that time, there was no obligation on the Applicants as those affected were not clients of the Company, their details having been entered in the portal as part of the fraudulent activity. The Applicants then submitted there was no evidence from the companies or Mr Kumar from which a contrary inference could be drawn concerning knowledge of the companies.
In my opinion, a breach of subs 30-10(4) is not established.
I accept the Applicants’ submission that those affected by the fraud were not clients of the Company. This seems relatively clear from the Board’s SFICS at [75] which details the fraud as being one of Mr Kumar entering the two companies into the portal as clients (when they were not), lodging false BAS to obtain refunds and then delinking those entities from the Company’s client list in the portal.
In circumstances where the affected companies were not clients and were otherwise aware of what had occurred, there appears no basis to conclude the provision has been breached.
It was not suggested there was a separate obligation to communicate to a non-client which had been breached. In circumstances where there had been no loss suffered by the companies and evidence that they were aware of what had occurred, again, there is no reason to conclude there has been a contravention of another of the tax agents’ obligations by reason of the failure to communicate with the companies about what had occurred.
subs 30-10(7) – ensure that tax agent service is provided competently
In relation to the alleged contravention of subs 30-10(7) – ensure that tax agent services is provided competently, the Board says in its SFICS that there was a failure to provide adequate supervision and control of Mr Kumar which permitted him to commit the frauds in question, a failure to advise the affected companies that they had been victims of fraud and a failure to remove Ms Monga’s credentials as a means of accessing the portal in a timely manner following the employment of Mr Kumar being terminated.
The Applicants submit that this provision relates to a “tax agent service”, the definition of which is found in s 95-5 of the TAS Act. However, the matters identified in connection with Mr Kumar’s fraud are not such a service provided on behalf of the Applicants. In essence “the fraud vitiates everything that came before it”. Again, the Applicants relied on the fact that the companies were not clients of the applicants.
As to the issue of supervision generally, the Applicants rely on the evidence of Mr Bagga in the Bagga September statement which details an audit conducted and action taken following discovery of Mr Kumar’s fraud.[45]. Reference was also made to various policy documents concerning the provision of competent services and adequate supervision of staff as well as a whistleblower policy and a document entitled “Updated Policies and Procedures”.[46]
[45] TB p. 1294 at [47] and following.
[46] TB p. 651 and following.
Counsel for the Applicants also submitted there was now three other registered tax agents in the business able to assist in relation to these matters.
In short, the Applicants say that while there may have been past non-compliances, corrective action has been taken.
In the Explanatory Paper, of subs 30-10(7) and the word “competently”, it says (footnotes omitted):
What does ‘competently’ mean?
96. A registered tax practitioner should be a person of such competence and integrity that others may entrust their taxation affairs to the registered tax practitioner’s care. The registered tax practitioner should be a person of such reputation and ability that the Commissioner of Taxation may assume that the taxation returns or other documents lodged by the registered tax practitioner have been prepared honestly and competently.
97. The Macquarie Dictionary provides the following definition of ‘competent’:
‘Competent
1.properly qualified; capable;
2. fitting, suitable or sufficient for the purpose; adequate’
98. Competence, with respect to registered tax practitioners, can therefore be defined as a state of being capable, fitting, suitable or sufficient to provide a tax agent service (including a BAS service or tax (financial) advice service).
The Explanatory Paper continues[47] (citations omitted):
[47] at [101]-[103].
101. The assurance of competence by a registered tax practitioner, in the provision of a tax agent service, requires the registered tax practitioner to:
· act diligently in accordance with applicable technical and professional standards when providing a tax agent service
· maintain knowledge and skills at the level required to ensure that a client is provided with an appropriate standard of tax agent services
· exercise reasonable care in the provision of a tax agent service.
102. The Macquarie Dictionary provides the following definition of ‘diligent’: ‘Diligent’
1. constant and persistent in an effort to accomplish something;
2. pursued with persevering attention’
103. Acting diligently requires a registered tax practitioner to act in accordance with the terms of the client engagement carefully, thoroughly and on a timely basis.
In the context of a tax agent providing services through its employees or contractors, ensuring tax agent services are provided competently requires that a tax agent has in place processes for training others and monitoring the services provided by them. It also involves ensuring safeguards are put in place by way of limiting authority given to employees or establishing controls and audit procedures to ensure that work undertaken by others for whom the tax agent is responsible is performed in an appropriate manner and in compliance with the standards expected of the tax agent.
In In my view, the evidence establishes breaches of subs 30-10(7) of the Code.
Those breaches include the following:
(a)failing to put in place sufficient supervision and controls to monitor and report on use of the portal in a manner likely to prevent or at least detect the fraudulent conduct of Mr Kumar;
(b)allowing the work of employees to be conducted in a manner where they can access and use the portal other than with their own credentials and in circumstances where data can be entered and changes made without the knowledge or direction of the Applicants and/or without any processes to verify the correctness of what has been done or report on its occurrence;
(c)failing to have a sufficient number of tax agents appropriately qualified to supervise the staff on hand at the locations where the business is conducted.
Subs 30-10(14) – must respond to requests and directions from the Board
The Board says the Applicants did not respond to its requests for information in a responsible and reasonable manner. The Applicants failed “to provide adequate responses to some questions in preliminary enquiry letters from the Board dated 6 March 2023 and 13 June 2023”.[48]
[48] Respondent's SFICS at [83].
In response, by reference to the communications in question, the Applicants submitted that responses were timely and appropriate for the questions asked.
Insofar as it is suggested that the Applicants’ response to the letter of 6 March did not address some of the broader issues, namely the authority given to Mr Kumar to use Ms Monga’s credentials, the Applicants submitted that the response was written in the context of requests for information about Mr Kumar’s fraud, not more generally about any legitimate access Mr Kumar had to the portal.
Otherwise, the Applicants say there is no substance to the claim the Applicants were not timely or cooperative in responding to the Board’s enquiries.
Having reviewed the correspondence in question, I am not satisfied there is a breach of subs 30-10(14) of the Code.
A considerable amount of detail was required to be provided by the correspondence from the Board. As questions were reframed, or further questions asked, additional information was provided. The Applicants took the request seriously, instructing lawyers to assist in preparing a response to the serious allegations that were made. Candid admissions were made concerning making the credentials of Mr Bagga and his wife available for use by Mr Kumar. So were there admissions concerning the applicants’ own tax affairs.
I am not satisfied there was any attempt to mislead or obfuscate or any breach of this provision.
Other matters
Subsection 20-5(3)(d)(i) provides:
Companies
(3) A company is eligible for registration as a *registered tax agent or BAS agent if the Board is satisfied that:
…
(d) the company has:
(i) in the case of registration as a *registered tax agent—a sufficient number of individuals, being registered tax agents, to provide *tax agent services to a competent standard and to carry out supervisory arrangements; or
…
I am satisfied this eligibility criteria is not met by the Company.
It is clear from the evidence of Mr Bagga that the there is an insufficient number of tax agents to service all locations. Certainly, the evidence of Mr Bagga to which I have referred above demonstrates that he alone is unable to provide necessary supervision having regard to the number of employees and the amount of work undertaken by the Company for more than 5000 clients. Indeed, in connection with the Queensland office, Mr Bagga gave evidence that he rarely if ever attends and it does not appear there is any employee who is tax agent in that location.
PRESENT POSITION AND SANCTIONS
Having made the findings set out above, it is necessary to decide what, if any, sanctions should be imposed on the Applicants.
As noted above, there are two separate regimes by which sanctions may be imposed. One arises in consequence of a failure to comply with the Code as permitted by s 30-15. The second permits termination in the circumstances provided in s 40‑5 Termination of registration—individual and 40‑15 Termination of registration—companies.
Consistent with the TAS Act and the authorities to which I have referred above, it is necessary to determine whether Mr Bagga is presently a fit and proper person including whether he is of good fame, integrity and character.
The question of present fitness and propriety requires an examination of the past conduct, the nature and severity of any misconduct, whether corrective action has been taken and/or whether there are continuing breaches of obligations the person has, the likelihood of future inappropriate conduct, the persons recognition and remorse for the conduct in question and the degree to which the passage of time might demonstrate matters of misconduct might properly be put in the past.
Past conduct of Mr Bagga indicates a lack of integrity as found above. The conduct was authorising the use of credentials to access the portal and signing the SRE when it was incorrect.
In concluding there was a lack of integrity, I do not consider the conduct should be characterised as fraudulent or carried out in a manner intended to deceive. Rather, the conduct of Mr Bagga was ill considered and certainly inappropriate as it permitted Mr Kumar to act in the guise of others, to commit the frauds referred to above and misrepresent his relevant experience. Consequently, it eroded the trust which the ATO and the Board was able to place in Mr Bagga as a tax agent and director of the Company.
In relation to use of the credentials, after the fraud which involves the inappropriate use of the Bagga credentials was detected, Mr Kumar was not dismissed. Rather, a further authorisation was given to Mr Kumar to use his wife’s credentials. This further authorisation permitted Mr Kumar to again register new clients although Mr Bagga was not aware of this fact and had not given authority for Mr Kumar to do so. It occurred in circumstances where the supervision of Mr Kumar, in the period after the fraud was detected until he was dismissed, declined over time. Here, Mr Bagga said supervision reduced because of positive feedback received about the work of Mr Kumar.
Since Mr Kumar’s dismissal, there is no suggestion other employees have been permitted to access the portal other than with their own credentials.
There were significant breaches of the Code. These include a failure to comply with personal tax obligations and the failure to ensure that tax agent services were provided competently.
Of the first matter, it relates to events in the years 2016 and 2023 and the late lodgement of returns. The particular events and the days late are recorded in the Board’s SFICS.[49] A number of entities for whom Mr Bagga was responsible were involved. The late lodgements concerned income tax returns, income activity statements and business activity statements. Non-compliance ranges from 1 to 201 days late. There were a significant number of late lodgements.
[49] TB p. 1191; TB p. 1193.
Some explanation was provided by Mr Bagga about what occurred, including the impact of the Covid pandemic. This is found in the letter to the Board dated 15 January 2024 dealing with the questions of sanctions.[50] At paragraph 19 the Applicants said:[51]
In relation to the breaches of section 30-10(2) of the Code in relation to the late lodgements, Mr Bagga and Auz Taxation provide the following explanations:
(a) Mr Bagga and his companies were affected in 2020 and 2021 by the Covid-19 pandemic, including in relation to lock downs, infections of staff and being short of staff. These difficulties contributed to Mr Bagga struggling to lodge all tax returns and BAS on time.
(b) Mr Bagga opened the company Foxcell Pty Ltd in mid June 2016, and purchased a business in July 2016. He mistakenly did not lodge a BAS for the June 2016 quarter as he had not yet started trading. He mistakenly registered to submit IAS monthly rather than quarterly and so missed a number of monthly IAS deadlines. In September 2018, Mr Bagga changed the reporting to quarterly IAS.
(c) In relation to Auz Taxation Pty Ltd, the company was not added to the ATO portal for the preparation of IAS and CTR. Mr Bagga called the ATO on three occasions (two occasions on dates unknown before 9/3/23, and on the third occasion on 9/3/23) without success. On 14/3/23 an ATO officer was able to add the company and Mr Bagga then lodged and paid all outstanding tax on the same day.
(d) Mr Bagga was late with his lodgement of Foxcell Pty Ltd’s BAS for June 2022, during a period of high stress after Mr Kumar’s fraud was detected.
(e) Mr Bagga was late with Foxcell Accounting Pty Ltd’s BAS for Dec 2022 because the application for deferral was lodged one day after the due date (lodged on 1/3/23, when due on 28/2/23). This issue is dealt with in row 1 of the table at paragraph 60 of the response to allegations letter.
[50] TB p. 727 and following.
[51] TB p. 730.
The evidence indicates that all personal tax obligations are now being met, any failures have been rectified and that there are no continuing contraventions of the Code.
There were no allegations that the Applicants failed to deal with client affairs on a timely basis.
Of the second matter, there continues to be inadequate supervision of existing staff across all offices of the Company.
However, relevant to the issue of competency and supervision are the following matters:
(a)Mr Bagga has been an accountant and a tax agent registered under the TAS Act since 2016.
(b)The Company presently has more than 5000 clients and makes more than 20,000 lodgements per year. It operates in 6 locations.
(c)Aside from the incidents involving Mr Kumar, it was not suggested in these proceedings that the tax agent services provided by Mr Bagga and the Company to their clients are deficient or substandard.
Quality and timeliness of the tax agent services provided to clients and the good character of Mr Bagga is supported by statements from witnesses who were not cross examined.[52] It is also supported by the company clients have remained with the Company following those clients being given a copy of the Board’s decisions as required by the conditions in the Stay Order.
[52] Dr Prasad – TB p. 1476 and following; Mr Singh – TB p. 1478 and following.
Considered as a whole, I have come to the view that Mr Kumar is a fit and proper person within the meaning of the TAS Act.
While I am satisfied that past conduct demonstrated a lack of integrity, what has occurred since the events involving Mr Kumar, the rectification of non-compliances with personal tax obligations together with a history of dealing with client tax affairs (which appears unblemished) provides me with some confidence that the events of the past will not be repeated.
In these circumstances, in my opinion termination of the registration of each of the Applicants is not warranted and the decisions of the Board should be set aside. This is so notwithstanding the continuing non-compliance by the Company to provide “a sufficient number of individuals, being registered tax agent, to provide tax agent services to a competent standard and to carry out supervisory arrangements” (as required by subs 20-5(3)(d)(i)) and to ensure the obligations of subs 30-10(7) of the Code are met
While I have reached the conclusion that termination is not appropriate, the past conduct and contraventions of the Code requires some sanctions. This is necessary to provide both specific deterrence and general deterrence for past non-compliance and to ensure corrective action is taken in connection with supervisory arrangements and the competency obligations under the Code.
In the present case, a sufficient sanction will be a written caution as provided in subs 30-15(2)(a) of the TAS Act.
While I have considered suspension, it seems to me that such an order would be punitive upon the Applicants and unnecessarily adversely affect the more than 5000 clients of the Company who continue to use the services of and put their trust in the Applicants.
Further, orders and undertakings of a type proposed by the Applicants’ Counsel will address issues of supervision of existing staff and provide a more robust environment, both in terms of directors to manage the Company and additional tax agents to supervise, provide training and maintain the competency and quality of the work done by the applicants’ employees and contractors.
Orders and undertaking of a type proposed by the applicants’ Counsel can be made in the form of orders under the wide power granted by s 30-20 of the TAS Act. Reporting obligations to the Board will ensure the Applicants comply with these orders.
It follows that the Board’s decisions should be set aside, written cautions issued to each of the Applicants and orders made of the type proposed by the Applicants’ Counsel.
DECISION
The Tribunal makes the following orders:
1.The decisions of the Respondent made 24 January 2024 are set aside.
2.Pursuant to s 30-15(2)(b) of the Tax Agent Services Act 2009, each of the Applicants, Auz Taxation Pty Ltd (the Company) and Sumit Bagga (Mr Bagga) is provided a written caution in respect of the contraventions of the Code of Professional Conduct.
3.Pursuant to s 30-20 of the Tax Agent Services Act 2009, the Applicants are to take the following actions:
(a)Within 1 month of the date of these orders, the Applicants must inform:
(i) all existing clients – being those that are linked to the Applicants on the Tax Agent Portal as at the date of these orders; and
(ii) all existing and any new employees and contractors,
of the Tribunal’s reasons for decision and of these orders, by sending or providing copies of those reasons and these orders to them.
(b)Within 14 days after notifications pursuant to order 3(a)(i) are complete, the Applicants must notify the respondent of the same and must provide a list of all clients, employees and contractors to whom the documents were sent.
(c)Within 2 months of the date of these orders, the Applicants must arrange for all employees and contractors of the Company to undergo compulsory training conducted by or on behalf of the Applicants concerning the terms of use and requirements of use of myGovID and of the online services for agents platform, including with reference to the Australian Taxation Office’s online publication “Online services for agents terms and conditions” dated 20 March 2025.
(d)Within 3 months of the date of these orders, the Applicants must arrange for the appointment of at least one additional director(s) of the Company, which appointee(s) must be a registered tax agent, and must notify the respondent of the person or persons so appointed;
(e) Within 6 months of the date of these orders, the Applicants must take all reasonable and necessary steps to ensure that:
(i) there is at least one registered tax agent employed or engaged by or on behalf of the first applicant at each of the business’ branches at which it operates; and
(ii) that each of those agents are instructed or required to individually review any documents to be lodged with the Australian Taxation Office on behalf of a client for the first applicant before they are lodged by the Applicants; and
must notify the Respondent of the persons appointed to those roles.
(f)Within 12 months of the date of these orders, Mr Bagga must undertake and complete remedial education in the following courses, and to provide details of his satisfactory completion to the respondent within 7 business days after doing so:
(i) "TASA 2009 and The Code of Professional Conduct Course" offered by The Tax Institute.
(ii) A Certificate IV in Human Resource Management offered by Swinburne University.
Date(s) of hearing: 29 April 2025, resuming 30 April 2025 Counsel for the Applicant: Mr Brown SC and Mr Fitzgerald of Counsel Counsel for the Respondent: Mr Molesworth of Counsel
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