Borella and Tax Practitioners Board
[2023] AATA 3748
•15 November 2023
Borella and Tax Practitioners Board [2023] AATA 3748 (15 November 2023)
Division: TAXATION AND COMMERCIAL DIVISION
File Number: 2022/4204
Re: Terry Borella
APPLICANT
And Tax Practitioners Board
RESPONDENT
DECISION
Tribunal: Senior Member G Lazanas
Date: 15 November 2023
Place: Sydney
The decision under review is affirmed
......................[Sgd]..................................................
Senior Member G Lazanas
Catchwords
TAX AGENTS – breach of Code of Professional Conduct in Tax Agents Services Act 2009 (Cth) – tax agent registration termination – decision to preclude applicant from applying for tax agent registration for two years – whether applicant complied with taxation laws in the conduct of his personal affairs –where applicant committed repeated breaches of personal tax obligations – where applicant did not respond to an investigation notice from the Tax Practitioners Board – where applicant was given multiple opportunities to rehabilitate – whether applicant a fit and proper person – reckless behaviour - reviewable decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 42C
Tax Agent Services Act 2009 (Cth) ss 2-5, 20-5, 20-15, 30-10, 30-15, 30-20, 30-25, 30-30, 40-5,
40-25, 60-125, 90-1,
Income Tax Assessment Act 1997 (Cth) s 995-1 Cases
Alan Gough and Vision Business Group Pty Ltd and Tax Practitioners Board [2022] AATA 2757 Delis v Tax Practitioners Board [2016] FCA 570
Kishore and Tax Practitioners Board [2017] AATA 271
Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd (2019) 369 ALR 644 Pappalardo v Tax Agents’ Board of Victoria [2003] AATA 990
Re Li and Tax Practitioners Board [2014] AATA 212
Re McCarthy and Tax Practitioners Board [2021] AATA 641 Re Proh and Tax Agents’ Board of Victoria [2010] AATA 149 Ridden and Tax Practitioners Board [2020] AATA 422 Shmuel and Tax Practitioners Board [2019] AATA 2168
Stasos v Tax Agents’ Board of New South Wales (1990) 21 ATR 974 Su v Tax Agent’s Board of South Australia (1982) 61 FLR 1
Toohey and Tax Agents’ Board of Victoria [2009] AATA 603 Worsley and Tax Practitioners Board [2022] AATA 3742
REASONS FOR DECISION
Senior Member G Lazanas 15 November 2023 INTRODUCTION
1.The Applicant, Mr Terry Borella, seeks a review of the decision of the Respondent, the Tax Practitioners Board, dated 31 March 2022 to terminate his tax agent registration pursuant to subparagraph 60-125(2)(b)(ii) and paragraph 40-5(1)(b) of the Tax Agent Services Act 2009 (Cth) (TASA) and to preclude him from applying for registration as a tax agent for a period of two years from the date the termination of his tax agent registration takes effect pursuant to s 40-25(1) of the TASA (Reviewable Decision).
2.The Reviewable Decision was based on the Board’s findings that Mr Borella had breached ss 30-10(2) and 30-10(14) of the Code of Professional Conduct (Code) contained in the TASA. He had failed to comply with the taxation laws in the conduct of his personal affairs and failed to respond to a notice from the Board. Consequently, the Board decided that Mr Borella was not a fit and proper person pursuant to paragraph 20-5(1)(a).
3.Specifically, Mr Borella had repeatedly failed to lodge his income tax returns (ITRs) as well as Business Activity Statements (BASs) by their respective due dates over a long period of time. Mr Borella had also failed to pay outstanding income tax (IT) and integrated client account (ICA) debts as and when they fell due and had additionally defaulted on payment arrangements, he had entered into with the Australian Taxation Office (ATO). There were also other instances of failures by Mr Borella to comply with his tax obligations as well as failures to comply with orders made by the Board and this Tribunal in relation to previous disciplinary matters. While most of Mr Borella’s abovementioned defaults had been rectified by the time of the hearing, it also emerged that he had not complied with other tax
obligations. A helpful summary of Mr Borella’s various defaults as of 14 August 2023 which was prepared by the Board is attached as Annexure A.
4.As these reasons will explain, I have decided to affirm the Reviewable Decision. Amongst other things, I was satisfied that the continued breaches by Mr Borella of his tax obligations demonstrated a precarious pattern of reckless behaviour as to his obligations as a tax practitioner and that a ‘sanction’ less than termination and preclusion from being registered as a tax practitioner for two years would be insufficient to deter him from further breaches of the TASA. The public would also not be protected. Mr Borella did not discharge his burden of proving otherwise.
RELEVANT LEGISLATIVE PROVISIONS
5.The object of the TASA, as stated in s 2-5 is “to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct”. This objective is achieved through the registration regime found in Part 2 of the TASA that applies to all entities who provide tax agent services, the Code in Part 3 of the TASA, and the various sanctions for disciplining tax practitioners.
6.The term ‘tax practitioner registration requirements’ is defined in s 90-1 of the TASA as “the matters about which the Board must, under Subdivision 20-A, be satisfied before the Board is obliged to grant an application for registration under this Act”. Being a ‘fit and proper person’ forms part of a ‘tax practitioner registration requirement’.
7.Paragraph 40-5(1)(b) provides that the Board may terminate the registration of a registered tax agent who is an individual if they cease to meet one of the tax practitioner registration requirements. Relevantly, paragraph 20-5(1)(a) of the TASA provides that an individual is eligible for registration as a registered tax agent if the Board is satisfied that the individual is a ‘fit and proper person’. In determining whether a person is a ‘fit and proper person’ to be registered as a tax agent, the Board must, pursuant to paragraph 20-15(a) of the TASA, have regard to whether the individual is of good fame, integrity and character.
8.Part 3 of the TASA contains the Code that relevantly applies to all registered tax agents. Section 30-10 sets out the Code which relevantly states:
(2) You must comply with the *taxation laws in the conduct of your personal affairs.
(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.
9.‘Taxation law’ is defined in s 995-1 of the Income Tax Assessment Act 1997 (Cth) and includes the TASA and any Act in respect of which the Commissioner of Taxation has general administration. Relevantly, this includes the Acts relating to the requirements for the filing of ITRs and BASs and the payment of income tax and GST. The term ‘personal affairs’ in s 30-10(2) is not defined but is understood to refer to a registered tax agent’s personal taxation obligations. These include obligations regarding their tax agent practice and encompasses matters such as the accurate and timely lodgement of personal ITRs and BASs, timely payment of superannuation guarantee contributions and tax instalment amounts. It also extends to the affairs of all associated entities of the registered tax practitioner and any entity that the registered tax practitioner has direct or indirect control over, including associated companies and trusts (including corporate trustees of trusts).
10.Under Subdivision 60-E of the TASA, the Board is empowered to commence an investigation into, amongst other things, any conduct that may breach the TASA (s 60-95). When the Board conducts an investigation under Subdivision 60-E, and finds that the conduct in issue breaches the TASA, then pursuant to s 60-125(2), the Board must either make a decision that no further action will be taken or do one or more of a number of things, including terminate an entity's registration under Subdivision 40-A.
11.Section 30-15 of the TASA states that if the Board is satisfied, after conducting an investigation that the tax practitioner has failed to comply with the Code, the Board may issue sanctions. The Board is able to give a written caution, make an order under s 30-20, suspend the tax agent’s registration (s 30-25) or terminate the tax agent’s registration (s 30- 30).
THE ISSUES
12.The first issue before the Tribunal is whether Mr Borella failed to meet the requirements of ss 30-10(2) and 30-10(14), being to comply with the taxation laws in the conduct of his
personal affairs and to respond to requests and directions from the Board in a timely, responsible and reasonable manner.
13.The second is whether Mr Borella ceased to meet the tax practitioner registration requirement that he is a ‘fit and proper person’ as required under paragraph 20-5(1)(a) of the TASA.
14.The third issue consists of two parts. The first concerns whether the Board’s decision to terminate Mr Borella’s tax agent registration pursuant to paragraph 40-5(1)(b) of the TASA was appropriate. The second concerns whether the Board’s decision to preclude, pursuant to s 40-25(1) of the TASA, Mr Borella from applying for tax agent registration for a period of two years from the date the termination takes effect, was appropriate.
THE FACTUAL BACKGROUND
15.The following findings of fact are made based on the respective Statements of Facts Issues and Contentions filed by Mr Borella and the Board, as well as the evidence and documents before the Tribunal. I deal with the evidence in more detail further below.
16.It is appropriate to record at the outset that the documents before the Tribunal comprised the T-Documents filed on 28 June 2022 as well as multiple Supplementary T-Documents.1 The Supplementary T-Documents were filed on various dates as they were continuously updated until shortly before the hearing. The last tranche was filed on 24 August 2023 and included, amongst other documents, the status of Mr Borella’s compliance with his tax affairs.2 For example, ST58 showed that Mr Borella had $59,250.01 outstanding on his ICA as of 24 August 2023 in respect of which there was an active payment plan with the ATO entered into on 29 November 2022.3
1 T1-T10 and ST1-ST78.
2 ST57-ST78.
3 ST60.
History of disciplinary interactions
17.Mr Borella has a history of disciplinary matters, including interactions with the Board and this Tribunal. It is appropriate to set this out in chronological order as it is directly relevant to the present proceedings.
18.On 11 August 2015, Mr Borella wrote to the Board voluntarily disclosing a Local Court appearance on 5 August 2015. Mr Borella stated that proceedings had been commenced against him by the ATO due to a failure to lodge three BASs pursuant to the taxation laws by their respective due dates. These were Mr Borella’s BASs for the quarterly tax periods ending 30 September 2014, 31 December 2014 and 31 March 2015. Mr Borella further stated that his barrister had informed the Local Court that he would plead guilty to the offences.
19.On 3 August 2015, Mr Borella lodged his three overdue BASs referred to above.
20.On 12 July 2016, the Board commenced an investigation into Mr Borella pursuant to Subdivision 60-E of the TASA.
21.On 19 December 2016, the Board determined that Mr Borella had breached s 30-10(2) of the Code by failing to comply with taxation laws in the conduct of his personal affairs. The Board noted that as of 19 December 2016, Mr Borella had:
(a)failed to lodge ITRs for the 2015 and 2016 income years by their respective due dates;
(b)failed to lodge five of his BASs (quarterly tax periods ending 30 September 2015 to 30 September 2016 inclusive) by their respective due dates;
(c)a current payment arrangement in place with the ATO to address his outstanding IT debt of $12,176.21 and outstanding ICA debt of $7,294.74.
22.On 20 January 2017, the Board wrote to Mr Borella advising on the outcome of its investigation. The Board decided to issue Mr Borella with a written caution under Subdivision 30-B of the TASA and an order under s 30-20 of the TASA requiring Mr Borella
to lodge all overdue ITRs and BASs within three months from the date of the order (i.e. by 20 April 2017).
23.On 10 April 2017, Mr Borella lodged his overdue ITR for the 2015 income year and, on 1 May 2017, he lodged his overdue ITR for the 2016 year.
24.On 12 May 2017, Mr Borella lodged his overdue BASs for the quarterly tax periods ending 30 September 2015 to 30 June 2016 inclusive. On 5 June 2017, Mr Borella lodged his overdue BAS for the quarter ending 30 September 2016.
25.Although Mr Borella did not comply with the terms of the caution given to him, the Board did not take any further action against Mr Borella at that time.
26.More recently, on 1 March 2019, the Board commenced a further investigation into Mr Borella’s conduct pursuant to Subdivision 60-E of the TASA. At the time, Mr Borella had failed to lodge four of his BASs by their respective due dates, namely, for the quarterly tax periods ending 31 December 2017 to 30 September 2018 inclusive. In addition, Mr Borella had an outstanding IT debt of $74,300.55 which was not subject to a payment arrangement with the ATO and an outstanding ICA debt of $115,485.82 which also was not subject to a payment arrangement with the ATO.
27.On 19 March 2019, Mr Borella lodged his overdue BASs for the quarters ending 31 December 2017 to 30 June 2018. On 28 March 2019, Mr Borella lodged his overdue BAS for the quarter ending 30 September 2018.
28.On 18 July 2019, the Board found that Mr Borella had breached s 30-10(2) of the Code for failing to comply with his personal tax obligations. The Board decided to terminate Mr Borella’s tax agent registration under s 30-30 of the TASA. On 6 August 2019, the Board notified Mr Borella of its decision by letter and on 29 August 2019, Mr Borella applied for review of the Board’s decision in this Tribunal.
29.On 16 January 2020, Mr Borella entered into payment arrangements with the ATO to repay his outstanding IT debt amount, then comprising $76,475.26 and his ICA debt amount, then comprising $231,590.59.
30.On 17 June 2020, Mr Borella and the Board reached an agreement to settle the Tribunal proceedings commenced by Mr Borella referred to in [28] above, without proceeding to a hearing, in accordance with s 42C(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (42C Agreement). The 42C Agreement required Mr Borella (pursuant to an order under s 30-20 of the TASA) to comply with all his personal tax obligations, including compliance with the terms of his current payment arrangements with the ATO in respect of his outstanding IT and ICA liabilities. It also required Mr Borella to undertake a course in the TASA and the Code as approved by the Board and to provide evidence of completion to the Board within three months of the date of the agreement (i.e. by 17 September 2020).
31.In addition to the abovementioned order under s 30-20 of the TASA which was made on 22 June 2020, the Board also issued a written caution to Mr Borella pursuant to paragraph 30- 15(2)(a) of the TASA for his conduct which breached the Code.
32.On 7 April 2021, Mr Borella defaulted on the payment arrangement for his ICA debt. On 18 October 2021, Mr Borella defaulted on the payment arrangement for his IT debt. However, despite being in default, Mr Borella continued to make payments to the ATO up to 22 October 2021.
33.On 12 October 2021, Mr Borella completed a course in the TASA and the Code as per the requirement under the s 42C Agreement, however, the course was completed more than a year after Mr Borella was required to have completed it (see [30] above). The certificate of completion was provided by Mr Borella to the Board on 26 October 2021.
34.On 13 December 2021 the Board sent Mr Borella an email requesting him to address his outstanding ICA and IT debts and lodgement issues by 17 December 2021 or else the Board would commence an investigation.
35.On 21 December 2021, the Board issued a Notice of Decision to Investigate (Investigation Notice) to Mr Borella seeking a response from him by 27 January 2022. The Investigation Notice explained that the Board had commenced an investigation about Mr Borella’s conduct which may have breached the TASA and posed six questions. Mr Borella failed to provide any response to the Investigation Notice.
The Reviewable Decision
36.The abovementioned defaults together with other failures by Mr Borella to lodge his BASs and ITRs on time triggered the Board to take further action that eventually led the Board to make the Reviewable Decision that is the subject of these proceedings. In other words, these proceedings mark the second time Mr Borella has applied for review of a decision by the Board in relation to a decision to terminate this registration as a tax agent.
37.As of 31 March 2022, being the date of the Reviewable Decision, Mr Borella had failed to lodge three quarterly BASs for the quarterly tax periods ending 31 March 2021 to 30 September 2021 inclusive by their respective due dates.
38.In addition, Mr Borella had the following outstanding ATO debts:
(d)IT debt of $14,496.62 which was not subject to a current payment arrangement with the ATO; and
(b)ICA debt of $97,275.19 which was not subject to a current payment arrangement with the ATO.
39.Although Mr Borella had defaulted on his payment arrangements which were the subject of the s 42C Agreement (see [30] above), Mr Borella had made four voluntary payments to his ICA debt and one voluntary payment to his IT debt prior to the Board making the Reviewable Decision. The final payments made by Mr Borella to his ICA and IT debts prior to the Board making the Reviewable Decision were on 22 July 2021 and 22 October 2021, respectively.
40.Subsequent to the Reviewable Decision, Mr Borella failed to lodge a further three of his BASs by their respective due dates for the quarterly periods ending 31 December 2021 to 30 June 2022 inclusive. Also, after the date of the Reviewable Decision, Mr Borella failed to lodge his ITR for the year ending 30 June 2021 by its due date.
41.On 8 August 2022, Mr Borella lodged his overdue BASs for the quarterly periods ending 31 March 2021 and 30 June 2021. On 29 August 2022, Mr Borella lodged his overdue BASs
for the quarterly periods ending 30 September 2021 to 30 June 2022. On 14 September 2022, Mr Borella lodged his overdue ITR for the 2021 income year.
42.On 19 September 2022, Mr Borella lodged his ITR for the 2022 income year.4 On or about 21 September 2022, Mr Borella received the ATO’s notice of assessment for the 2022 income year which indicated a tax refund was due to Mr Borella for that year. The ATO then applied the refund to the amount owing on Mr Borella’s IT account, resulting in no outstanding liability for IT. Any excess funds were to be applied to Mr Borella’s ICA.
43.As of 24 October 2022 (being the date the Board’s Statement of Facts, Issues and Contentions was filed with the Tribunal in respect of these proceedings), Mr Borella did not have any outstanding lodgements of ITRs and BASs with the ATO.
44.As of 1 November 2022, Mr Borella owed the ATO approximately $123,000 on his ICA.
45.As of 15 November 2022, (being the date of a witness statement provided by Mr Borella in these proceedings), Mr Borella stated there was no payment arrangement in place with the ATO in relation to his ICA because he was in the process of preparing the BAS for the quarter ending 30 September 2022 due on 25 Novembers 2022.5 Mr Borella claimed that once that BAS was lodged he anticipated he would have a payment arrangement in place with the ATO by early December 2022.
46.In his witness statement dated 1 February 2023, Mr Borella claimed to have rendered services to a number of clients (including Mr Douchkov – see further below) to the value of approximating $70,000 but had not yet billed them.6 Mr Borella expected that once he issued the invoices and subject to his clients paying him on time, he would be able to discharge his tax liabilities.
47.As of 24 August 2023 (shortly before the hearing), Mr Borella had an ICA debt of
$59,250.017 which was the subject of a payment arrangement with the ATO entered into on 29 November 2022.8 Also, Mr Borella did not owe any income tax and his ITRs were up to
4 ST61.
5 Statement of Mr Borella dated 15 November 2022 (Exhibit A4).
6 Statement of Mr Borella dated 1 February 2023 (Exhibit A5).
7 ST58/496.
8 ST60.
date.9 On the other hand, it transpired that the ITRs for the Terry Borella Family Trust (TB Trust) were outstanding for the 2006 to 2022 income years as were also the BASs for the quarterly tax periods ending 30 September 2008 to 30 June 2023.10 The TB Trust also owed
$16,371.79 in superannuation guarantee charges in respect of which there was no payment plan in place with the ATO.11
THE PROCEDURAL BACKGROUND
48.As stated above at [1] above, the Board made the Reviewable Decision on 31 March 2022, and informed Mr Borella of the decision by letter dated 29 April 2022. The termination of his tax agent registration was to take effect from 27 May 2022.
49.On 26 May 2022, Mr Borella applied to the Tribunal for a review of the Reviewable Decision, and to stay the Reviewable Decision. The Board initially consented to a stay being granted, subject to four conditions, three of whom Mr Borella readily agreed to. However, the condition to which Mr Borella objected was that he had to inform his clients, on or before close of business on 22 August 2022, by way of letter in a form approved by the Board, of the administrative action taken by the Board and the proceedings currently on foot at the Tribunal (Client Notification Condition). Consequently, the matter was listed for a Tribunal hearing on the stay application on 22 July 2022.
50.On 8 August 2022, the Tribunal granted a stay but with all four of the proposed stay conditions, including the Client Notification Condition (collectively, the Stay Conditions).
51.On 2 September 2022, the Board sought to confirm whether the Stay Conditions were adhered to by Mr Borella. On 15 September 2022, the Board sent a letter to Mr Borella requesting a written response together with the letter he proposed to send to his clients to satisfy the Client Notification Condition. The Tribunal was not made aware of Mr Borella’s non-compliance with the requirements of its Stay Order nor of the correspondence between the parties (although the correspondence was filed as part of the Supplementary T-
9 ST61.
10 ST64/509 and ST65/510-512.
11 ST66 and ST67.
Documents in October 2022). Neither party raised with the Tribunal at the hearing the implications of Mr Borella’s non-compliance insofar as it affected the Stay Order.
52.On 20 September 2022, Mr Borella provided the Board with the form of the proposed letter to clients. The letter referred to him being subject to an investigation by the Board as he neglected to file his own ITRs and BASs and had not completed a course as ordered by the Tribunal due to a combination of factors, namely, working on a complex client project in London in 2019 and significant business disruptions brought about by the COVID-19 pandemic in 2020-2021.
53.On 30 September 2022, Mr Borella provided the Board with copies of letters he had issued to two clients in accordance with the Client Notification Condition.
THE EVIDENCE
54.The evidence comprised that of Mr Borella and two of his clients. Mr Borella provided four witness statements12 and also gave oral evidence and was cross examined. Two of his clients, Mr Drew Bolton and Mr Gavin Douchkov, also gave written statements as well as oral evidence and were cross examined.
Mr Borella
55.Mr Borella has been a registered tax agent under the TASA, and its equivalent precursor body, since 30 March 1995. Mr Borella is a sole practitioner. He stated that he runs a small business. However, he provided no information as to how many staff he had, if any, and the number of clients. Significantly, Mr Borella did not adequately explain the circumstances which led to his failures over a considerable period of time.
56.Broadly, Mr Borella accepted that he had failed to meet his tax obligations by failing to lodge by the scheduled due dates his income tax returns for various income years as well as his BASs for various quarterly tax periods. He stated that he considered it important to file accurate statements and the resultant tax. He stated that a failure to file accurate returns
12 They have been marked as Exhibits A3, A4, A5, and A6.
may attract criminal prosecution and or civil and administrative penalties. He considered it acceptable to pay his tax liabilities after they were due as he paid accrued interest charges to the ATO for late payment.
57.Mr Borella also sought to explain his failures to meet his personal tax obligations by reference to the COVID-19 pandemic, which he said caused severe disruptions to his business and cashflow, especially as clients were unable to pay him due to the effects of lockdown restrictions. Mr Borella submitted that the Board failed to take into account the difficulties he and, more generally, the tax profession experienced in relation to COVID-19 and the lockdown restrictions. He also stated that the Board overlooked the fact that the ATO had granted extensions to him in relation to the payment of his tax liabilities at various times. Furthermore, he stated that he had complied with the payment arrangements he had entered into with the ATO in 2020 until the COVID-19 pandemic caused him and his clients to have cashflow difficulties to service payments. Mr Borella also stated that he continued to make payments to the ATO during 2021 even though he was in default of the payment arrangements.
58.A problem with Mr Borella’s claims in relation to the implications of the COVID-19 pandemic is that he provided no independent evidence such as contemporaneous financial statements to support his assertions that his business suffered from the COVID-19 pandemic and/or lockdown restrictions. His evidence was very general and glib in nature. It was, therefore, difficult to evaluate its veracity. Besides, it was clear from the chronology of events set out above that Mr Borella had already accrued significant outstanding taxation liabilities before the onset of the COVID-19 pandemic, although it is acknowledged he had entered into payment arrangements with the ATO in relation to those liabilities. For example, as of 16 January 2020, Mr Borella had an outstanding IT debt of $76,475.26 and an outstanding ICA debt of $231,590.59 (see [29] above). He defaulted on the payment arrangements in April 2021 and October 2021 (see [32] above.
59.Separately, Mr Borella stated that a major client of his was compelled to supply a considerable amount of financial information about its various entities as part of a bank review of its finances. Mr Borella stated that he had no alternative, but to cease work for other clients and devote his time and resources to assisting this particular client so that the client would not default on its bank loans. Apparently, that client then used the bank dispute as a basis for refusing to pay for Mr Borella’s services. However, again, apart from these
broad statements, Mr Borella provided no details or independent evidence to support his assertions as well as the timing of these events and their impacts on him and his business. It was difficult in all the circumstances to glean the extent to which Mr Borella was affected with respect to meeting his own tax obligations by him ostensibly prioritising his clients’ affairs.
60.Mr Borella claimed to have substantially complied with the s 42C Agreement (see [30] above). However, he accepted under cross examination that he had not completed the course within the stipulated timeframe. He sought to justify his delay by explaining that he had wanted to do a course in person, instead of online, and also that he could not find any suitable topics.
61.As to the s 30-20 order by the Board requiring him to enter into payment arrangements with the ATO following the s 42C Agreement, Mr Borella maintained that he was not able to have any meaningful discussions with the ATO about a payment arrangement until he had brought his various lodgements up to date.
62.In relation to the Investigation Notice that Mr Borella received from the Board (see [35] above), Mr Borella provided various explanations, including in his witness statement dated 26 September 2022 that, due to work pressures and the onset of the Christmas break, a response to the Board was not sent.13 At the hearing, Mr Borella attempted to suggest that he had responded to the Investigation Notice, or that he may otherwise have been confused as he received another communication from the Board dated 24 February 2022 to which he responded on 17 March 2022. He further stated in his written submissions following the hearing that his response dated 17 March 2022 was in relation to both of the Board’s letters 21 December 2021 and 24 February 2022. However, Mr Borella’s letter dated 17 March 2022 expressly references the Board’s letter dated 24 February 2022.14 Finally, Mr Borella added that the Board knew or ought to have known that requiring a response by him by 27 January 2022 was designed to cause undue stress and that he would not be able to adequately respond or obtain legal advice during that period. Even if that were accepted
13 Statement of Mr Borella dated 26 September 2022 (Exhibit A3), [26].
14 T6/130.
(which it is not), it is not clear why Mr Borella did not communicate with the Board and request an extension of time as a pragmatic way of dealing with such a request.
63.With reference to Mr Borella’s failure to meet the timeframe in the Stay Conditions with respect to the Client Notification Condition (see [49] and [51] above), Mr Borella acknowledged that he did not comply by 22 August 2022. He sought to explain his failure by stating that he had changed legal representatives at or about that time. Mr Borella stated that he instructed his new legal representatives to prepare the letter and forward it for approval by the Board and that once it was approved by the Board, he sent the letters to his clients on 29 September 2022. However, the evidence of at least one of his clients at the hearing revealed that Mr Borella had not sent the letter until 13 October 2023 (see [71] below).
64.Mr Borella sought to distinguish his conduct from other instances of disciplinary action taken by the Board against other tax agents by pointing out that he had not been the subject of any complaints of serious wrongdoing. For completeness, it is noted that the Board acknowledged that it had received a complaint which Mr Borella had addressed by way of correspondence. The correspondence is attached to Mr Borella’s witness statement dated 1 August 2023.15 It suffices to observe that the Board did not make any submissions about the complaint at the hearing as it appeared to be about a client requesting documents from Mr Borella in circumstances where the client wanted to engage another tax agent. Apparently, Mr Borella was exercising a lien over the client’s files until his invoices were paid.
65.In relation to the TB Trust, Mr Borella acknowledged under cross examination that he had been the sole director of the trustee company of the TB Trust (TB Trustee) since his mother passed away in August 2005. The Board also referenced the fact that despite the deregistration of TB Trustee by the Australian Securities and Investments Commission, neither the ATO nor the Australian Business Register had been provided with the details of the current trustee. However, prior to the deregistration of the TB Trustee, one of the two issued shares was held, legally and beneficially, by Mr Borella while the second share was
15 Statement of Mr Borella dated 1 August 2023 (Exhibit A6).
held, legally only, by his late mother. TB Trustee as trustee of the TB Trust has also been continually registered for GST since 1 July 2006.
66.In relation to failures to keep the tax lodgements and payments relating to the TB Trust up to date, Mr Borella stated that it had not traded or generated any income since 1 July 2008 and was, therefore, not required to make any income tax lodgements. Additionally, Mr Borella claimed to be unaware of any tax debt owed by the TB Trust until recently when its ICA was added to his tax agent listing as another tax agent was, according to Mr Borella previously responsible for its lodgements. As to past periods, Mr Borella noted that it had lodged and paid its quarterly BASs for the 2006-2007 financial year, with the exception of the June 2007 quarter which remained unpaid. The TB Trust had also lodged its quarterly BASs for 2007-2008 financial year with minimal financial activity occurring during that year, but evidently hadn’t lodged any BASs since then – see Annexure A.
67.Mr Borella’s evidence was very high level and vague. He did not satisfactorily explain his repeated failures to lodge his ITRs and BASs by the scheduled due dates over a significant period of time. His explanation that his timeliness issues with filing his ITRs and BASs was due to his need to ensure the filings were accurate as otherwise he risked criminal and civil penalties also does not pass muster. Of course, the returns had to be accurate and complete, but they were also required to be lodged with the ATO by stipulated dates, as the failure to do so can also attract penalties. Amongst other things, Mr Borella could also not properly explain why he had failed to respond to the Investigation Notice sent by the Board. His suggestion that he may have been confused as he recalled responding to later correspondence from the Board dated 24 February 2022 was dubious. His subsequent submission that his letter dated 17 March 2022 in fact responded to both the Investigation Notice and the other Board letter was unreliable (see [62] above). Furthermore, Mr Borella failed to show any insights as to his failures. At no stage, notwithstanding his four written statements and oral testimony at the hearing, did Mr Borella take the opportunity to express any remorse or contrition for his failings.
Mr Bolton
68.Mr Bolton provided a written statement dated 1 February 2023 and gave oral evidence and was cross-examined at the hearing.16 Mr Bolton is a director of Drew Bolton & Associates Hospitality Consultants Pty Ltd (DB Company) (the other director being Mr Borella). Mr Bolton was also previously a director of Short Street Kitchen Catering & Events Pty Ltd (the other director and equal shareholder was Mr Douchkov – see further below).
69.Mr Bolton stated that he engaged Mr Borella to assist with the tax filings of DB Company and his personal tax affairs in April 2020 as his previous accountant had failed to keep the tax lodgements up to date and he had difficulties negotiating with the ATO. Mr Bolton stated that between April and November 2020, Mr Borella had provided accounting services to DB Company and himself in relation to tax returns and issued invoices for work done, but that due to the restrictions associated with the pandemic which impacted his cashflow, he had entered into a payment arrangement with Mr Borella regarding the payment of the fees commencing on 19 January 2021. Mr Borella continued to provide accounting services and render invoices to Mr Bolton. Mr Bolton stated that the business of DB Company had slowly returned to normal and that there had been discussions with the ATO about the tax liabilities owed by DB Company and himself. Mr Bolton stated that with Mr Borella’s assistance he had a payment arrangement with the ATO about the outstanding tax liabilities and, as of the date of his witness statement, his BAS lodgements were up to date.
70.Under cross-examination, it emerged that as of 13 February 2023, the ITR of DB Company for the 2022 income year which was scheduled to be filed by 31 October 2022 was overdue. Separately, as of 24 August 2023, DB Company owed a tax debt of approximately $222,000 which was outstanding since April 2023. Mr Bolton stated that he had not requested any assistance from Mr Borella in negotiating a payment arrangement with the ATO for that debt.
71.Mr Bolton additionally stated that he received a letter from Mr Borella on 13 October 2022 with the subject heading ‘Notification to clients regarding review of Tax Practitioners Board
16 Statement of Mr Bolton dated 1 February 2023 (Exhibit A1).
decision – no action required’ which notified him, for the first time, about the present proceedings in the Tribunal.17 See also [63] above.
72.Mr Bolton’s evidence was relatively straightforward and I accept it. . The cashflow difficulties Mr Bolton experienced during the pandemic lockdown restrictions and the fact he had to enter into payment plans with Mr Borella supported Mr Borella’s claim that he was experiencing cashflow difficulties on account of clients.
Mr Douchkov
73.Mr Douchkov provided a written statement dated 27 January 2023 and gave oral evidence at the hearing and was cross-examined.18 Mr Douchkov stated that he was a director of Neptune Hospitality Pty Ltd (Neptune) and Kanki Sea Tourism Hospitality and Entertainment Pty Ltd, and that both of those companies were in a joint venture trading as Seadeck International (Seadeck JV).
74.According to Mr Douchkov, in January 2018, Mr Borella had been engaged to work on the tax affairs of Seadeck JV. In September 2018, a dispute arose between the parties to the Seadeck JV and following proceedings in the Federal Court, joint receivers were appointed. Mr Douchkov stated that it was his understanding that Mr Borella was required as part of the Court’s orders to provide fortnightly profit and loss and associated financial reports to the joint receivers and other parties. When the Seadeck JV ended in April 2019, the joint receivers then decided to offset against any debts owed to Mr Borella during their time of appointment with payments of fees which were approved during their appointment but which related to services rendered prior to the receivers’ appointment period. According to Mr Douchkov, Mr Borella had disputed this arrangement and litigation ensued. However, contrary to what Mr Douchkov had considered to be Mr Borella’s involvement in providing services to the joint receivers of the Seadeck JV, counsel for the Board referenced a decision of Rares J of the Federal Court in Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd (2019) 369 ALR 644. His Honour rejected Mr Borella’s assertion that he was the independent accountant for the Seadeck JV and, in doing so, noted that Neptune’s
17 ST31/212.
18 Statement of Mr Douchkov dated 27 January 2023 (Exhibit A2).
senior counsel accepted that Mr Borella had acted only as Neptune’s accountant at all times.19 The result was that Mr Borella had undertaken work and rendered invoices where he was not properly engaged to act and, therefore, could not recover his fees.
75.Separately, Mr Douchkov acknowledged that he may owe a tax debt of approximately
$200,000 as a result of a Directors Penalty Notice issued to him for an amount owing by a company in relation to the abovementioned court proceedings. However, Mr Douchkov stated that he considered the ATO probably owes the company money once all the matters from the court proceedings were finalised. Mr Douchkov further stated that it had not been possible for him to negotiate with the ATO regarding the alleged tax liability as he was awaiting the finalisation of matters.
76.Mr Douchkov stated he and his related companies including Neptune continue to be clients of Mr Borella. Mr Douchkov testified that Mr Borella had provided him with a range of accounting services which helped him resolve issues with the ATO including negotiating with the ATO about payment of outstanding tax liabilities. He stated Mr Borella had gone above and beyond for his accounting affairs and that he would be attending to payment of Mr Borella’s fees as soon as practicable as his business was still recovering from the impacts of COVID-19.
77.I accept Mr Douchkov’s evidence, but note that his understanding of Mr Borella’s role with Seadeck JV was incorrect. Mr Douchkov recounted that his business in the hospitality industry had suffered from the COVID-19 pandemic lockdown restrictions, and he owed Mr Borella payments for his services and would attend to payment as soon as practicable. Mr Douchkov was also appreciative of Mr Borella’s efforts in assisting him.
DID MR BORELLA BREACH SECTIONS 30-10(2) AND 30-10(14) OF TASA?
78.Mr Borella has breached s 30-10(2) of the Code both in relation to himself and the TB Trustee.
19 ST51/183, [143].
79.Annexure A lists more than 100 failures of Mr Borella to comply with the Code occurring over the last 16 years, including by reference to the time taken to remedy each failure.
80.The failures with respect to s 30-10(2) as regards Mr Borella are, as follows:
(a)33 BASs have been lodged late for tax periods between 2013 and 2023; and
(b)5 ITR have been lodged late between 2014 and 2022; and
(c)he has had ICA and IT debts not subject to payment arrangements and, after entering into payment arrangements, has defaulted on each of them in 2021.
81.The failures with respect to s 30-10(2) as regards Mr Borella in his capacity as the person who had control over the TB Trustee are, as follows:
(a)3 ITRs are overdue and outstanding between 2007 and 2008;20
(b)59 BASs are overdue and outstanding for tax periods between 2008 and 202321; and
(c)the TB Trustee has a superannuation debt which is outstanding with no payment arrangement in place since 2011.
82.The failures of Mr Borella which concern s 30-10(14) are, as follows:
(a)in 2017, Mr Borella was late in complying with a s 30-20 order by lodging 5 of his overdue BASs late and 1 of the overdue ITRs late;
(b)from 2020 onwards, Mr Borella was late in complying with the 42C Agreement, and an associated s 30-20 order:
20 This is on the assumption the TB Trust has not earned any income since 1 July 2008.
21 Broadly, if a trustee of a trust is registered for GST, the trustee of the trust must lodge a BAS for each tax period even if the net amount for the period is zero: A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act), ss 31- 5, 184-1, 195-1 definitions of “entity” and “you”. If a trustee of a trust is registered for GST but not carrying on an enterprise, it must apply to the Commissioner to cancel its registration within 21 days of the cessation of the carrying on of any enterprise: GST Act, s 25-50. This means that, absent cancellation of registration, the trustee of the trust remains required to lodge BASs, even if they are zero.
(i)in 2020, Mr Borella was late in completing and notifying the Board of his completion of a course in the TASA and the Code;
(ii)lodging 8 BASs late for tax periods in 2020 to 2023;
(iii)having 1 BAS overdue and outstanding for a tax period in 2023;
(iv)lodging 1 ITR late for 2022; and
(v)defaulting on 2 payment arrangements in 2021); and
(c)in 2022, Mr Borella failed to respond to the Investigation Notice from the Board, with this failure remaining unremedied as at the date of the hearing.
83.I was not satisfied that the various explanations provided by Mr Borella adequately addressed his numerous and repeated failures. Mr Borella has repeatedly failed over a period of more than ten years to comply with his taxation obligations. Moreover, his non- compliance continued after the s 42C Agreement and after the date of the Reviewable Decision. I acknowledge that by the date of the hearing he was up to date with his personal tax lodgements, had entered into a payment arrangement for his ICA and, in addition, had no IT debt. The situation with respect to the TB Trustee had not, however, been remedied before the hearing. Regardless, the fact remains that Mr Borella has had a systemic pattern of non-compliance for which he offered no cogent explanation. He also did not adequately explain why he failed to respond to the Board’s Investigation Notice.
84.I also considered it to be significant that, at no stage, did Mr Borella express contrition for his failure to lodge his ITRs and BASs by the scheduled due dates. On the contrary, under cross examination, he stated that his overriding obligations were to lodge accurate returns and pay the resultant tax. He did not consider timeliness of lodgements and payments to be critical factors. Mr Borella suggested that the fact of him paying his tax liabilities late was permissible in circumstances where he paid interest charges accruing on the tax liabilities. Mr Borella was either unwilling or unable to accept that he had serious shortcomings with respect to the timeliness of his personal tax obligations. As a tax agent, he not only had to file accurate returns, he also had to do so on time (or else obtain extensions). Similarly, he had to pay his tax liabilities on time or else make payment arrangements with the ATO and adhere to those arrangements.
85.Accordingly, Mr Borella breached ss 30–10 (2) and 30–10 (14) of the Code in that he did not comply with the taxation laws in the conduct of his personal affairs and he did not respond to requests from the Board in a timely, responsible and reasonable manner.
IS MR BORELLA A FIT AND PROPER PERSON AS REQUIRED UNDER TASA?
86.The Board submitted that Mr Borella has ceased to meet the tax practitioner registration requirement that he is a ‘fit and proper person’ as required under paragraph 20-5(1)(a) having regard to the following matters:
(d)his failure to comply with his personal tax obligations which breached ss 30-10(2) and 30-10(14) of the Code and his complete lack of action to make any attempt to rectify his lodgement and debt shortcomings in a timely manner;
(e)his history of non-compliance with his obligations under the Code (including his personal tax obligations), which has resulted in previous investigations and sanctions; and
(f)his blatant disregard for the terms of the 42C Agreement and s 30-20 order issued by the Board.
87.The Board also maintained that Mr Borella’s conduct demonstrated a disregard for the Board and, significantly, he did not show any remorse or acknowledgement of any wrongdoing on his part.
88.Consequently, the Board submitted that Mr Borella has not discharged his burden of proving that he is a person of good fame, integrity and character and reputation and a fit and proper person to be a registered tax agent.
89.I agree with the Board’s submissions. While there is no statutory definition of the expression ‘fit and proper person’, it is clear that the Board and the Tribunal standing in the shoes of the Board, must consider the matters contained in s 20-15(a) of TASA, namely, whether the agent is of good fame, integrity and character. However, determining whether someone is a fit and proper person is not confined to these factors as the test plainly confers wide discretion.
90.Furthermore, the assessment of whether a person is a fit and proper person is to be made at the time of the decision, not the time of the wrongdoing: see Re Li and Tax Practitioners Board [2014] AATA 299; at [52] (Redfern SM, as she then was).
91.In Su v Tax Agents’ Board South Australia (1982) 61 FLR 1 (Su) Davies J held as follows in relation to the ‘fit and proper person’ test at 4-5:
A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation…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.
92.My approach is also informed by the numerous Court and Tribunal authorities which have canvassed the application of the ‘fit and proper person’ test. Relevantly, the authorities have reiterated that a failure to comply with personal tax obligations is inconsistent with a person being fit and proper and is sufficiently serious of itself to justify a finding that a person fails to meet the fit and proper person requirement. Those authorities also stand for the proposition that it is unnecessary for there to be any aspect of fraud or dishonesty. A bad personal record in tax matters by a tax agent can alone sufficiently render that person not a fit and proper person to remain registered as a tax agent. See especially Delis v Tax Practitioner’s Board [2016] FCA 570 at [41] (Davies J); Re McCarthy and Tax Practitioners Board [2021] AATA 641 (McCarthy) at [85] (Grigg M); and Shmuel and Tax Practitioners Board [2019] AATA 2168 (Schmuel) at [23]-[24] (Groom SM).
93.Clearly, a failure of an agent to attend to their own taxation affairs goes to the heart of the duties and capacity of a tax agent because it may demonstrate a lack of suitability of the tax agent to handle the affairs of their clients: Re Proh and Tax Agent’s Board of Victoria; [2010] AATA 149 (Proh) at [15] (McDonald DP); Su at 5 (Davies J); Shmuel at [23] (Groom SM). Further, a failure by a tax agent to comply with their taxation obligations may impact the tax agent’s relationship with the ATO, which “may in turn reflect on their handling of their client’s taxation affairs”.: McCarthy at [45] (Grigg M), citing Su.
94.A registered tax agent should hold themself up to a higher standard than the general public and lead by example: Toohey and Tax Agents’ Board of Victoria [2009] AATA 603 at [36]
(McDonald DP). This is because a registered tax agent is expected to have a working knowledge of tax laws and the importance of lodging accurate tax returns on time. Their clients, as well as the general public, should be able to entrust their taxation affairs to the agent and have confidence that their agent will be able to lead by example and also file their tax returns accurately and, on time, as required by the law.
95.A failure to adequately respond to correspondence from the Board has also been held to be a failure to treat the Board with proper respect, and a serious neglect of the business of a tax agent: Pappalardo v Tax Agent’s Board (Vic) [2003] AATA 990 (Pappalardo) at [30] (Dwyer SM). It may reflect adversely on an agent’s fitness and propriety for registration, as it can reveal a lack of appreciation of the significance of completely and promptly responding to requests from regulatory authorities. Similarly, the failure by a tax agent to comply with a s 30-20 order issued by the Board demonstrates a lack of appreciation of the importance of compliance with a registered tax agent’s obligations under the TASA, as well as a lack of respect for the Board as the regulator of the agent’s profession.
96.Obviously, a breach of a Tribunal’s stay order is also significant in and of itself and reflects poorly on a person’s fitness and propriety as it shows a lack of respect to legal institutions. See also Worsley and Tax Practitioners Board [2022] AATA 3742 at [83], [97] (Kirk SM).
97.In reaching the conclusion that Mr Borella is not a fit and proper person and, therefore, does not meet the tax practitioner registration requirements, I have taken into account the fact that Mr Borella did not provide a sufficient explanation for the breaches, nor are the breaches one-off or isolated instances. Rather, the breaches were systemic in that he was repeatedly non-compliant in his lodgements over a long period. Further, he failed to rectify his pattern of non-compliance with lodgement timeframes, despite being given multiple opportunities to do so. Other breaches occurred after Mr Borella had been notified of the Reviewable Decision. While it is acknowledged that Mr Borella rectified most of his breaches before the hearing, he still had not attended to any of the outstanding BASs or ITR lodgements of the TB Trust nor has its outstanding superannuation debt been paid or a payment arrangement been entered into.
98.The Tribunal may nevertheless find that a person is not a fit and proper person even if at the time of the hearing there are no longer any outstanding breaches. The Tribunal must consider the person’s current fitness to be a tax agent having regard to the whole of his or
her conduct: Proh at [15] (McDonald DP). The recurring failures by Mr Borella to lodge on time and to adhere to payment plans highlight a much larger pattern of non-compliance that cannot be excused by short bursts of rectification. Mr Borella did not demonstrate that he had rehabilitated his non-compliant behaviour.
99.A lack of contrition or a failure to appreciate any wrongdoing is another factor that is considered relevant to whether a person is a fit and proper person to be a registered tax agent. For example, in Stasos v Tax Agents Board (1990) 21 ATR 974, Hill J stated at 985:
a person who has been shown to be other than a fit and proper person to be registered must satisfy the Tribunal considering his re-registration or cancellation of his registration as the case may be, that he appreciates the significance of his wrongdoing, that he regrets it and that he has rehabilitated himself such that it is truly unlikely that there will be any lapse in the future of the standards which are required of him. The more serious his dereliction from duty the longer may be the time necessary to show this. It will not be sufficient for him to merely express his contrition. The Tribunal must be satisfied on the balance of probabilities that not only is that contrition actually felt, but that he will not again deviate from the high standards required of him as a registered tax agent.
100.In both his written statements and in his evidence at the hearing, Mr Borella failed to express any contrition and or show any insight as to his numerous breaches which has reinforced my view that he is not a fit and proper person to be a registered tax agent. Neither the Board nor the Tribunal was given any assurance that Mr Borella appreciated his failures, that he had rehabilitated and that the non-compliance would not occur again in the future. In this regard, see also Ridden and Tax Practitioners Board [2020] AATA 422 at [9]-[10], [21]-[22] (McCabe DP); Alan Gough and Vision Business Group Pty Ltd and Tax Practitioners Board [2022] AATA 2757 at [22]-[25], [45], [47] (Kirk SM).
WAS IT APPROPRIATE FOR THE BOARD TO TERMINATE MR BORELLA’S TAX AGENT REGISTRATION?
101.The Board’s decision to terminate Mr Borella’s tax agent registration was made pursuant to paragraph 40-5(1)(b) for failing to meet the tax practitioner registration requirement that Mr Borella is a fit and proper person. Mr Borella’s registration was not terminated pursuant to
s 30-30 of the TASA as a sanction pursuant to paragraph 30-15(2)(d) of the TASA for failure to comply with the Code. However, the Board submitted, and it is well established, that the question of the appropriateness of the exercise of the discretion in paragraph 40-5(1)(b) is to be governed by similar principles to those concerning the imposition of sanctions pursuant to paragraph 30-15(2)(d).
102.Against that background, it is important to keep in mind that the stated object of the TASA is “to ensure that *tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. This is to be achieved by (among other things):
(a)establishing a national Board to register tax agents and BAS agents;
(b)introducing a *Code of Professional Conduct for *registered tax agents and BAS agents; and
(c)providing for sanctions to discipline registered tax agents and BAS agents.
103.In any event, the imposition of sanctions for breaches of the Code is not for the purpose of punishing the individual, but for the protection of the public and the maintenance of proper standards within the regulated industry and, in addition, sanctions may also serve the purpose of personal (specific) or general deterrence: Kishore and Tax Practitioners Board [2017] AATA 271 (Kishore) at [18] (Frost DP). Numerous factors should be taken into account in deciding an appropriate sanction, including the seriousness of the conduct; the likelihood that the conduct will be repeated and the potential harm to the public if it is; the impact of a particular sanction on the individual (especially where the sanction may inhibit or prevent the individual’s capacity to earn a living); and the extent to which the individual has demonstrated genuine contrition or remorse: Kishore at [19] (Frost DP).
104.It is acknowledged that the primary purpose of exercising the discretion to cancel a tax agent’s registration is to protect the public from agents who are not conforming to the legislative requirements attaching to their registration as agents. This is because if a tax agent is not competent at their work the public should be protected from relying on them for performance of the tasks required of a tax agent: Papparlardo at [44] (Dwyer SM).
105.I was satisfied that the repeated failure of Mr Borella to lodge his ITRs and BASs by the scheduled due dates over such a long period of time, his failure to remedy these failures in a timely manner, his inability to rectify his behaviour despite being given multiple opportunities to do so, and other breaches as referred to above, justify the Board’s decision to terminate his tax agent registration. Mr Borella could not have been in any doubt that his failure to comply with taxation laws in relation to his personal affairs was a serious matter, as he holds a position of trust as a tax agent to conduct his personal tax affairs in a way that maintains public confidence. While I accept the evidence of Mr Bolton and Mr Douchkov, that they were experiencing cashflow difficulties due to the COVID-19 lockdown restrictions, their difficulties in paying Mr Borella’s fees do not wholly account for nor excuse Mr Borella’s repeated non-compliance. Mr Borella’s history of non-compliance was problematic before the onset of the COVID-19 pandemic and continued before and after the Reviewable Decision.
106.I consider the fact that Mr Borella did not treat his obligations under the TASA with sufficient seriousness or to demonstrate appropriate respect and willingness to co-operate with the Board further supports my conclusion that the Board was correct to terminate his registration.
107.I accept that termination of registration should only 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: Kishore at [20]. I acknowledge this case is not in the most serious category. Notwithstanding, taken as a whole, the conduct of Mr Borella in light of the fact that he has been given multiple opportunities to rehabilitate and has not demonstrated any capacity or willingness to do so, means that termination of his tax agent registration for a period is warranted. He has also shown no insight nor contrition for his failures.
108.The Board’s decision to terminate the Applicant’s tax agent registration pursuant to paragraph 40-5(1)(b) is appropriate, having regard to all the circumstances.
WAS IT APPROPRIATE FOR THE BOARD TO DETERMINE THAT MR BORELLA IS PRECLUDED FROM APPLYING FOR REGISTRATION AS A TAX AGENT FOR TWO YEARS?
109.I agree with the Board’s submission that the only outcome of this proceeding which will sufficiently protect the public from Mr Borella, maintain proper standards within the regulated tax agent profession, and serve the purposes of specific and general deterrence, is for Mr Borella’s registration to be terminated, and a two year prohibition placed on his application for registration.
110.I have taken into consideration Mr Borella’s repeated failure to remedy outstanding tax lodgements and his failure to display contrition at any stage. Other factors that have influenced my conclusion on the two year preclusion period are the indisputable facts that several prior attempts to regulate Mr Borella’s conduct, and to caution him, have been unsuccessful in deterring him. It will also be recalled that this is the second time the Board has decided to terminate Mr Borella’s tax agent registration. The first time the proceedings were settled and then Mr Borella breached the 42C Agreement knowing that the alternative had been for the proceedings to consider the termination of his registration. His continuation as a tax agent having regard to those circumstances and his recalcitrant attitude risks undermining the effective functioning of the tax agent profession and its standing in the eyes of the public.
111.Given Mr Borella’s history with disciplinary matters, the Tribunal cannot be satisfied that any lesser action than deregistration for a period of two years would have the appropriate deterrent effect on Mr Borella or more generally. The period of two years is sufficient time for Mr Borella to attend to the unremedied obligations of himself and the TB Trust and to put processes and systems into place to ensure such breaches will not occur in the future. Significantly, this period of prohibition will also signify to both the public and the tax agent profession the seriousness of non-compliance by tax agents of their obligations regarding their personal affairs under the TASA, as the effective functioning of the profession is in the public interest.
DECISION
112.The Board’s Reviewable Decision, namely, the decision to terminate Mr Borella’s tax agent registration pursuant to paragraph 40-5(1)(b) and to preclude him from applying for registration as a tax agent for a period of two years from the date the termination of his tax agent registration takes effect is affirmed.
I certify that the preceding 112 (one hundred and twelve) paragraphs are a true copy of the reasons for the decision herein of Senior Member G Lazanas
...............................[Sgd].........................................
Associate
Dated: 15 November 2023
Date(s)ofhearing: 28 August 2023 Dateoflast submissions:
25 September 2023
CounselfortheApplicant:
Mr E Yin
Solicitorsforthe Applicant:
Nightingale Lawyers West
CounselfortheBoard
Ms C Ensor
SolicitorsfortheBoard
Mr C Febbraro, Tax Practitioners Board
ANNEXURE A
No. Date of failure Event Relevant part of Code Date breach remedied Days late Terry Borella 1. 18/03/2013 Failure to lodge BAS for the period ended 31 Dec 2012 by due date s 30-10(2) 11/05/2015 784 2. 27/05/2013 Failure to lodge BAS for the period ended 31 Mar 2013 by due date s 30-10(2) 11/05/2015 714 3. 26/08/2013 Failure to lodge BAS for the period ended 30 Jun 2013 by due date s 30-10(2) 11/05/2015 623 4. 25/11/2013 Failure to lodge BAS for the period ended 30 Sep 2013 by due date s 30-10(2) 25/05/2015 546 5. 28/02/2014 Failure to lodge BAS for the period ended 31 Dec 2013 by due date s 30-10(2) 25/05/2015 451 6. 26/05/2014 Failure to lodge BAS for the period ended 31 Mar 2014 by due date s 30-10(2) 25/05/2015 364 7. 25/08/2014 Failure to lodge BAS for the period ended 30 Jun 2014 by due date s 30-10(2) 25/05/2015 273 8. 31/10/2014 Failure to lodge ITR for the period ended 30 Jun 2014 by due date s 30-10(2) 25/05/2015 206 9. 11/12/2014 Failure to lodge BAS for the period ended 30 Sep 2014 by due date s 30-10(2) 03/08/2015 235 10. 03/03/2015 Failure to lodge BAS for the period ended 31 Dec 2014 by due date s 30-10(2) 03/08/2015 153 11. 26/05/2015 Failure to lodge BAS for the period ended 31 Mar 2015 by due date s 30-10(2) 03/08/2015 69 12. 16/05/2016 Failure to lodge ITR for the period ended 30 Jun 2015 by due date s 30-10(2) 10/04/2017 329 13. 25/11/2015 Failure to lodge BAS for the period ended 30 Sep 2015 by due date s 30-10(2) 12/05/2017 534 14. 29/02/2016 Failure to lodge BAS for the period ended 31 Dec 2015 by due date s 30-10(2) 12/05/2017 438
15. 26/05/2016 Failure to lodge BAS for the period ended 31 Mar 2016 by due date s 30-10(2) 12/05/2017 351
No. Date of failure Event Relevant part of Code Date breach remedied Days late 16. 25/08/2016 Failure to lodge BAS for the period ended 30 Jun 2016 by due date s 30-10(2) 12/05/2017 260 17. 31/10/2016 Failure to lodge ITR for the period ended 30 Jun 2016 by due date s 30-10(2) 01/05/2017 182 18. 25/11/2016 Failure to lodge BAS for the period ended 30 Sep 2016 by due date s 30-10(2) 05/06/2017 192 19. 28/02/2017 Failure to lodge BAS for the period ended 31 Dec 2016 by due date s 30-10(2) 31/07/2017 153 20. 20/04/2017 Failure to lodge overdue ITR for the period ended 30 Jun 2016 by date ordered in s 30-20 order s 30-10(14) 01/05/2017 11 21. 20/04/2017 Failure to lodge overdue BAS for the period ended 30 Sep 2015 by date
ordered in s 30-20 order
s 30-10(14) 12/05/2017 22 22. 20/04/2017 Failure to lodge overdue BAS for the period ended 31 Dec 2015 by date
ordered in s 30-20 order
s 30-10(14) 12/05/2017 22 23. 20/04/2017 Failure to lodge overdue BAS for the period ended 31 Mar 2016 by date ordered in s 30-20 order s 30-10(14) 12/05/2017 22 24. 20/04/2017 Failure to lodge overdue BAS for the period ended 30 Jun 2016 by date
ordered in s 30-20 order
s 30-10(14) 12/05/2017 22 25. 20/04/2017 Failure to lodge overdue BAS for the period ended 30 Sep 2016 by date
ordered in s 30-20 order
s 30-10(14) 05/06/2017 46 26. 26/05/2017 Failure to lodge BAS for the period ended 31 Mar 2017 by due date s 30-10(2) 09/10/2017 136 27. 25/08/2017 Failure to lodge BAS for the period ended 30 Jun 2017 by due date s 30-10(2) 08/06/2018 287
28. 27/11/2017 Failure to lodge BAS for the period ended 30 Sep 2017 by due date s 30-10(2) 16/07/2018 231 29. 28/02/2018 Failure to lodge BAS for the period ended 31 Dec 2017 by due date s 30-10(2) 19/03/2019 384
No. Date of failure Event Relevant part of Code Date breach remedied Days late 30. 15/05/2018 Failure to lodge ITR for the period ended 30 Jun 2017 by due date s 30-10(2) 16/07/2018 62 31. 29/05/2018 Failure to lodge BAS for the period ended 31 Mar 2018 by due date s 30-10(2) 19/03/2019 294 32. 27/08/2018 Failure to lodge BAS for the period ended 30 Jun 2018 by due date s 30-10(2) 19/03/2019 204 33. 26/11/2018 Failure to lodge BAS for the period ended 30 Sep 2018 by due date s 30-10(2) 28/03/2019 122 34. 28/02/2019 Failure to lodge BAS for the period ended 31 Dec 2018 by due date s 30-10(2) 28/03/2019 28 35. 01/03/201922 Outstanding IT debt not subject of a payment arrangement s 30-10(2) 16/01/202023 321 36. 01/03/201924 Outstanding ICA debt not subject of a payment arrangement s 30-10(2) 16/01/202025 321
22 And prior.
23 Payment arrangement entered into.
24 And prior.
25 Payment arrangement entered into.
37. 17/09/2020 Failure to complete course in TASA and Code and provide evidence of completion to the Respondent in breach of 42C Agreement and s 30-20 order by the agreed date s 30-10(14) 26/10/2021 404 38. 25/11/2020 Failure to lodge BAS for the period ended 30 Sep 2020 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
02/12/2020 7 39. 07/04/2021 Default on payment arrangement for ICA debt in breach of 42C Agreement and s 30-20 order ss 30-10(2),
(14)
29/11/202226 601 40. 26/05/2021 Failure to lodge BAS for the period ended 31 Mar 2021 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
08/08/2022 439
No. Date of failure Event Relevant
part of Code
Date breach remedied Days late 41. 25/08/2021 Failure to lodge BAS for the period ended 30 Jun 2021 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
08/08/2022 348 42. 18/10/2021 Default on payment arrangement for IT debt in breach of 42C Agreement and s 30-20 order ss 30-10(2),
(14)
27/09/2022 344 43. 25/11/2021 Failure to lodge BAS for the period ended 30 Sep 2021 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
29/08/2022 277
26 Payment arrangement entered into.
44. 27/01/2022 Failure to respond to request for information from the Respondent dated 21 Dec 2021 s 30-10(14) Not remedied Not remedied 45. 28/03/2022 Failure to lodge BAS for the period ended 31 Dec 2021 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
29/08/2022 154 46. 26/05/2022 Failure to lodge BAS for the period ended 31 Mar 2022 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
29/08/2022 95 47. 08/06/2022 Failure to lodge ITR for the period ended 30 Jun 2021 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
14/09/2022 98 48. 22/08/2022 Failure to inform clients of this proceeding by due date in breach of condition 4 of stay conditions 14/11/2022 84 49. 25/08/2022 Failure to lodge BAS for the period ended 30 Jun 2022 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
29/08/2022 4 50. 28/02/2023 Failure to lodge BAS for the period ended 31 Dec 2022 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
21/03/2023 21 51. 26/05/2023 Failure to lodge BAS for the period ended 31 Mar 2023 by due date (also breach of 42C Agreement and s 30-20 order) ss 30-10(2),
(14)
25/07/2023 60
No. Date of failure Event Relevant part of
Code
Date breach remedied Days late Terry Borella Family Trust
52 15/05/2007 Failure to lodge ITR for the period ended 30 Jun 2006 by due date s 30-10(2) Outstanding Outstanding 53 31/10/2007 Failure to lodge ITR for the period ended 30 Jun 2007 by due date s 30-10(2) Outstanding Outstanding 54 31/10/2008 Failure to lodge ITR for the period ended 30 Jun 2008 by due date s 30-10(2) Outstanding Outstanding 55-
113
11/11/2008-
26/05/2023
Failure to lodge 59 BAS for the periods ended 30 Sep 2008 to 31 Mar 2023 by due dates (also breach of 42C Agreement to the extent post 17 June 2020 and s 30-20 order to the extent post 22 June 2020) ss 30-10(2),
(14)
Outstanding Outstanding 114 21/04/2011 Outstanding superannuation guarantee debt not subject of a payment arrangement ss 30-10(2),
(14)
Outstanding Outstanding
0
13
0