Can Do Accounting Services Pty Ltd and Tax Practitioners Board (Practice and Procedure)
[2025] ARTA 24
•9 January 2025
Can Do Accounting Services Pty Ltd and Tax Practitioners Board (Practice and Procedure) [2025] ARTA 24 (9 January 2025)
Applicant:Can Do Accounting Services Pty Ltd
Respondent: Tax Practitioners Board
Tribunal Number: 2024/3871
Tribunal:General Member R Smith
Place:Adelaide
Date:9 January 2025
Decision:The application for a stay of the decision is refused. The interim stay order is discharged.
……………[SGND]………………………….
General Member R Smith
CATCHWORDS
PRACTICE AND PROCEDURE – application to stay decision under review – termination of tax agent registration – whether stay necessary to secure the effectiveness of the review – whether the discretion to grant stay enlivened – stay refused – interim stay order discharged.
LEGISLATION
Administrative Review Tribunal Act 2024 (Cth)
The Tax Agent Services Act 2009 (Cth)
CASES
Kender v Australian Securities and Investments Commission [2018] AATA 4445
Le’Sam Accounting Pty Ltd v Tax Practitioners Board [2020] AATA 890
Ridden v Tax Practitioners Board [2020] AATA 422
Scott v Australian and Securities and Investments Commission [2009] AATA 798Statement of Reasons
INTRODUCTION
On 9 May 2024, a decision was made by the Tax Practitioners Board (“the Respondent”) to terminate the tax agent registration of Can Do Accounting Services Pty Ltd (“the Applicant”, “the Company”) and to impose a two-year period during which the Applicant may not apply for registration.
The Applicant has applied for a stay of the decision of the Respondent until final determination of the review.
On 3 July 2024, the Tribunal ordered by consent that the Respondent’s decision be stayed on an interim basis until the Tribunal hears and determines the stay application or until further order. The interim stay order was made subject to a condition that the Applicant would not accept or contract with any new clients.
The Respondent opposes the stay application.
BACKGROUND
Facts
The following facts are uncontroversial and not disputed by the Applicant.
The Company’s sole director and shareholder is Ruaidhri Carslake (Mr Carslake). On 28 May 2018, Mr Carslake, on behalf of the Applicant, applied for the Company to be registered as a tax agent. Mr Carslake in his personal capacity has never been a registered tax agent.
As part of the application, the Applicant named Mr. Jeffrey Pringle (Mr Pringle) as the relevant supervising tax agent. Mr. Pringle did not work for the Company and never provided any supervisory functions.
On 12 June 2018, the Applicant was registered as a tax agent.
On 26 May 2021, the Applicant lodged a tax agent registration renewal application which listed Mr Pringle and Selviana Schembari (Ms Schembari) as the supervising tax agents. The renewal application required the Applicant to make a declaration as to the truth and correctness of the information supplied.
Mr Pringle was listed as a supervising tax agent for the Company between 28 May 2018 to 16 January 2024.
Ms. Schembari was listed as a supervising tax agent of the Applicant from 1 August 2019 to 31 January 2024. During this time the Applicant filed 3790 lodgments with the Australian Taxation Office (ATO). Of those only 129 were reviewed by Ms. Schembari, the remainder were filed by Mr. Carslake on behalf of the Applicant.
From 1 February 2024, Mr. Yoong Wee Low (“Mr. Low”) has been recorded as the supervising tax agent of the Applicant.
On 3 June 2024, a company known as Can Do Advisory Pty Ltd was incorporated. The directors of that company are Mr. Low and Flynn Carslake - who is Mr. Carslake’s son. Can Do Advisory Pty Ltd was registered as a tax agent on 28 November 2024.
On 2 December 2024, Mr. Carslake advised the Australian Taxation Office in writing that there had been a whole of practice transfer from the Applicant to Can Do Advisory Pty Ltd and that all the Applicant’s clients had agreed to become clients of the new company.
The Decision Under Review
The Respondent commenced an investigation following a complaint by Ms Schembari on 14 January 2024 and Mr Pringle on 16 January 2024. In broad compass, the complaints alleged the Company misrepresented to the Respondent that the Applicant had an authorised supervising agent and that the nominated agent provided supervisory functions between 2019 and 2023.
By its decision dated 9 May 2024, the Respondent determined that there had been serious breaches of the Code of Professional Conduct under the Tax Agent Services Act 2009 (Cth) (the Code) by the Applicant, and that the Applicant ceased to meet the tax practitioner registration requirements under section 20-5(3)(a) of the Tax Agent Services Act 2009 (Cth) (the TASA) by virtue of the fact that the Director was no longer a fit and proper person.
Each of these findings provided a basis for the Respondent to terminate the Applicant’s tax agent registration pursuant to sections 30-15(2)(d) and 40-15(1)(b) of the TASA. In addition to terminating the Applicant’s tax agent registration, the Respondent also decided, pursuant to section 40-25(1) of the TASA that the Applicant may not reapply for registration as a tax agent for two years from the date of termination.
THE STATUTORY FRAMEWORK
The TASA
Section 2-5(1) of the TASA sets out the objects of the Act, namely, to support public trust and confidence in the integrity of the tax profession and system, ensuring that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.
This is achieved, in part, through the registration and regulation of entities that provide tax agent services by the Respondent, in conjunction with the Code for registered tax agents.
For a company to be eligible for registration as a tax agent, the Respondent must be satisfied that the director is a fit and proper person.[1] In determining whether an individual is a fit and proper person, the Respondent must have regard to the matters set out in section 20-15 of the TASA which relevantly include “whether the individual is of good fame, integrity and character”.
[1] Tax Agent Services Act 2009 (Cth) ("the TASA”) ss 20-5(3)(a).
There is a further requirement that there be a sufficient number of individuals being registered tax agents to provide tax agent services to a competent standard and to carry out supervisory arrangements.[2]
[2] Ibid ss 20-5(3)(d).
These provisions are supported by the Code, which includes an obligation that a registered tax agent “must act honestly and with integrity”.[3]
[3] Ibid ss 30-10(1).
The Respondent is empowered by Subdivision E of the TASA to undertake an investigation into conduct that may be in breach of the Act.[4] Upon completion of an investigation, if the Respondent finds the conduct breaches the Act, the Respondent must either make a decision to take no further action or to do one or more of items set out in subsection 60-125(2)(b). This extends to one or more of the sanctions under the Subdivision 30-B of the TASA, which include, but are not limited to: a caution, suspension of a tax agent’s registration and termination of the tax agent’s registration.[5]
[4] More specifically section 60-95.
[5] Section 30-15 of the TASA.
A company tax agent registration may be terminated under subdivision 40-A if the director ceases to meet one of the registration requirements, which includes whether the director is a “fit and proper person”.
Where the Respondent terminates a tax agent’s registration following an investigation, the Respondent may also determine a period of in which the tax agent may not reapply for registration. This can be up to five years.[6]
[6] Ibid ss 40-25.
Administrative Review
A decision of the Respondent to terminate a tax agent’s registration is reviewable by the Tribunal, as is a decision to impose a period during which the tax agent may not reapply for registration.
The Tribunal exercises all the powers and discretions conferred upon the original decision maker to determine the correct or preferable decision in relation to the decision under review.[7]
[7] Administrative Review Tribunal Act 2024 (Cth) (“the ART Act”) s 54.
Staying the Implementation of a Decision
Making an application to the Tribunal seeking a review of a decision does not affect the operation of the decision.[8] However, on an application by party to a proceeding for a review of a reviewable decision, the Tribunal may make an order staying or otherwise affecting the implementation of the decision if the Tribunal considers that it is desirable to do so for the purpose of ensuring the effectiveness of the review.[9]
[8] Ibid ss 32(1).
[9] Ibid ss 32(2).
In other words, the grant of the stay must only be for the specific purpose of securing the effectiveness of the review and this purpose must be kept front of mind when determining the application.[10] It is not enough, by way of an example, that the Applicant or Respondent will experience some other consequence. Further, a stay should only be granted if the Tribunal is of the view the stay is desirable for this purpose.
[10] See the comments of Deputy President McCabe (as he then was) in Kender v Australian Securities and Investments Commission [2018] AATA 4445 at [5].
The Respondent submitted that given the Applicant has now purportedly transferred all of its clients to Can Do Advisory Pty Ltd, the Applicant cannot satisfy the Tribunal that a stay of the decision would secure the effectiveness of the review. With no clients, there will be no loss to the Applicant if the stay is refused.
The evidence of Mr. Carslake in relation to the establishment of Can Do Advisory Pty Ltd and the transfer of the client base was not entirely clear. He stated in his evidence that the internal structure of Can Do Advisory Pty Ltd was not finalised, that it did not have a bank account and the business was not trading. The transfer was relatively recent to the interlocutory hearing, and it was not entirely clear whether the transition of services had been completed. Accordingly, it is appropriate to consider the factors referred to below.
Before making, varying, revoking or staying a reviewable decision, the Tribunal must take into account the interest of any person who may be affected by the review of the decision.[11]
FACTORS FOR CONSIDERATION
[11] Section 32(7)(b) of the ART Act.
General Principles
The matters relevant to the granting of a stay are well established.[12] They are:
a. the prospects of success;
b. the consequences for the Applicant of the refusal of a stay;
c. the public interest;
d. the consequences for the Respondent in carrying out its functions;
e. whether the application for a view would be rendered nugatory if a stay were not granted;
f. any other relevant matter.
[12] Scott v Australian and Securities and Investment Commission [2009] AATA 798.
The onus of satisfying the Tribunal that a stay is desirable in the circumstances lies with the Applicant.
CONSIDERATION OF FACTORS
The Respondent’s Findings
The Respondent was satisfied on the balance of probabilities that the Applicant:
a. breached the Code by:
i.failing to act honestly and with integrity. In particular, the Applicant made a false or misleading statement in the application for renewal of tax agent registration lodged with the Board on 26 May 2012, by listing Mr Pringle as the supervising agent in circumstances where Mr Pringle never performed any services as a supervising agent for the Company; and
ii.failing to ensure that tax agent services provided by or on behalf the Company, were provided competently. More specifically, that between 1 August 2019 and 31 January 2024 there were no supervisory arrangements. During this period 3661 unsupervised lodgements were made by the Applicant.
b. ceased to meet the tax practitioner registration requirement under paragraph 20-5(3)(a) of the TASA on the basis that the Director was not a fit and proper person as a consequence of:
i.him facilitating the conduct that caused the Applicant to breach the Code (which they concluded demonstrated that Mr Carslake was not of good fame, integrity and character);
ii.him personally preparing the lodgements without a tax agent registration or under the supervision of an appropriately authorised supervising agent;
iii.that Mr Carslake knew or ought to have known that failing to understand or meet his obligations under the TASA would fall short of the expectations required by a sole director of a company; and
iv.that Mr Carslake holds a position of influence and trust in a small community.
The Applicant’s case
The Applicant filed a very lengthy document with the Tribunal on 16 December 2024[13] and Mr. Carslake gave evidence at the interlocutory hearing. The contentions of the Applicant distilled from the material and evidence can be summarised as follows:
[13] Exhibit A1: Applicant’s Bundle of Documents.
·Mr Pringle was included in the application for registration as a tax agent by the Applicant as the supervising tax agent with his permission. However, he shortly thereafter decided not to join the Company. The Applicant admits that Mr Pringle never worked for the Company and was never a supervising tax agent.
·Mr Carslake acknowledged that Mr Pringle should have been removed as the supervising tax agent once it became apparent he was not going to be working for the Company and he should not have been included as part of the renewal application. However, at the time, he did not appreciate that he was required to advise the Respondent of any change in circumstance and the inclusion of Mr. Pringle in the renewal registration application was as a result of an oversight.
·Mr. Carslake was aware that he needed to replace Mr. Pringle as a supervising tax agent of the Applicant. He advertised for registered tax agents through “Seek” and from this process he hired four registered tax agents including Ms. Schembari and Ms. Kelly Felter who registered herself as supervising agent of the Company for the duration of her employment.
·At all times the Company employed registered tax agents who provided services to the clients of the Applicant, although the registration details of the Applicant did not always reflect this. Mr. Carslake acknowledged in his evidence that he did not fully appreciate the extent of his and the Applicant’s obligations in this regard, but had he done so he would have complied with them.
·Ms Schembari had agreed from her commencement with the Company in 2019 to be a supervising agent for the Company. The Applicant did not advise the Respondent of this arrangement until the renewal application was lodged in 2021.
·Although no formal processes were in place, Ms Schembari did have unlimited access to the software used by the Applicant and could therefore access all the lodgements made on behalf of the Company. Ms Schembari and Mr Carslake spoke regularly, and Mr Carslake asserted she had confidence in his abilities and that he would seek her advice as required.
·Ms Schembari and Mr Carslake initially had a close and trusted working relationship and were exploring partnership opportunities. The complaint lodged by Ms Schembari was precipitated by a breakdown in their personal and professional relationship during which Mr. and Ms Schembari engaged in conduct designed to undermine the Applicant’s and Mr Carslake’s reputation. This conduct has caused considerable harm to Mr Carslake and his family.
·Prior to setting up the Company, Mr. Carslake worked under the supervision of a registered tax agent. This experience shaped what he thought was an appropriate level of supervision. He recounted that in that role not every lodgment was personally reviewed by the supervisor and some supervisory tasks were delegated to trusted colleagues.
·Mr. Carslake stated in his evidence that the supervision provided by Ms Schembari was consistent with his past experience and that she was also comfortable with the arrangements until the break down in the relationship. He now, however, recognises the supervision provided was inadequate and has since implemented a more rigorous supervision process by Mr Low.
·If the Tribunal were to refuse the stay application, in addition to the consequences to Mr. Carslake personally (in particular to his mental and physical health, financial position, damage to his reputation and potential further harassment by Mr. Schembari), there would be consequences for the community given the limited tax agent services currently provided to the community and his involvement in broader community activities.
The Applicant’s case does not dispute a number of factual matters which underpin the decision of the Respondent, including that the inclusion of Mr. Pringle on the renewal application was misleading, and that the appropriate level of supervision was not provided by Ms. Schembari at the relevant time.
The Applicant does however deny that the conduct was deliberate, intentional or dishonest. Instead, Mr. Carslake says the conduct was a consequence of his inexperience and ignorance of the registration requirements and processes and his focus on otherwise establishing and providing services to clients in his small community.
Prospects of Success
In general terms, an obviously strong case will weigh in favour of a stay and an obviously weak case will weigh against it. In assessing the merits for this purpose, the Tribunal should not undertake a mini trial, but rather a rough and ready assessment such as a permit an informed view as to whether a more favorable outcome in the review proceeding is likely.[14]
[14] Le’Sam Accounting Pty Ltd v Tax Practitioners Board [2020] AATA 890 at [13].
The Respondent considers that on the materials before the Tribunal the prospects of success are low and that this weighs against the granting of a stay.
Some of the key factual findings relating to the actions of the Applicant and Mr. Carslake which underpin the Respondent’s decision are not disputed. The parties disagree as to whether the conduct was deliberate and part of a broader design to knowingly circumvent the supervision registration requirements, or as a result of inexperience and ignorance.
The latter are matters that have not been presented in full and parts of the evidence are untested. However, the Tribunal is able to take into account the evidence currently available to form a preliminary impression as to the prospects of success and whether the Applicant’s case is arguable.
The Applicant concedes that Mr Pringle should have been removed from the record when the Applicant applied for a renewal of its registration on 26 May 2021 and that best practice would have been for Mr Pringle to have been removed once it was apparent he would not be taking up a role with the Company. The failure of the Applicant to ensure the accuracy of the registration records meant that Mr Pringle was wrongly named as the supervising tax agent of the Applicant for in excess of five years. Further, the inclusion of Mr Pringle in the renewal application was a false declaration by the Applicant to the Respondent.
False declarations to the Respondent, even those that are inadvertent, have the potential to undermine the confidence in the registration process.[15] The conduct of the Applicant in this regard should be viewed through this lens. Therefore, even if the Tribunal were satisfied after a final hearing that the misleading conduct was reckless or indifferent, it will still amount to misconduct.
[15] Ridden v Tax Practitioners Board [2020] AATA 422 at [29].
In addition, in order for the Tribunal to be persuaded that the conduct was reckless and not intentional as asserted by the Respondent, it will be necessary for Mr Carslake to reconcile his evidence with other evidence which suggests he knew Mr Pringle was named as the supervising tax agent of the Applicant as late as May 2021.[16]
[16] Exhibit R2: Respondent’s Supplementary T-Documents (ST1), 1509, 1521-2.
In relation to the lack of supervision between 1 August 2019 and 31 January 2024, the Applicant concedes there were no structured supervisory arrangements in place and that during this period the vast majority of lodgements (which were prepared by Mr Carslake) were not reviewed by Ms Schembari. In his evidence, Mr Carslake explained the arrangement was one based on trust and was consistent with his prior work experience with a different supervising tax agent. At the time, he did not fully appreciate what was required of a supervising tax agent.
Although this evidence provides context from the perspective of the Applicant/ Mr Carslake, it does not ultimately assist the Applicant’s case. There is an expectation that a director of a company will discharge their duties with a degree of care and diligence. For the sole director of a registered tax agent engaged in the provision of tax agent services this necessarily includes being fully aware of the registration process and the requirements for maintaining that registration. Ignorance or inexperience does not excuse the fact that the tax agent services were not actually adequately supervised by a competent registered tax agent over a number of years.
In circumstances where it is accepted the inclusion of Mr. Pringle in the renewal registration application was a misleading statement and the tax agent services were not adequately supervised by a competent registered tax agent over a four-and-a-half year period, even if it were to be accepted that the conduct was reckless, the Applicant has not established an evidentiary foundation upon which I can be satisfied there is a reasonably arguable case for having the termination set aside altogether.
Consideration of this factor weighs against the granting of a stay.
The consequences to the Applicant
The Respondent submits that the mere fact of a tax agent facing adverse consequences from a stay being refused is of little weight as it is a situation faced by any person or entity operating in a regulatory regime. In their submission, other factors and specifically the public interest should be given weightier consideration.
The evidence as to the transition of the Applicant’s business to Can Do Advisory Pty Ltd was not entirely clear. However, I observe that should the Tribunal refuse to grant a stay that any consequences to the Applicant will be limited once the transition is completed.
Mr Carslake did give evidence as to the consequences to him personally should the stay be refused. He stated that given his proximity to retirement and his broader personal financial position, the loss of income which would flow from the refusal of the stay would have considerable impact. Mr Carslake also outlined the effect the investigation and decision of the Respondent has had on his mental and physical wellbeing as well as his reputation. In his view, should the stay be refused, the consequences to his reputation in particular, would be magnified and may require him to step back from his community-based activities.[17]
[17] As an example, his role with the local Rotary club.
Mr Carslake was also particularly concerned that if a stay were not granted that he would be subjected to further harassment and intimidation from Mr. and Mrs. Schembari. It was clear from his evidence that the conduct of Mr and Ms Schembari has had profound effect on Mr. Carslake and his family.
I accept and can infer from the evidence that Mr Carslake may experience adverse consequences should the stay be refused. However, this factor alone is an insufficient basis for securing a stay.
Public interest
The Respondent submitted that consideration of the public interest weights strongly in favour of refusing the stay. In their view, of paramount consideration is the protection of the public given the conduct of the Applicant and the concerns raise in respect of Mr Carslake’s fitness as a tax agent company director where unsupervised tax agent services were provided over an extended period of time.
Mr Carslake stated to the Tribunal that tax agent services in his small community were already very limited and that should a stay be refused the services available would be further compromised. He was also concerned that his local Rotary club would fold should he relinquish his membership, which he was considering as a consequence of the proceedings.
Mr. Carslake also gave evidence that he has implemented a more robust supervisory process and that Mr Low reviews all lodgements before they are filed. I infer from this evidence that the Applicant considers any risk to the public to be minimal.
The conduct of the Applicant and Mr Carslake resulted in tax agent services which were largely unsupervised being provided to the community over a number of years. During the course of the investigation, the Applicant’s case focused on whether Ms Schembari had agreed to be the supervising tax agent prior to May 2021.[18] This however misses a critical point: not only must a company have a supervising tax agent, that person must also actually perform appropriate supervisory functions.
[18] Exhibit R1, T-Documents (T7): Applicant’s response to the Submission to the Board Conduct Committee, 1140-1239.
It is the performance of those functions that protect the public and preserve confidence in the system. The conduct of the Applicant and Mr Carslake in failing to ensure tax agent services were properly supervised and not directly acknowledging the seriousness of that conduct reflects a limited understanding of the protective role a supervising tax agent plays within the regulatory framework.
The need to uphold the integrity of the tax system and preserve general community confidence in the tax profession is a critical consideration. This broader consideration outweighs the more limited potential impact to the Mission Beach community. Consequently, I agree with the submissions of the Respondent that granting the stay would be contrary to the public interest.
Consideration of this factor weighs against the granting of a stay.
The consequences for the Board
The Respondent says that its role as an effective regulatory body and the Board’s ability to discharge its statutory duties may be frustrated if a stay were to be granted. The Applicant did not make any submissions on this issue.
In circumstances where the Applicant has acknowledged it made a misleading statement to the Respondent as part of its application for renewal of its registration and that tax agent services were not adequately supervised by a competent registered tax agent over many years, even if it were to be accepted that the conduct was reckless, a decision to refuse the granting of the stay would promote the integrity, reliability and ethics of the statutory system.
Consideration of this factor weights against the granting of a stay.
Whether the application would be rendered nugatory if a stay were not granted
The Respondent in making the decision under review found that Mr Carslake was not a fit and proper person. Even if there were consequences to the stay being refused, a review would give the opportunity to Mr Carslake to overturn this finding. In this sense, if the stay were not granted the review would not be rendered nugatory.
Consideration of this factor weighs against the granting of a stay.
Other matters
The Respondent considers the conduct of the Applicant, and in particular the alleged non-compliance with the interim stay order in respect of the condition around accepting new clients weighs against the granting of a stay.
At the hearing, the Respondent advised the Tribunal that a number of new clients in the Mission Beach were linked to Mr Low via the tax agent portal. The Respondent wrote to the Applicant seeking clarification about this.[19]
[19] Exhibit R3, Further Supplementary T-Documents (ST10): Email from the Applicant to the Respondent, in response to the Respondent’s 2 December 2024 letter, 1578-86.
As I understood the evidence of Mr Carslake, although he met with the new clients, prepared the lodgements and the services were charged through the Company, he considered the clients to be those of Mr. Low and not the Applicant. This is because Mr Low finalised the lodgements through his tax agent portal and he was free to take those clients with him should he no longer be employed by the Applicant. On this basis, the Applicant did not act in breach of the stay conditions.
This submission cannot be accepted in circumstances where Mr Low had no contact with the clients, his role was limited to reviewing and submitting the lodgements and he was paid by the Applicant for this service. The distinction sought to be drawn by Mr Carslake is a fallacy. The conduct is a further example of the Applicant and Mr Carslake failing to fully appreciate their responsibilities in the context of the provision of tax agent services.
Consideration of this factor weighs against the granting of a stay.
CONCLUSION
With the exception of the potential consequences to Mr Carslake, consideration of the remaining factors weighs in favour of not granting a stay. The Applicant has not satisfied the Tribunal that a stay is desirable for the purposes of securing the effectiveness of the hearing and determination of the application for the review. Accordingly, I refuse the application for a stay and the interim stay order is discharged.
DECISION
The application for a stay of the decision is refused. The interim stay order is discharged.
I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for the decision herein of General Member R Smith.
.............................[sgnd].....................................
Associate
Date(s) of hearing: 20 December 2024 Date final submissions received: 20 December 2024 Advocate for the Applicant: Mr Ruaidhri Carslake Counsel for the Respondent: Mr Ben McGlade Advocate for the Respondent: Mr Kyle Garcia, TPB Legal Unit
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