CFMZ and Tax Practitioners Board (Taxation)
[2020] AATA 2955
•14 August 2020
CFMZ and Tax Practitioners Board (Taxation) [2020] AATA 2955 (14 August 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2020/3936
Re:CFMZ
APPLICANT
AndTax Practitioners Board
RESPONDENT
DECISION
Tribunal:The Hon. John Pascoe AC CVO, Deputy President
Date:14 August 2020
Place:Sydney
The application for a stay order is refused.
The interim stay order made under section 41(2) of the Administrative Appeals Act 1975 (Cth) is also discharged at the date of this decision.
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The Hon. John Pascoe AC CVO, Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – STAY APPLICATION – application for stay of decision to terminate tax agent registration – prospects of success – consequences of refusal – impact on ability to earn income – impact on professional reputation – public interest – confidence in the proper administration of taxation laws and operation of the regulatory system – whether stay necessary to preserve the efficacy of the review proceedings – stay refused
LEGISLATION
Tax Agent Services Act 2009 (Cth) ss 60.125, 40.5, 20-A, 30.5, 20.10, 30.15, 60.125
Administrative Appeals Act 1975 (Cth) (the AAT Act) s 41CASES
Kyriacou and Tax Practitioners Board [2020] AATA 1466
Scott v Australian Securities & Investments Commission [2009] AATA 798
Hill and Tax Practitioner Board (Taxation) [2020] AATA 678REASONS FOR DECISION
The Hon. John Pascoe AC CVO, Deputy President
14 August 2020
BACKGROUND
The applicant seeks review in the Administrative Appeals Tribunal (the Tribunal) of a decision of the Taxation Practitioner’s Board (the Board) to terminate her tax agent registration under the Tax Agent Services Act 2009 (Cth) (TASA) as at 22 July 2020.
The decision of the Board was made on 11 June 2020 under subparagraph 60.125(2)(ii) and 40.5(1)(b) of the TASA and was communicated to the applicant in a letter dated 22 June 2020.
The applicant applied for a stay of the Board’s decision to permit her to continue to operate as a registered tax agent pending the hearing of the application for review.
During the interlocutory hearing in relation to the applicant’s stay application, Counsel for the respondent offered to liaise with the applicant to ensure that each party was ready to proceed to a hearing of the substantive matter as soon as possible to minimise any potential damage to the applicant if a stay were not to be granted.
The matters to be considered by the Tribunal in determining whether or not to exercise its discretion to grant a stay under subsection 41(2) of the Administrative Appeals Act 1975 (Cth) (the AAT Act) are well settled and were clearly enunciated by the then President of the Tribunal in Scott v Australian Securities & Investments Commission [2009] AATA 798. These matters include:
(a)the prospects of success;
(b)the consequences to the applicant of a refusal of the stay;
(c)the public interest;
(d)the consequences for the respondent in carrying out its functions depending upon whether a stay was granted or not;
(e)whether the application for review would be rendered nugatory if a stay were not granted; and
(f)other matters that are relevant.
LEGISLATIVE FRAMEWORK
Section 40.5 of the TASA broadly provides the grounds for a tax agent’s registration to be terminated by the Board. It states as follows:
(1) If you are a *registered tax agent or BAS agent and an individual, the Board may terminate your registration if:
(a) an event affecting your continued registration, as described in section 20-45, occurs; or
(b) you cease to meet one of the *tax practitioner registration requirements; or
(c) you breach a condition of your registration.
The phrase “tax practitioner registration requirements” is defined in section 90.1 of the TASA, namely the matters considered by the Board under Subdivision 20-A when granting a tax agent’s registration. Relevantly, under Subdivision 20-A of the TASA:
(1) An individual, aged 18 years or more, is eligible for registration as a *registered tax agent or BAS agent if the Board is satisfied that:
(a) the individual is a fit and proper person; and
(b) the individual meets the requirements prescribed by the regulations (including, but not limited to, requirements relating to qualifications and experience) in respect of registration as a registered tax agent or BAS agent....”
Section 30.5 of the TASA provides that the ‘Code of Professional Conduct’ applies to a registered tax agent or BAS agent pursuant to 30.10 of the TASA. The Codes of Professional Conduct for tax agents relevantly include:
“Honesty and integrity
(1) You must act honestly and with integrity.
(2) You must comply with the *taxation laws in the conduct of your personal affairs.
...
Other responsibilities
(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.”
Section 30.15 of the TASA sets out sanctions for failure to comply with the ‘Code of Professional Conduct’. It provides:
“(1) This Subdivision applies if the Board is satisfied, after conducting an investigation under Subdivision 60-E, that you have failed to comply with the Code of Professional Conduct.
(3) The Board may do one or more of the following:
...(d) terminate your registration under section 30-30.”Furthermore, subsection 60.125(2) of the TASA titled ‘Outcomes of investigations’ provides that if a tax practitioner’s conduct breaches TASA, the Board can terminate the agent’s registration. The provision states as follows:
(2) If the Board investigates conduct under section 60-95 and finds that the conduct breaches this Act, the Board must either:
(a) make a decision that no further action will be taken; or
(b) do one or more of the following:
....(ii) terminate an entity’s registration under Subdivision 40-A.” (refer paragraph [8] above).
Prospects of success
Turning first to the prospects of success, the weight of the material which is yet to be tested would seem to weigh against the prospect of the applicant being successful.
The applicant admits to many of the breaches which led the Board to make its registration cancellation decision, including the failure to lodge tax returns by the due date, the failure to meet obligations related to her role as a trustee of the superannuation fund or, if that is not relevant, failure to deal with the taxation affairs of the fund in accordance with her legal obligations.
The applicant’s explanation in relation to her breaches relates primarily to personal factors such as the stress of ongoing litigation, which exacerbated existing underlying health issues as outlined by her treating psychiatrist. She also points to her previous exemplary record since she first became a registered tax agent in 1980. She said that during this time she has not had previous complaints made against her. It may be that these matters will be taken into account by the Tribunal on the hearing of the matter. The applicant drew attention to the Tribunal’s decision in Hill and Tax Practitioner Board (Taxation) [2020] AATA 678, which considered the extent to which a practitioner’s health or other circumstances can provide an explanation for unprofessional conduct.
There is, however, no doubt that the Board acted within its powers under the TASA Act and considered relevant material in coming to its decision. The applicant has not demonstrated any legal error in the Board’s decision or “establish[ed] the existence of facts or the possibility of legal error that may lead to a different result”: Kyriacou and Tax Practitioners Board [2020] AATA 1466 at [33].
The Board does appear to have taken into account the applicant’s personal circumstances such as mental health issues, despite not having before them a copy of the applicant’s latest medical material. I note that the applicant provided verbal updates to the Board on her medical situation, which is certainly consistent with the status of her ongoing health diagnosis. On the material currently before the Tribunal and the submissions of the respondent, it is evident that the Board did consider the applicant’s health issues and the effects of this in reaching its decision to cancel her registration. Whether the Board afforded appropriate weight to this issue is a matter for the Tribunal to consider at the hearing.
The applicant also raised a series of issues including the possibility that the Board did not have all the relevant information before it when making its decision, including that the applicant lodged a number of outstanding income tax returns and that the Commissioner had decided not to pursue some of the outstanding debt. The applicant does not, however, dispute the key findings of the Board regarding outstanding tax obligations.
Consequences to the applicant of a refusal of the stay
I accept that there are consequences for the applicant of the decision to cancel her registration as at 22 July 2020, both in terms of her income, costs associated with her practice such as insurance and tax software, the impact on her professional reputation and also some impact on her existing clients if she is unable to lodge returns on their behalf. In this regard, I note that the applicant’s income from her work as a tax agent was relatively small and it is possible for her clients to find another tax agent to lodge returns on their behalf.
The potential consequences for the applicant may be mitigated by an early hearing or from not disclosing the applicant’s identity in publishing this decision.
The public interest
In relation to the wider public interest, it is very important that the public have confidence in the proper administration of taxation laws in Australia, and that the public can be satisified that those who have the status of a registered tax agent are fulfilling their obligations in a manner which is accepted by both the Regulator, in this instance the Board, and also in this case the Commissioner himself.
The Board must be seen to be carrying out its supervisory and regulatory obligations in ensuring that those for whom it is responsible are complying with their obligations under the law and that proper and ethical conduct is evidenced by the profession.
It is relevant in this context that the Commissioner of Taxation determined that the applicant did not meet the requirements to be a trustee or director of a corporate trust of a superannuation entity and disqualified the applicant from acting in this role. The public interest would require such actions to be considered very seriously.
I note that the applicant claimed that the public interest was satisified by her not advertising her services, that her practice is small and that she does not receive client referrals from the Board’s website. This argument, however, ignores the fact the Board has an obligation to take appropriate action to ensure the integrity of the tax system and to be seen to be proactive in doing so.
Consequence for the Respondent
The respondent’s submissions note that the granting of a stay will impact the ability of the Board to fulfil its regulatory functions under the TASA short-term, including ensuring that tax agents like the applicant are meeting appropriate standards of professional and ethical conduct. Obviously, the consequences may be mitigated if a stay is short. However, confidence in the Board itself would be undermined if it was not seen as carrying out its obligations and this would in turn undermine confidence in the tax system itself.
Would the application for review be rendered nugatory if a stay were not granted?
I do not consider that the application for review would be rendered nugatory if the stay were not granted because a successful review application at the Tribunal would ultimately result in the applicant’s registration being restored. Clearly, there would be an effect on the applicant’s business between the date that the cancellation of her registration comes into effect and the date of any decision in relation to the application itself. However, such effects can be minimised by the parties working together to ensure that the hearing of the matter proceeds as quickly as possible.
CONFIDENTIALITY APPLICATION
The applicant raised concerns that the publication of the Tribunal’s decision on the stay application may result in adverse consequences to the applicant and her family. In the applicant’s submission to the Tribunal, she said that this could result from the disclosure of sensitive personal information and information as to other litigation which was kept confidential by the NSW Civil and Administrative Tribunal (NCAT).
I note that I received the respondent’s views opposing this request, but they did not provide the Tribunal with any argument to support their position.
In my opinion, it is reasonable at this stage of the proceedings for the Tribunal’s decision to be anonymised in order to protect the applicant’s privacy, particularly in relation to her health issues. Any detriment to the respondent from such a decision will be of short duration and unlikely, in my view, to adversely reflect in any way on the respondent, particularly as the aim of the legislation is the proper administration of the tax system and not to punish or shame individuals.
Although anonymisation is not what the applicant requested, it does protect her identity whilst maintaining the principle of open justice. The question of anonymity can then be further considered at the hearing.
CONCLUSION
In considering the evidence before the Tribunal, I am of the opinion that the correct and preferable decision is to not exercise my discretion to grant a stay of the Board’s decision. The interim stay order dated 16 July 2020 ceases from the date of this decision.
I certify that the preceding 29 (twenty-nine) paragraphs are a true copy of the reasons for the decision herein of The Hon. John Pascoe AC CVO, Deputy President.
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Associate
Dated: 14 August 2020
Date of hearing: 5 August 2020 Counsel for the Respondent: Ms E Kovacs Solicitors for the Respondent: Mr A Coorey, Tax Practitioners Board
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