Clifford and Tax Practitioners Board - [2023] AATA 2068

Clifford and Tax Practitioners Board [2023] AATA 2068 (14 July 2023)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2022/7220
Re:Jennifer Clifford
APPLICANT

AndTax Practitioners Board
RESPONDENT

DECISION
Tribunal:Deputy President I Molloy
Date:14 July 2023
Place:Brisbane

1.        The decision to terminate the applicant’s registration as a tax agent is affirmed subject to the following.
2.        The termination of the applicant’s registration shall take effect one calendar month from the date of publication (and thereby notification) of this decision.
3.        The decision prohibiting the applicant from applying for registration as a tax agent is varied to eighteen months commencing on the date that this decision to terminate her registration takes effect.
...............................[SGD].............................
Deputy President I Molloy

Catchwords
TAX AGENT REGISTRATION — Tax Practitioners Board — Tax agent registration —Code of Professional Conduct— Fit and Proper Person — Decision affirmed.
Legislation
Superannuation Industry (Supervision) Act 1993 (Cth)
Tax Agent Services Act 2009 (Cth)
Cases
Dahia v Tax Agents’ Board of Victoria [1997] AATA 265
Houvardis v Tax Agents’ Board of New South Wales [1991] AATA 134
Schmuel and Tax Practitioners Board [2019] AATA 2168
Stasos v Tax Agents’ Board [1990] FCA 379
Su v Tax Agents’ Board of South Australia [1982] AATA 127
REASONS FOR DECISION
Deputy President I Molloy
14 July 2023
REASONS FOR DECISION
This is an application for review of a decision of the respondent, the Tax Practitioners Board (“the Board”), made on 21 July 2022 terminating the applicant’s tax agent registration and prohibiting her from reapplying for registration for a period of two years (“the reviewable decision”).
This followed findings by the respondent that the applicant had breached her professional obligations and was not a fit and proper person to be registered as a tax agent.
The respondent’s decision took effect on 6 September 2022. On 15 September 2022 the Tribunal granted an interim stay by consent, which was discharged on its return on 27 October 2022 when the applicant apparently failed to appear. On 29 March 2023, following a contested hearing, the Tribunal granted a stay pending the hearing and determination of this review.
The applicant disputes that she is not a fit and proper person to be registered as a tax agent. Amongst other things she says that whatever she has done incorrectly with regard to either her own or her clients’ tax matters has been corrected. She does not believe she should be deregistered at all.
The respondent seeks orders affirming the reviewable decision.
TAX AGENT SERVICES ACT
The object of the Tax Agent Services Act 2009 (Cth) (“the TAS Act” or “the Act”), 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”. The legislation provides for registration of tax agents and BAS agents and introduces a Code of Professional Conduct.
Section 20-5(1) of the Act provides relevantly:
20‑5 Eligibility for registration as registered tax agent, BAS agent or tax (financial) adviser
Individuals

An individual, aged 18 years or more, is eligible for registration as a * registered tax agent, BAS agent or tax (financial) adviser if the Board is satisfied that
(a)the individual is a fit and proper person; …
Section 20-15 of the Act sets out the criteria to satisfy the requirement that an individual is a fit and proper person, including whether the individual is of “good fame, integrity and character”.
Section 40-5(1) of the Act provides that the respondent may terminate the registration of a tax agent if, among other things, the tax agent ceases to meet one of the tax agent requirements set out in sub-section 20-5(1).
Part 3 of the TAS Act contains the Code of Professional Conduct. Under s 30.10 the Code includes:
Honesty and integrity
1You must act honestly and with integrity.
2You must comply with the taxation laws in the conduct of your personal affairs.
….
Competence
7 You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.
Other responsibilities
14 You must respond to requests and directions of the Board in a timely, responsible and reasonable manner.
Section 30-15 of the Act provides that if the respondent is satisfied, after conducting an investigation under Subdivision 60-E, which occurred in this case, that a tax agent has failed to comply with the Code of Professional Conduct, then the respondent may amongst other sanctions terminate the tax agent’s registration under s 30-30.
Section 40-25(1) of the Act provides that, if the respondent terminates a tax agent’s registration, the respondent may also determine a period, of not more than five years, during which the tax agent may not apply for registration.
Under s 40-20(2) of the Act termination by the Board takes effect on the date specified in a notice of termination given to the tax agent, which must be at least 28 days after the date of the notice.
CODE OF PROFESSIONAL CONDUCT
The applicant breached several provisions of the Code of Conduct. She made false declarations to the respondent in her Renewal of Registration form submitted on 6 June 2019. In answer to the question “do you have any overdue tax obligations?” she answered “No”. In truth, at the time of submitting the form, the applicant owed the Australian Taxation Office (‘ATO’) $145,455.50 with no payment plan in place.
The applicant’s response was that she was in phone contact and Tax Agent Portal Messaging with the ATO for remission of interest (and extensions of time to lodge outstanding tax returns). She said, ’As I was lead (sic) to believe by ATO that Remission of Interest would be granted I answered ‘NO’ to having a Tax debt, similarly with Extension of time to lodge.’[1]
[1] Exhibit C, Applicant’s Outline of Submissions, dated 30 June 2023, page 6.
The applicant did not produce anything, for example notes of telephone conversations, to support any of this. Furthermore, in cross-examination the applicant admitted the outstanding debt, at the time of her answer, was in respect of tax as well as interest. Only since 2021, according to the applicant’s own evidence, has it only been interest. Her answer “No” was untrue. Her explanation for the answer was also untrue.
The applicant lodged 10 false declarations with the ATO, for the years 2009 to 2018, claiming that a particular client, a self-managed superannuation fund, had been audited. In truth the fund had not been audited in any of those years. She informed the respondent that she knew there was no auditor’s report when she lodged the returns. She said she lodged the false declarations to stop “harassing phone calls” from the ATO asking why she had not lodged her client’s tax returns.
She made the same declarations to the ATO, in respect of another self-managed superannuation fund (‘SMSF’) client, for the 2015 to 2019 income years. That fund had only been audited in respect of the 2015 year (but no audit report had been provided by the date of lodgment) and there was no audit in respect of the other years.
By failing to obtain audit reports for her SMSF clients the applicant exposed those clients to the risk of significant penalties under s 35C of the Superannuation Industry (Supervision) Act 1993 (Cth). A tax agent acting honestly and competently would not expose their clients to such a risk. As I have said, the applicant maintained that whatever she had done “incorrectly”, whether in respect of her own or her client’s tax matters, “I have corrected, and no client has been disadvantaged.”[2] This statement is misleading. In respect of at least some years her SMSF clients have still not been audited.
[2] Exhibit C, page 7.
The applicant misled the respondent’s officers about these defaults by claiming that these were the only SMSF clients in respect of which she had not received audit reports before lodging returns. In truth the applicant had made similar false declarations in respect of several other clients for the 2014 and 2015 income years.
The applicant had an outstanding personal income tax debt of $77,887.31 owing to the ATO on 2 June 2023 with no payment plan in place. The applicant said this was a general interest charge about which she has been corresponding with the ATO for 2 years. The applicant said she did not believe she has this debt. What she meant by this is she believed the debt should be remitted. She said she has reported it to the Complaints Resolution division of the ATO. That was only on 15 May 2023.Before the Tribunal, she was critical of the ATO because she could not be given a time when she could expect a case manager to contact her, and that she was told not to ring to enquire until at least 30 days had expired.[3] Subsequent to the hearing the applicant has provided evidence that the ATO, on 3 July 2023, did remit the above general interest charge.
[3] Exhibit C, page 6.
At various times between April and June 2022 the applicant did not provide substantive responses to the respondent’s attempts to contact her by email and telephone, or provide confirmation and information sought by the respondent.
The applicant has ongoing health concerns and has had difficult personal circumstances which she says led her to falling behind in her work commitments. I have taken these matters into account whilst recognising the purpose of the TAS Act is protection of the public. It should also be said, as the respondent submits, that the applicant’s health difficulties have existed over many years. I am not dealing with isolated lapses of judgment or short-term difficulties. There is nothing which comes near to excusing the applicant’s multiple breaches especially in her dealings with the ATO and the respondent.
The applicant has breached the above provisions of the Code of Professional Conduct. Some of these breaches involve a pattern of conduct over significant periods of time. Having heard and seen the applicant give evidence I am not satisfied that she truly appreciates the significance of her misconduct. She was all too ready to excuse her behaviour on factors said to be beyond her control or on the conduct of the ATO or the Board. She says, “I do feel that TPB and ATO have unfairly treated me over these years … but mainly the Tax Practitioners Board that have opposed my AAT application at every stage …”.[4]
[4] Exhibit C, page 2.
FIT AND PROPER PERSON
I am also satisfied that the applicant is not a fit and proper person to be registered as a tax agent. The term “fit and proper” as it relates to persons having a particular status, profession or vocation has been considered by the courts and by this Tribunal on numerous occasions.
In Su v Tax Agents’ Board of South Australia,[5] Davies J stated:
The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. he should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.
[5] [1982] AATA 127.
In Stasos v Tax Agents’ Board,[6] Hill J set out the above passage from Su v Tax Agents’ Board of South Australia and expressed agreement “subject to the qualification that his Honour stated too narrowly the functions of a tax agent by limiting these to the preparation of returns.” Hill J said[7]:
In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the boards or tribunals to which I have already referred. Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate. This is particularly so now that the Commissioner has proceeded to a system of self assessment, with inaccuracies only coming to light in case of random audit or, presumably, other information coming to the hands of the Commissioner.
The Commissioner and his officers must be able, also, to accept the word of a tax agent when acting for a taxpayer in negotiations, and a fortiori in matters proceeding in a Board, the Administrative Appeals Tribunal or indeed a court it is imperative that the honesty and integrity of the tax agent not be called into doubt. So it is that it is a requirement, not only of initial registration, but of remaining on the register that a tax agent be a fit and proper person to perform the duties of a tax agent and bear the responsibilities that come with those duties.
[6] [1990] FCA 379.
[7] At paras [50]-[51]
These principles have been applied in many cases before the Tribunal, such as Schmuel and Tax Practitioners Board[8], cited by the respondent.
[8] [2019] AATA 2168.
I have taken into account the applicant’s evidence that she has been registered as a tax agent for the last 36 years. She says she has lodged over 20,000 tax returns, completed and lodged over 10,000 BAS and IAS. She has also completed financial statements for more than 2,000 business entities and undertaken many other tasks in the course of her practice.
I also take into account the seriousness of the applicant’s conduct including what I consider to be deliberate dishonesty. The applicant has not been open and honest in her evidence before the Tribunal. Her conduct has exposed some of her clients to possible prosecution. Even now she has not remedied some of these matters. I am not satisfied that that this conduct will not be repeated or prolonged. I do not believe the applicant has demonstrated genuine contrition or remorse.
The exercise of the discretion to disqualify a person from being a tax agent is not to be used in punishment of that person. The purpose of the power to disqualify is to protect the public.[9] Protection of the public includes protection of the clients who may engage the tax agent’s service and protection of the revenue. Protection of the public is also closely linked with public confidence in the system. The public is entitled to know and expect that persons who occupy the position of a tax agent are of high integrity.
[9] Dahia v Tax Agents’ Board of Victoria [1997] AATA 265 at [15]; Houvardis v Tax Agents’ Board of New South Wales [1991] AATA 134 at [26]; Su v Tax Agents’ Board of South Australia [1982] AATA 127.
In all the circumstances I consider the appropriate sanction is that the applicant’s registration be terminated. I am also satisfied, taking all of the above into account, including giving relevant weight to the applicant’s health, her age, and other issues she has raised, that she should be prohibited from applying for registration for a total of two years.
In calculation of that time, the time during which the applicant was deregistered and did not have the benefit of either of the stay orders, should be taken into account as should the fact that the current stay was subject to conditions. In my view the correct and preferable decision is that the applicant should be prohibited from applying for registration as a tax agent for eighteen months from the date upon which her termination pursuant to this decision takes effect.
CONCLUSION
The decision of the respondent to terminate the applicant’s registration as a tax agent will therefore be affirmed. The termination shall take effect one calendar month from the date of publication and notification of this decision. The applicant shall be prohibited, from the date such termination takes effect, from applying for registration as a tax agent for a period of eighteen months.

I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Deputy President I Molloy

...............................[SGD]................................
Associate Nick S
Dated: 14 July 2023

Date(s) of hearing: 23 June 2023

Applicant: Self-represented litigant

Counsel for the Respondent:

Solicitor for the Respondent:

Mr L. Molesworth

Christian Febbraro
TPB Legal Unit