Coogan and Tax Practitioners Board - [2019] AATA 2432

Coogan and Tax Practitioners Board [2019] AATA 2432 (6 August 2019)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/3724
Re:Thomas Coogan
APPLICANT

AndTax Practitioners Board
RESPONDENT

DECISION
Tribunal:Senior Member A Poljak
Date:6 August 2019
Place:Sydney

The applicant’s application for a stay pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) is refused.
The interim stay granted on 2 July 2019 is discharged.
.........................[SGD]...............................................
Senior Member A Poljak
CATCHWORDS
TAX AGENT REGISTRATION – application for a stay of the decision under review – termination of applicant's registration as a tax agent – failure to comply with taxation laws – interim stay order in operation – prospects of success – consequences to the applicant – the public interest – consequences for the respondent in carrying out its functions – whether the review would be rendered nugatory if a stay were not granted – stay application refused – interim stay discharged
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 41
Tax Agent Services Act 2009 (Cth) s 30-10
CASES
Carter v Tax Practitioners Board [2017] AATA 528
Delis v Tax Practitioners Board [2016] FCA 570
Re Scott and Australian Securities and Investments Commission (2009) 51 AAR 114
REASONS FOR DECISION
Senior Member A Poljak
6 August 2019

Mr Thomas Coogan, the applicant, seeks review of a decision of the Tax Practitioners Board (“the Board”) dated 30 May 2019. In its decision, the Board found that the applicant had breached subsection 30-10(2) of the Code of Professional Conduct (“Code of Conduct”) in the Tax Agent Services Act 2009 (Cth) (“The Act”) because he had failed to comply with taxation laws in the conduct of his personal affairs. He did so by failing to cause Coogans Pty Ltd (“the Company”), a company of which he is sole director, to lodge certain tax returns as required by taxation legislation, by failing to pay Company tax debts, and by failing to pay director penalty notices served on him personally. As a result the Board terminated the applicant’s registration as a tax agent and determined that the applicant may not apply for registration for a period of three years from the date of termination.
The applicant has applied for a stay of the decision under review pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”). The Board opposes the stay application.
An interim stay has been in place since 2 July 2019. For the reasons set out below the stay is refused and the interim stay discharged.
Relevant Legislative Provisions
Section 41(2) of the AAT Act provides:
The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] AATA 2432
Decision Date: 6 August 2019

CaseChat Overview and Summary

This matter concerned an application for a stay of a decision by the Tax Practitioners Board to terminate the registration of the applicant as a tax agent. The termination was based on the applicant's failure to comply with taxation laws. The applicant sought an interim stay of this decision pending the determination of his review application.

The court was required to consider several factors in determining whether to grant the stay. These included the applicant's prospects of success on review, the consequences to the applicant if the stay were refused, the public interest, and whether the review proceedings would be rendered nugatory without a stay. The applicant argued that the breaches of taxation laws by his company did not constitute breaches of his personal affairs as required by the Code of Conduct, and that he had taken steps to address his medical condition and compliance issues.

The court found that the applicant's submission that company affairs did not reflect on his personal affairs had limited prospects of success, referencing precedent that held breaches of taxation laws in the conduct of personal affairs, including when acting as a director, are relevant to an individual's good fame, integrity, and character, and thus their fitness and propriety to be a registered tax agent. The court concluded that the review would not be rendered nugatory if the stay were not granted, as any adverse consequences, such as a period of ineligibility to reapply for registration, could be set aside or reduced if the review were successful.

Consequently, the application for a stay was refused, and the interim stay that had been in operation was discharged.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The application for review will not be rendered nugatory if the stay is not granted. The applicant’s registration as a tax agent will be terminated in the meantime. However, if successful, the determination that the applicant may not apply for registration for a period of three years from the date of termination may be set aside or reduced. DECISION For all of the above reasons, the stay application is refused. It follows that the interim stay should be discharged.

Ratio Decidendi

Legal Principle Established

In considering whether to grant a stay, factors which may be taken into account were discussed by Justice Downes in Re Scott and Australian Securities and Investment Commission (2009) 51 AAR 114 at [4]. Relevant factors in these proceedings include the prospects of success; the consequences for the applicant of the refusal of the stay; the public interest; and whether the application for review would be rendered to nugatory if a stay were not granted.ConsiderationProspects of Success The applicant was at all material times the sole director and secretary of the Company. As at 18 July 2019, the Company had twenty-five outstanding Business Activity Statements (BAS) dating back to April 2017 and three outstanding income tax returns. According to ATO and ASIC records, as at 18 July 2019, the Company has an outstanding tax debt of $686,488.37 (consisting of $170,783.32 income tax account debt, and $515,705.05 in Client Activity Centre (CAC) debt). A CAC debt is a debt that relates to activity statements – for example GST, income tax withholding (PAYGW) and general interest charges (GIC). The Company has owed a CAC debt continuously since 22 May 2007. The last time a payment was made towards the CAC debt was on 16 July 2018, when the Company made a payment of $226.73. Since 15 January 2019, seventeen payments of $1000 have been made towards the income tax debt. The applicant has also failed in his personal capacity to pay five Director Penalty Notices (DPN) totalling $357,535.93 by their respective due dates. These breaches are uncontested and on any view, are significant. The applicant submits that the Tribunal should ignore breaches of the taxation laws by the Company in deciding whether the applicant breached section 30-10(2) of the Code of Conduct. This is because section 30-10(2) of the Code of Conduct required the applicant to “comply with the taxation laws in the conduct of your personal affairs”. The applicant contends that the affairs of the Company are not his “personal affairs”. Further, the applicant submits that his application for review has prima facie merit because he has taken steps to manage his medical condition which has been the cause of his failure to comply with taxation laws; has entered into discussions with the ATO about his debts and compliance issues; and has submitted three outstanding BAS. The applicant’s submission that the Company affairs do not reflect on the conduct of his personal affairs has limited prospects of success. In Delis v Tax Practitioners Board [2016] FCA 570 Davies J endorsed (at [42]) the approach taken by the Tribunal at first instance when it held (at [90]):Plainly, by breaching the taxation laws in the conduct of his personal affairs which includes when acting as a director of Delis Enterprises, Mr Delis has breached the Code of Professional Conduct which applies to registered tax agents. While the TASA prescribes sanctions for any such breach, failure to comply with the Code plainly says something about the good fame, integrity and character of an individual. Those matters are relevant criteria for determining whether an individual is a fit and proper person (s. 20-15 TASA). [Emphasis added]