Crocker and Tax Practitioners Board

[2023] AATA 4131

Crocker and Tax Practitioners Board [2023] AATA 4131 (13 December 2023)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):2023/1419      

Re:Mark Raymond Crocker   

APPLICANT

AndOther

RESPONDENT

AndTax Practitioners Board

DECISION

Tribunal:Mr Rob Reitano, Member

Date:13 December 2023

Place:Sydney

I affirm the Board’s decision of 19 January 2023 refusing Mark Raymond Crockers’ application for registration as a tax agent under the Tax Agent Services Act 2009.

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Mr Rob Reitano, Member

CATCHWORDS

TAX AGENTS – application for registration as a tax agent – Tax Practitioners Board – no relevant tertiary qualification – whether a person is eligible to be registered as a tax agent on the basis of relevant experience – supervision and control - decision under review affirmed

LEGISLATION

Tax Agent Services Act 2009 (Cth)

Tax Agent Services Regulations 2022

REASONS FOR DECISION

Mr Rob Reitano, Member

13 December 2023

1. The case is about what a person who has ‘relevant experience’, but no qualifications, must do to obtain registration as a tax agent under the Tax Agent Services Act 2009 (Cth) (Act) and the Tax Agent Services Regulations 2022 (Regulations).

2. On 9 August 2022 Mr Mark Crocker (Mark Crocker) lodged an application with the Tax Practitioners Board (Board) for registration as a tax agent. It became clear during the Board’s consideration of his application that the basis upon which he sought registration was confined to his experience, because he had no relevant formal tertiary qualifications. The Board rejected his application for registration as a tax agent because it was not satisfied that he had the required period of ‘relevant experience’, a term with a particular regulatory meaning to which I will turn in a moment, for registration.

3. The only issue in this review is whether Mark Crocker can satisfy the Tribunal, standing in the shoes of the Board, that he has the required period of ‘relevant experience’ for registration as a tax agent. If he does, then he is eligible for registration, and is entitled to be registered and, if he does not, his application must be rejected.

   THE RULES

4. A condition of eligibility for an individual to be registered as a tax agent in s.20-5 of the Act is that the Board must be ‘satisfied’ that 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 20-25 requires the Board to register an individual who is eligible to be registered but otherwise the Board is obliged to reject the application.

5. The requirement to be ‘satisfied’ involves an evaluation of facts or circumstances against relevant criteria which permits a positive assessment to be made that the criteria is adequately met. In this review, the Tribunal, standing in the place of the Board, must be ‘satisfied’ that the individual meets the relevant ‘requirement prescribed by the regulations’.

6. The relevant ‘requirement prescribed by the regulations’ in this case is found in Item 206 of Schedule 2 to the Regulations. That Item applies to people who want to be registered and who do not hold relevant tertiary qualifications but otherwise have the experience to be registered as a tax agent.

7. Item 206 of Schedule 2 of the Regulation provides:

   This clause applies if the individual:

   (a)is a voting member of a recognised tax agent association; and

   (b)has undertaken at least 8 years of full time relevant experience (or part time equivalent) in the last 10 years.

8. Item 212 of Schedule 2 to the Regulation defines the phrase ‘relevant experience’:

   ‘relevant experience’ means work by an individual:

   (a)as a registered tax agent; or

   (b)as a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

   (c)under the supervision and control of a registered tax agent; or

   (d)under the supervision and control of a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

   (e)as an Australian legal practitioner; or

   (f)of another kind approved by the Board;

   that includes substantial involvement in the provision of one or more of the types of tax agent services described in section 90-5 of the Act, or substantial involvement in the practice of a particular area of taxation law to which one or more of those types of tax agent services relate.

9. The words and phrases ‘work’ and ‘under the supervision and control’ and ‘registered tax agent’ all have self-evident meanings, and none were seriously in contest. The word ‘supervise’ involves superintendence or oversight over what is being done. ‘Control’ involves having the ability to direct or influence what is being done. The words ‘supervision and control’ taken together, and in context, means undertaking work that is subject to being checked or managed with the most likely objective being that it conforms to desirable standards of competence and professionalism.

10. The ‘in the provision of one or more of the types of tax agent services described in section 90-5 of the Act’ are also well explained by s.90-5, noting that for present purposes the alternative, reliance upon practice in taxation law, is not relevant. Section 90-5 of the Act defines ‘tax agent services’ as follows:

    (1)A tax agent service is any service:

    (a)that relates to:

    (i)     ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a taxation law; or

    (ii)    advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or

    (iii)   representing an entity in their dealings with the Commissioner; and

    (b)that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:

    (i)     to satisfy liabilities or obligations that arise, or could arise, under a taxation law;

    (ii)    to claim entitlements that arise, or could arise, under a taxation law.

11. The preparation and lodgement of tax returns and tax statements is squarely within the definition of ‘tax agent services’. I need not take that matter further because the circumstances here do not require me to do so.

12. The more problematic question concerns the words ‘includes substantial involvement in...’. Those words refer to the work as being the whole or the set. The word ‘includes’ carries with it the concept that the work must have been within it as a part or sub-set of ‘substantial involvement’ in providing one or more types of tax agent services. The words ‘substantial’ and ‘involvement’ are ordinary English words: ‘substantial’ means ‘important’, ‘significant’ or ‘considerable’; ‘involvement’ means ‘participation’ or ‘taking part in’. The word ‘substantial’ is used to qualify the word ‘involvement’ so that the requirement is that the work the individual is doing must include important, significant or considerable participation in the provision of one or more of the types of tax agent services. It is unnecessary to take the matter further given the basis upon which I have decided the matter.

    THE FACTS

13. Mark Crocker was, when he made his application for registration, and continues to be, a voting member of the Taxation Institute which is a recognised tax agent association.

14. Mark Crocker was one of the partners of a registered tax agent partnership which traded as Raymond Crocker & Mark Crocker. In 1990, Mark Crocker started work with his father, Raymond Crocker, as an employee and later as a sub-contractor. In September 2008 he became a partner. The partnership traded as a registered tax agent partnership from 1 October 2008 until 19 October 2021. Raymond Crocker was a registered tax agent in his own right from 1 April 2009 until 19 October 2021.

15. Raymond Crocker and the partnership both had their registration terminated with effect from 19 October 2021. A reason for the cancellation of both registrations was because from 3 July 2020 to 3 February 2021 Raymond Crocker had not provided or not ensured supervision and control over 717 lodgements because he, as the sole supervising agent, had been unable to work in that period due to illness.

16. Raymond Crocker provided a statement of relevant experience in relation to Mark Crocker for the purpose of his application for registration. A statement of relevant experience is a statement that informs the quantity and type of work undertaken by an individual seeking registration. The statement of relevant experience was dated 14 November 2022 and identified that the ‘type of relevant experience’ was ‘work by an individual under the supervision and control of a registered tax agent’.  The statement of relevant experience said that Mark Crocker spent approximately 60% of his time preparing tax returns and statements in respect of different kinds of entities in the period from 9 August 2012 until 9 August 2021. In each of those years, Mark Crocker prepared about 800 to 900 returns and statements. The statement also said that Mark Crocker spent 60% of his working time in providing tax agent services.

17. I should note before going further that Mark Crocker said in the hearing that he, not Raymond Crocker, had completed the statement of relevant experience despite the fact that on the face of the statement of relevant experience it is made clear that the relevant supervisor was required to complete the statement. Mark Crocker’s evidence was that he was not aware of whether Raymond Crocker was aware of the contents of the form, even though it was Raymond Crocker’s signature that appeared on it.

18. Curiously, the statement of relevant experience alongside the question ‘Did the applicant’s relevant experience include substantial involvement in: a. One or more types of tax agent services described in section 90-5 of the Tax Agent Services Act 2009 (TASA)’ there was a cross next to the word ‘No’. In doing so, the statement of relevant experience represented that Mark Crocker had no relevant experience that included ‘substantial involvement in one or more of the types of tax agent services described’ in the Act. That could not be correct given what he had said about the number of returns and statements that Mark Crocker had prepared and given some of the other things he said. It is unnecessary to speculate how the error came about but it is sufficient to say it is an obvious error.

19. The statement of relevant experience also referred to ‘bookkeeping and BAS related lodgements together with wages’ as being things that might be considered ‘relevant experience’.

20. Later in the statement of relevant experience, in answer to the question ‘Please provide comments on the applicant’s level of competence in the provision of tax agent services’ the answer was recorded:

    Attending to all matters in relation to completing tax returns for business and personal clients and giving guidance in attending to taxation responsibilities after several years of working under my supervision. He has my confidence in dealing with and advising on the correct and proper preparation and lodgement of all tax returns. (The underline is added)

21. In another undated document that Raymond Crocker submitted to the Board he said:

    This [is] to advise that my son Mark Raymond Crocker has been an employee from approximately July 1990 – to June 2000, then a sub-contractor to the end of September 2008 and from then on, we have been in partnership to date. He has established himself as the principal person in all aspects of tax preparation and related matters within our practice.

    I trained him in upskilling on accounting procedures and tax preparation. Mark has prepared tax returns ranging from Individuals, Partnerships, Companies preparing all associated schedules, Profit & Losses, also helping with wages where needed within client’s company, Superannuation Funds etc. Helping clients understanding tax implications such as investment properties, capital gains, shares etc.

    He became competent and was able to undertake his work with minimal supervision. He became more competent in all tasks to enable him to take over the management of the practice when I was absent due to health issues from 1992. Proving to myself that I could step back and not be concerned about the business as I was unable to work for more than a maximum of an hour each day during rehabilitation.

    This enabled me to feel confident that he was professionally competent to manage the tasks of accounting and tax preparation in my absences. He worked under my supervision until I was left with no other option but to semi-retire from the practice as my late wife’s situation meant that she needed full time care which I felt comfortable doing knowing Mark was there to keep the business going.

    Due to ongoing health issues, I determined that I would only attend work on a minimal basis. I appreciated the way in which he presented himself within our practice, becoming involved in aspects of accounting and tax preparation & lodgement. He performed these duties in a mature and professional way. He continued to develop his skills and became a Justice of the Peace.

    I’m pleased that Mark really demonstrated that he could perform all aspects of accounting, taxation preparation and lodgement without my supervision. Mark has for over 18 years now worked independently, he has built up his own client base and has always had my support, experience and advice whenever needed.

    He has stood up and supported me in my difficult times and I’m proud of what he has achieved in the practice under my guidance, whilst also maintaining his many family commitments, showing his character to act under pressure, but also be professional and proactive within the practice. (The underline is added)

    22.In a letter dated 21 March 2022 Raymond Crocker said:

    This is to advise that Mark Raymond Crocker has worked with me for virtually 25 years. Initially he worked for me whilst he was still learning. However, for the last

    approximately 20 years he has worked in partnership with me.

    He has undertaken much of the work that has passed through the business whilst I

    have been a silent partner but always overseeing his work and monitoring his

    progress.

    I have mainly stayed silent as I have been overcoming numerous health issues which has made it difficult to maintain the level of work that I would like to. Mark has always confidently been able to maintain a level of professionalism that I am happy to support. (The underline is added)

    23.Mark Crocker said in a letter dated 7 March 2023 that:

    So, the way the actual supervised role was performed was Raymond Crocker was in attendance while I conducted interviews with clients to obtain all necessary information to complete the tax work. We would then have lunch together to discuss what and why we were doing the work that way along with arranging the afternoon schedule for me to attend to administrative duties.

22. Mark Crocker also said that:

    All returns were printed and reviewed with Ray prior to contact with client so we were both aware of all information pertinent to the client so if the client contacted us either of us would know how the information on the return was done.

23. Mark Crocker said in his oral evidence before the Tribunal that he was in frequent contact with his father by telephone and he was also supervised in that way. That was a little unusual given that nowhere in any of the other material filed in the case did he make a claim to having been supervised by phone.

24. Mark Crocker also referred to his experience as being over more than ten years, but as will be seen, it is not necessary to say much about that because it is irrelevant.

    CONSIDERATION

25. I am satisfied that Mark Crocker is a voting member of a recognised tax agent association, namely the Tax Institute, so that he satisfies the first of the two conditions in Item 206 of Schedule 2 to the Regulations.

26. I next need to consider whether Mark Crocker ‘has undertaken at least 8 years of full time relevant experience (or part time equivalent) in the last 10 years’ under the supervision and control of a registered tax agent’. The only registered tax agent who Mark Crocker suggests he was supervised by is Raymond Crocker.

27. The ‘last ten years’ is the period from 9 August 2012, the date ten years before the application was filed, until 9 August 2022, the date when the application was filed. In the seven months from 3 July 2020 until 3 February 2021 Raymond Crocker could not have supervised Mark Crocker as he was away from work and ill. He was either in hospital or recovering from the effects of a car accident. Raymond Crocker’s tax agent registration was terminated on 19 October 2021 so from then until 9 August 2022, a period of nine months and three weeks, Mark Crocker could not have been working under the supervision and control of a registered tax agent. It follows for at least a period of 16 months and 3 weeks in the ten years before his application, Mark Crocker could not have been obtaining relevant experience. The evidence raises some doubt about what happened after 3 February 2022 so far as Raymond Crocker’s involvements in the business and involvement in any supervision and control over Mark Crocker is concerned. It seems that at least in March and April Raymond Crocker was still undergoing rehabilitation. The evidence is really unsatisfactory about what happened between 3 February 2021 and 19 October 2021 so far as supervision and control is concerned. Absent a satisfactory explanation from Raymond Crocker about what was going on in that period the evidence is not persuasive that there was any supervision or control of Mark Crocker’s work by his father in that period.

28. Alternatively, the issue can be resolved on a more general basis by having regard to the whole of the previous ten years. I am not satisfied that the work that Mark Crocker did during   that period was under the supervision and control of Raymond Crocker for eight of the last ten years before 9 August 2012 for four main reasons.

29. First, there is not much evidence before me about how it is suggested that Raymond Crocker supervised or controlled Mark Crocker’s work other than a number of conclusory statements. Mark Crocker’s evidence is that that happened because his father attended interviews with clients and discussed things over lunch with him. He added in the hearing the new suggestion that his telephone calls to his father involved supervision, something that he had not suggested before. He also later said that he printed all returns which were, in due course, reviewed by his father. Aside from the fact that none of these things are corroborated by Raymond Crocker and that they are all self-serving, it is not obvious to me how attending interviews and discussion about matters over lunch and on the phone  amount to supervision and control. So far as reviewing tax returns is concerned, it is a little remarkable that Raymond Crocker does not mention this at all as part of any claimed supervision, especially given that his working time was so limited during much of the period in question: as little as an hour a day. Nor does he mention supervision and control happening over lunch or by telephone. Further, Mark Crocker only mentioned his father reviewing returns as a means by which he and Raymond knew what each other were doing, rather than by way of supervision or control, which is perplexing.

30. Second. Raymond Crocker’s statements about Mark Crocker’s role in the business of the partnership do not engender any sense of confidence about the fact that Mark Crocker was supervised and controlled. The statement that Mark Crocker was ‘the principal person in all aspects of tax preparation and related matters within our practice’ does not readily sit well with someone who is supervised and controlled in their work. In a similar vein, his references to ‘minimal supervision’ without referring to what that involved, if anything, are incapable of evaluation. Further, his statement that Mark Crocker was, at some unidentified time, in his opinion ‘professionally competent to manage the tasks of accounting and tax preparation in my absences’, leaves well and truly open the unknown as to just how long any of these absences were, such that, during those times, there was no supervision or control exercised over Mark Crocker’s tax work nor his work more generally.

1. Likewise, the statement that Mark Crocker ‘worked under [his] supervision until I was left with no other option but to semi-retire from the practice’ again identifies some unknown time when, so it seems, there was no supervision or control at all over Mark Crocker’s work. Finally, the statement that ‘Mark really demonstrated that he could perform all aspects of accounting, taxation preparation and lodgement without my supervision. Mark has for over 18 years now worked independently, he has built up his own client base and has always had my support, experience and advice whenever needed’ is, at best, ambiguous, and at worst, a concession that there was no supervision or control over a long period of time.

2. Third, the notion that Mark Crocker was ‘the principal person in our business in all aspects of tax preparation’, who ‘work[ed] independently’ and who was responsible for ‘the management of the practice’, as referred to in Raymond Crocker’s undated letter, does not sit neatly with him being subject to the supervision and control of Raymond Crocker. Nor is being a partner with Raymond Crocker in the business suggestive of control. In any event, there is scant evidence about any control exercised by Raymond Crocker over Mark Crocker.

3. Finally, the significant inconsistencies between the evidence of Raymond and Mark Crocker about what was going on so far as supervision and control are concerned means that much of the evidence is left uncorroborated. Although, ordinarily, that might not present a significant problem, the fact that there are only two people who can give evidence about what happened and that they give very different versions means that no positive state of satisfaction is able to be arrived at. Further, the reliability of Mark Crocker’s evidence is damaged by his having completed the statement of relevant experience when it should have been completed by his father; by the fact that he added important things such as the claim to supervision by phone so late in the day; and because he could not satisfactorily explain the significant difference created by the words his father used, ‘working independently’, which was inconsistent with his own evidence.

4. I am not satisfied that Mark Crocker has relevant experience because he did not work under the supervision and control of a registered tax agent for at least eight years in the last ten years preceding his application for registration.

   DECISION

5. I affirm the Board’s decision of 19 January 2023 refusing Mark Raymond Crockers’ application for registration as a tax agent under the Tax Agent Services Act 2009.

I certify that the preceding 37 (thirty seven) paragraphs are a true copy of the reasons for the decision herein of Mr Rob Reitano, Member

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Associate

Dated: 13 December 2023

Date(s) of hearing:	11 December 2023
Applicant:	Self-represented
Counsel for the Respondent:	Ms L McGovern
Solicitors for the Respondent:	Ms J Mills & Ms S Pannam, Tax Practitioners Board