Cross and Tax Practitioners Board

Case [2021] AATA 441

Cross and Tax Practitioners Board [2021] AATA 441 (9 March 2021)

Division:TAXATION AND COMMERCIAL DIVISION

File Numbers:         2020/2356

2020/2357

Re:Ashley Cross

FIRSTAPPLICANT

AndM. Adamson & A. Cross

SECOND APPLICANT

AndTax Practitioners Board

RESPONDENT

DECISION

Tribunal:Deputy President Boyle

Date:9 March 2021

Place:Perth

The Tribunal varies each of the Decisions by deleting “s 60-125(2)(b)(ii)” and substituting therefor “s 60-125(2)(b)(i) by terminating the registration under s 30-30”.

.......[SGD].................................................................

Deputy President Boyle

CATCHWORDS

TAX AGENT REGISTRATION – tax agent registration termination – practitioner not a fit and proper person – failure to meet requirements of registration – partnership ceases to meet registration requirements – 125 self-managed super fund annual returns lodged with false declarations – review by Tribunal exercising all of the powers of the Board under TASA – reviewable decisions varied

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) – ss 37, 41(2)

Partnership Act 1895 (WA) – s 45

Tax Agent Services Act 2009 (Cth) – ss 2-5, 20-5, 20-5(1)(a), 20-5(2)(a)(ii), 20-15, 30-10, 30-10(1), 30-10(7), 30-10(14), 30-15, 30-15(1), 30-15(2), 30-15(2)(d), 30-20, 30-25, 30-30, 40-A, 40-5, 40-5(1)(b), 40-10, 40-10(1)(a), 40-15, 40-25(1), 60-E, 60-95, 60-125(2), 60-125(2)(a), 60-125(2)(b)(i), 60-125(2)(b)(ii), 60-125(2)(b)(iii), 60-125(2)(b)(iv), pt 3

CASES

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

Aged Care Standards and Accreditation Agency Ltd v Kenna Investments Pty Ltd (2004) 138 FCR 428

Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511

Cross and Tax Practitioners Board [2020] AATA 1471

Hill and Tax Practitioner Board [2020] AATA 678

Johnson and Commissioner of Patents [2020] AATA 3983

Li and Tax Practitioners Board (2014) 141 ALD 201

SHTX and Tax Practitioners Board (2016) 158 ALD 549

Stasos v Tax Agents’ Board (1990) 21 ALD 437

Su v Tax Agents’ Board South Australia (1982) 61 FLR 1

SECONDARY MATERIALS

Explanatory Memorandum, Tax Agent Services Bill 2009 (Cth)

REASONS FOR DECISION

Deputy President Boyle

9 March 2021

THE APPLICATIONS

  1. On 2 April 2020, the Respondent (the Board) made the following decisions:

    (a)to terminate the First Applicant’s registration as a tax agent in accordance with subsection 60-125(2)(b)(ii) and section 40-5(1)(b) of the Tax Agent Services Act 2009 (Cth) (TASA);

    (b)that the First Applicant may not apply for registration for a period of two years from the date the termination of his tax agent registration takes effect, pursuant to section 40-25(1) of TASA; and

    (c)to terminate the Second Applicant’s registration as a tax agent in accordance with subsection 60-125(2)(b)(ii) and section 40-10(1)(a) of TASA.

    (the Decisions).

  2. Applications for review of the Decisions were lodged with the Tribunal on 23 April 2020.

    THE DECISIONS

  3. The bases of the Decisions were:

    First Applicant

    The Board was not satisfied that the First Applicant met the tax practitioner registration requirement under s 20-5(1)(a) of TASA that he be a fit and proper person because of breaches of subsections 30-10(1) and 30-10(7) of the Code of Professional Conduct in TASA (the Code). Although the Decision to terminate the First Applicant’s registration “in accordance with subparagraph 60-125(2)(b)(ii)”

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Cross and Tax Practitioners Board [2021] AATA 441
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[2021] AATA 441
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CaseChat Overview and Summary

The Administrative Appeals Tribunal (the Tribunal) considered applications for review of decisions made by the Tax Practitioners Board (the Board) to terminate the registration of the First Applicant as an individual tax agent and the Second Applicant as a partnership tax agent. The Board's decisions were based on findings that the First Applicant had breached subsections 30-10(1) (honesty and integrity) and 30-10(7) (competence) of the Code of Professional Conduct under the Tax Agent Services Act 2009 (TASA). Consequently, the Board was not satisfied that the First Applicant was a fit and proper person for registration, and as the First Applicant was a partner in the Second Applicant, the partnership also ceased to meet the registration requirements.

The Tribunal was required to determine whether the First Applicant was a fit and proper person for registration, and if not, what sanction was appropriate. It also had to consider whether the First Applicant had breached the Code of Professional Conduct and, if so, what action or sanction should be imposed. For the Second Applicant, the Tribunal needed to ascertain if it continued to meet the registration requirements, specifically if each individual partner was a fit and proper person, and if not, what sanction was appropriate. The Tribunal also had to consider whether the Second Applicant had breached the Code and the appropriate sanction.

The Tribunal's reasoning centred on the provisions of TASA concerning the termination of registration for partnerships and the Code of Professional Conduct. Section 40-10(1)(a) of TASA permits the Board to terminate a partnership's registration if it ceases to meet registration requirements, including the fitness and properness of its partners. The Code mandates that registered tax agents must act honestly and with integrity (s 30-10(1)) and provide services competently (s 30-10(7)). The Board's investigation revealed that the First Applicant had lodged at least 125 self-managed super fund annual returns with false declarations, indicating a failure to act honestly and with integrity, and a lack of competence.

The Tribunal varied the Board's decisions. It found that the First Applicant was not a fit and proper person and had breached the Code. The Tribunal terminated the First Applicant's registration and imposed a period of 5 years during which he could not apply for registration. For the Second Applicant, the Tribunal also terminated its registration and imposed a period of 5 years during which it could not apply for registration.

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

Applications for review of the Decisions were lodged with the Tribunal on 23 April 2020.THE DECISIONS The bases of the Decisions were:First ApplicantThe Board was not satisfied that the First Applicant met the tax practitioner registration requirement under s 20-5(1)(a) of TASA that he be a fit and proper person because of breaches of subsections 30-10(1) and 30-10(7) of the Code of Professional Conduct in TASA (the Code). Although the Decision to terminate the First Applicant’s registration “in accordance with subparagraph 60-125(2)(b)(ii)” did not spell out the factual basis for termination under that provision, it can be taken that it was because of the findings of the breaches of subsections 30-10(1) and 30-10(7)[1] which were breaches of TASA following an investigation under s 60-95 for the purposes of s 60-125(2) of TASA.[1] R2, T6/924–5; T6/927–8.Second ApplicantThe Board was not satisfied that the Second Applicant met the tax practitioner registration requirement under s 20-5(2)(a)(ii) of TASA that each individual partner is a fit and proper person because the Board was not satisfied that the First Applicant was a fit and proper person. As with the Decision in relation to the First Applicant, the Decision in relation to the Second Applicant did not spell out the factual basis for the termination under s 60-125(2)(b)(ii), however, again, it can be assumed that it was because of the findings of the breaches of subsections 30-10(1) and 30-10(7). On 23 April 2020 requests were made by the Applicants for stays of the operation or implementation of the Decisions under s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). Those requests were denied by the Tribunal[2] (Stay Decision).[2] Cross and Tax Practitioners Board [2020] AATA 1471.BACKGROUND On 1 March 2010 the First Applicant was registered as an individual tax agent under TASA. On 18 July 1991 the Second Applicant was registered as a partnership tax agent. The Second Applicant has two partners being the First Applicant and Ms Margaret Adamson. Ms Adamson is also a registered tax agent. On 25 September 2019 the Board received a referral from the Australian Taxation Office (ATO) acting on behalf of the Commissioner of Taxation (the Commissioner) concerning the conduct of the First Applicant. The ATO alleged that:[3](a)the First Applicant had lodged 19 self-managed super fund annual returns (SAR) on behalf of the Second Applicant listing the auditor as Ms Gardner of audit firm Butler Settineri when she had not completed an audit;(b)the First Applicant had admitted the he had lodged SAR prior to audit; and(c)the issue of lodging unaudited SAR may not be limited to the 2017 financial year.[3] R2, T3/25. According to the Board, further enquiries by the Board of Ms Gardner identified that:(a)at least 125 SAR were lodged prior to audit; and(b)eight funds had not been audited for 10 years or more. On 19 December 2019 the Board commenced an investigation under Subdivision 60-E of TASA into the conduct of the First Applicant.

Ratio Decidendi

Legal Principle Established

Section 40-10(1)(a) of TASA relevantly provides:Termination of registration - partnerships(1)If you are a *registered tax agent, BAS agent or tax (financial) adviser and a partnership, the Board may terminate your registration if:(a)you cease to meet one of the * tax practitioner registration requirements; or... Part 3 of TASA contains the Code, which applies to all registered tax agents. Section 30-10 relevantly provides:The Code of Professional ConductHonesty and integrity(1)You must act honestly and with integrity....Competence(7)You must ensure that a *tax agent service that you provide, or that is provided on your behalf, is provided competently. Section 30-15 of TASA provides:Sanctions for failure to comply with the Code of Professional Conduct(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.(2)The Board may do one or more of the following:(a)give you a written caution;(b)give you an order under section 30-20;(c)suspend your registration under section 30-25;(d)terminate your registration under section 30-30. Section 30-30 of TASA provides:TerminationThe Board may terminate your registration Section 40-25(1) of TASA provides:(1)If the Board terminates your registration, the Board may also determine a period, of not more than 5 years, during which you may not apply for registration.THE ISSUES The issues for determination by the Tribunal are:Application 2020/2356(a)Is the First Applicant a fit and proper person for the purposes of s 20-5(1)(a) of TASA?(b)If the answer to (a) is no, what, if any, is the correct or preferable sanction?(c)Did the First Applicant breach s 30-10 of the Code?(d)If the answer to (c) is yes, what is the correct or preferable action or sanction under s 60-125(2) or any other provision of TASA?Application 2020/2357(a)Does the Second Applicant satisfy the requirements of s 20-5(2)(a) of TASA;(b)If the answer to (a) is no, what, if any, is the correct or preferable sanction?(c)Did the Second Applicant breach s 30-10 of the Code?(d)If the answer to (c) is yes, what is the correct or preferable action or sanction under s 60-125(2) or any other provision of TASA?THE HEARING AND THE EVIDENCE Pursuant to a direction made on 14 May 2020, the applications were programmed and heard together. The hearing of the applications was on 26 October 2020. Mr S Vandongen SC, instructed by Sceales Lawyers, appeared for both Applicants. Mr M Crowley appeared for the Board. The First Applicant was the only witness to give evidence at the hearing. The following documents were admitted into evidence:(a)Applicants’ Statement of Facts, Issues and Contentions (Applicants’ SFIC), dated 12 June 2020, with annexures 1–7 (Exhibit A1);(b)Statement of Evidence of the First Applicant, dated 21 August 2020 (Exhibit A2);(c)Applicants’ bundle of references, received by the Tribunal on 26 October 2020 (Exhibit A3); (d)Handwritten register of information provided to Adamson and Cross, undated (Exhibit A4);(e)Respondent’s Statement of Facts, Issues and Contentions, dated 29 June 2020 (Exhibit R1);(f)T-Documents for matter 2020/2356 (Exhibit R2); and (g)T-Documents for matter 2020/2357 (Exhibit R3).