D'couto and Tax Practitioners Board - [2023] AATA 3485

D'couto and Tax Practitioners Board [2023] AATA 3485 (26 October 2023)
Division: TAXATION AND COMMERCIAL DIVISION
File Number: 2022/9330
Re:Joylene D'couto
APPLICANT

AndTax Practitioners Board
RESPONDENT

DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:26 October 2023
Place:Sydney

The reviewable decision is affirmed.
.................................[sgd].......................................
Mrs J C Kelly, Senior Member
CATCHWORDS
TAX AGENTS – breach of TASA Code of Professional conduct – tax agent registration termination – decision to prevent reapplying for tax agent registration for three years – whether the applicant acted honestly and with integrity – whether the applicant complied with taxation laws – whether the applicant provided tax agent services competently – whether the applicant is a fit and proper person – reviewable decision affirmed
LEGISLATION
Taxation Administration Act 1953 (Cth)
Tax Agent Services Act 2009 (Cth)
Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)
CASES
Beckett and Tax Practitioners Board [2021] AATA 1234
Carbery and Associates Pty Ltd v Tax Agents’ Board (Qld) (2001) 46 ATR 1106
Hill and Tax Practitioners Board [2020] AATA 678
Kishore and Tax Practitioners Board [2017] AATA 271
Shmuel and Tax Practitioners Board [2019] AATA 2168
Stasos v Tax Agents Board (1990) 21 ATR 974
Su v Tax Agents’ Board South Australia (1982) 61 FLR 1
Toohey and Tax Agents’ Board of Victoria [2009] AATA 603
SECONDARY MATERIALS
Explanatory Memorandum, Tax Agent Services Bill 2009 (Cth)
Explanatory Paper TPB(EP) 01/2010 Code of Professional Conduct
Explanatory Paper TPB(EP) 02/2010 Fit and proper person
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
26 October 2023
Introduction

The Applicant, Ms D’Couto, has applied to the Tribunal to set aside the decision made by the Tax Practitioners Board (the Board) (the Respondent) on 13 October 2022:
(a)to terminate her tax agent registration pursuant to subsection 40-5(1)(b) of the Tax Agent Services Act 2009 (Cth) (the TASA) [1]; and
(b)to prohibit her from re-applying for registration for a period of three years from the date termination of her registration takes effect pursuant to subsection 40-25(1) of the TASA.
[1] The TASA replaced Part VIIA of the Income Tax Assessment Act 1936 (Cth).
I have decided to affirm the Board’s decision for the following reasons.
Background
The reviewable decision was made following an investigation conducted pursuant to subdivision 60-E of the TASA. On 29 January 2021, the Respondent received a referral from the Australian Taxation Office (ATO) concerning the Applicant’s personal tax affairs. On 9 February 2021, the Respondent received a further referral from the ATO concerning the Applicant and audits carried out on 19 of her clients, of work-related expenses (WRE). The Board issued a letter to the Applicant on 3 May 2022 advising that it had commenced an investigation. On 23 September 2022, the Board sent a letter to the Applicant and attached a submission from the Board’s Conduct Committee setting out alleged breaches of the Code of Professional Conduct (the Code). The Applicant responded on 12…

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: [2023] AATA 3485
Decision Date: 26 October 2023

CaseChat Overview and Summary

The Administrative Appeals Tribunal considered a decision by the Tax Practitioners Board to terminate the registration of a tax agent, Ms D'couto, and to prevent her from reapplying for registration for three years. The Board's decision followed an investigation prompted by referrals from the Australian Taxation Office concerning Ms D'couto's personal tax affairs and audits of her clients' work-related expense claims. The Tribunal was asked to review the Board's findings that Ms D'couto had breached specific provisions of the Code of Professional Conduct and consequently ceased to meet the registration requirement of being a fit and proper person.

The Tribunal was required to determine whether Ms D'couto had breached subsections 30-10(1), 30-10(2), and 30-10(7) of the Code of Professional Conduct, which relate to acting honestly and with integrity, complying with taxation laws in personal affairs, and providing tax agent services competently, respectively. Further, the Tribunal had to assess whether these breaches meant Ms D'couto was no longer a fit and proper person to be a registered tax agent, as required by subsection 20-5(1)(a) of the Tax Agent Services Act 2009 (TASA). Finally, the Tribunal needed to decide if termination of her registration was appropriate and, if so, whether a three-year period prohibiting reapplication was warranted.

The Tribunal affirmed the Board's decision. It found that Ms D'couto had indeed breached the specified subsections of the Code. The investigation revealed issues with her personal tax compliance and the competence of tax agent services provided on her behalf, particularly concerning client work-related expense claims. These findings led the Tribunal to conclude that Ms D'couto no longer met the registration requirement of being a fit and proper person, having regard to her good fame, integrity, and character.

Consequently, the Tribunal ordered that Ms D'couto's tax agent registration be terminated. It further determined that she should be prevented from applying for re-registration for a period of three years, aligning with the sanctions available under the TASA for such breaches.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

I have decided to affirm the Board’s decision for the following reasons.Background The reviewable decision was made following an investigation conducted pursuant to subdivision 60-E of the TASA. On 29 January 2021, the Respondent received a referral from the Australian Taxation Office (ATO) concerning the Applicant’s personal tax affairs. On 9 February 2021, the Respondent received a further referral from the ATO concerning the Applicant and audits carried out on 19 of her clients, of work-related expenses (WRE). The Board issued a letter to the Applicant on 3 May 2022 advising that it had commenced an investigation. On 23 September 2022, the Board sent a letter to the Applicant and attached a submission from the Board’s Conduct Committee setting out alleged breaches of the Code of Professional Conduct (the Code). The Applicant responded on 12 October 2022. The decision under review was made on 13 October 2022. Part 2 of the TASA deals with registration of tax agents and BAS (Business Activity Statement) agents. The Code, which applies to all registered tax agents and BAS agents, is set out in section 30-10 in Part 3 of the TASA. The Board was satisfied that the Applicant had breached subsections 30-10(1), 30-10(2) and 30-10(7) of the Code and determined that the Applicant had ceased to meet the tax practitioner registration requirement under paragraph 20-5(1)(a) of the TASA, that she is a fit and proper person. The Board notified the Applicant of the reviewable decision by letter dated 9 November 2022. The issues The issues to be determined are:(1)Whether the Applicant has breached the following requirements of the Code:a.Subsection 30-10(1), to act honestly and with integrity;b.Subsection 30-10(2), to comply with taxation laws[2] in the conduct of [her] personal affairs;c.Subsection 30-10(7), to ensure that a tax agent service that [she] provide/s, or that is provided on [her] behalf, is provided competently.(2)Whether the Applicant has ceased to meet the tax practitioner registration requirement in subsection 20-5(1)(a) of the TASA that she is a fit and proper person.(3)Whether the Applicant’s tax agent registration should be terminated pursuant to paragraph 40-5(1)(b) of the TASA, and (4)If so, whether it should be determined that she may not apply for registration for a period of three years pursuant to subsection 40-25(1) of the TASA. [2] The term ‘taxation law’ is defined in section 995-1 of the Income Tax Assessment Act 1997 (Cth) and relevantly includes ‘an Act of which the Commissioner has general administration’, which includes the Income Tax Assessment Act 1936 (Cth), the A New Tax System (Goods and Services Tax Act 1999 (Cth) and the Tax Administration Act 1953 (Cth). The object of the Act The object of the TASA:is to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.[3] [3] Tax Agent Services Act 2009 (Cth) s 2-5. Relevantly, that object is to be achieved by:(a)Establishing the Board; and(b)Introducing a Code of Professional Conduct for registered tax agents; and(c)Providing sanctions to discipline registered tax agents.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The appropriate sanction is that the Applicant’s registration be terminated and the determination made that she may not apply for reregistration during a period of three years.DECISION The reviewable decision is affirmed.

Ratio Decidendi

Legal Principle Established

Tax agent services 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; orii.advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; oriii.representing an entity in their dealings with the Commissioner; andb)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.[4][4] Tax Agent Services Act 2009 (Cth) s 90-5(1).Available sanctions and termination of registration Section 30-15 in Subdivision 30-B of the TASA sets out sanctions for failure to comply with the Code:(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).(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. The orders the Board may make under section 30-20 of the TASA are: to complete a specified course of education or training, provide tax services only under supervision of a specified registered tax agent, or provide only specified tax services. In respect of each order, the Board may specify a relevant period of time. In the case of suspension under section 30-25 of the TASA, the Board may, by notice in writing, suspend registration for a period it determines. A person must not provide tax agent services during that period. During a period of suspension, the person is taken not to be a registered tax agent except for specified purposes. In addition to termination under section 30-30 of the TASA, subsection 40-5 sets out various circumstances in which the Board may/must terminate registration, including subsection 40-5(1)(b) which provides that the Board may do so if:·you cease to meet one of the tax practitioner registration requirements. As set out above, the relevant registration requirement in this case that the Board found the Applicant ceased to meet is being a fit and proper person (subsection 20-5(1)(a) of the TASA). Subsection 20-15(a) of the TASA states that in deciding whether it is satisfied that an individual is a fit and proper person, the Board must have regard to whether the individual is of good fame, integrity and character. Subsection 40-25(1) of the TASA provides that if the Board terminates an agent’s registration, it may impose a period of not more than five years during which an agent may not apply for registration.The Applicant’s background The Applicant:·has been a registered tax agent since 1 September 2004. When the TASA commenced on 1 March 2010 she was automatically registered as an individual tax agent;[5]·is a sole trader and has traded under the name ‘Tax Angels’ since 7 January 2008;·has been the sole trustee of The Trustee for Elsie Maude McKenzie Estate (the Estate) since 3 July 2006;·has been the sole director of Beyond the Abyss Pty Ltd (the Company) since its incorporation on 16 September 2008.[5] Pursuant to the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth).2014 investigation by the Board and subsequent Tribunal decision