Delis v Tax Practitioner's Board

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FEDERAL COURT OF AUSTRALIA

Delis v Tax Practitioners’ Board [2016] FCA 570

Appeal from: Delis and Tax Practitioners’ Board [2015] AATA 820
File number: VID 797 of 2015
Judge: DAVIES J
Date of judgment: 24 May 2016
Catchwords:

ADMINISTRATIVE LAW – appeal from decision of
Administrative Appeals Tribunal – application for renewal of registration as tax agent – whether first applicant was a fit and proper person – relevant considerations – where failure to comply with taxation laws – where Commissioner of Taxation had remitted penalties and interest – where applicant gave evidence of ill-health – Tax Agent Services Act 2009 s 20-5

ADMINISTRATIVE LAW – appeal from decision of Administrative Appeals Tribunal – application for renewal of registration as tax agent – whether first applicant was a fit and proper person – procedural fairness – where applicant gave evidence of ill-health – whether obligation to request additional evidence –Tax Agent Services Act 2009 s 20-5
Legislation:

Administrative Appeals Tribunal Act 1975 (Cth) s 44

Federal Court Rules 2011 (Cth) r 33.12(2)

Tax Agent Services Act 2009 (Cth) ss 20-5, 20-15, 30-10(2)
Cases cited:

Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290; [2003] FCAFC 244

Haritos v Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92

Osland v Secretary, Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24

Toohey v Tax Agents’ Board of Victoria (2007) 171 FCR 291; [2007] FCA 431
Date of hearing: 12 April 2016
Registry: Victoria
Division: General Division
National Practice Area: Taxation
Category: Catchwords
Number of paragraphs: 46
Counsel for the Applicants: N Rosenbaum
Solicitor for the Applicants: Charlesworth Josem Partners
Solicitor for the Respondent: D Brown of the Australian Government Solicitor

ORDERS

VID 797 of 2015
BETWEEN:

PETER DELIS

First Applicant

DELIS ENTERPRISES PTY LTD
Second Applicant
AND:

TAX PRACTITIONERS BOARD

Respondent

JUDGE:

DAVIES J

DATE OF ORDER:

24 MAY 2016

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The applicants pay the respondent’s costs of the proceeding.

3.Paragraph 1 of these orders be stayed until 10 June 2016.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

DAVIES J:

  1. The applicants have appealed the decision of the Administrative Appeals Tribunal (“Tribunal”) which affirmed the decision of the respondent (“the Board”) to refuse to renew the registration of the applicants as registered tax agents (“tax agents”).

    BACKGROUND

  2. Pursuant to the Tax Agent Services Act 2009 (“TASA”) registration as a tax agent is a requirement to provide tax agent services for a fee. The first applicant (“Mr Delis”) was registered in his own right and, as the sole director of the second applicant (“Delis Enterprises”), was also the sole nominated supervising tax agent for Delis Enterprises.

  3. In July 2014, both applicants applied to the Board for renewal of their registrations as tax agents.…

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Details
Case
[2016] FCA 570
Decision Date

CaseChat Overview and Summary

The case of Delis v Tax Practitioners Board involved two applicants, Mr Delis and Delis Enterprises, appealing against the decision of the Tax Practitioners Board to refuse their applications for registration as tax agents. The applicants sought judicial review of the Board’s decision, contending that it was unreasonable due to procedural unfairness and an incorrect application of the law. The applicants argued that the Tribunal failed to consider the evidence of Mr Delis’s ill health and that the Board should have requested additional evidence on this point. The Board, in turn, submitted that the Tribunal’s decision was correct and should be affirmed.

The central legal issues before the court were whether the Tax Practitioners Board's decision was unreasonable due to procedural unfairness and an incorrect application of the law. Specifically, the applicants contended that the Tribunal failed to adequately consider Mr Delis's evidence of ill health, which they argued explained the non-compliance with taxation laws. They also argued that the Tribunal should have requested additional evidence on this point. In response, the Board submitted that the Tribunal had correctly considered the evidence and applied the relevant statutory provisions correctly.

The court found that the Tribunal had properly exercised its discretion in not seeking additional evidence on Mr Delis's ill health. The court held that the Tribunal's decision was open to it, given the extensive evidence of non-compliance with taxation laws and the history of defaulting on payment arrangements with the Australian Taxation Office. The court also found that the Tribunal had correctly applied the statutory provisions in concluding that Mr Delis was not a fit and proper person to be registered as a tax agent due to his history of non-compliance. Consequently, the court dismissed the appeal and affirmed the Board's decision.

The final orders of the court were that the appeal be dismissed, that the applicants pay the respondent's costs of the proceeding, and that the payment of costs be stayed until 10 June 2016. The court's decision underscored the importance of compliance with taxation laws and the need for tax agents to be fit and proper persons, free from patterns of non-compliance, to maintain public trust and integrity in the tax system.

Orders

Orders of the court

1. The appeal be dismissed.

2. The applicants pay the respondent’s costs of the proceeding.

3. Paragraph 1 of these orders be stayed until 10 June 2016.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Sub-division 30-A of Div 30 of the TASA contains a Code of Professional Conduct which applies to tax agents: s 30-5. Relevantly, it is a requirement pursuant to s 30-10(2) that a tax agent comply with the taxation laws in the conduct of the tax agent’s personal affairs.THE TRIBUNAL DECISION On review of the Board’s decision, the Tribunal had to consider for itself whether it was satisfied that Mr Delis was a fit and proper person for registration as a tax agent (Toohey v Tax Agents’ Board of Victoria (2007) 171 FCR 291; [2007] FCA 431 at [13]) and concluded that Mr Delis was not a fit and proper person to be registered as a tax agent: s 20-5(1). In consequence, the Tribunal also found that Delis Enterprises did not satisfy the eligibility criteria for registration as Mr Delis was the sole director of that company: s 20-5(3). The Tribunal found systematic, long term non-compliance by both Mr Delis and Delis Enterprises in respect of their taxation obligations. The Tribunal also found a pattern of conduct by Mr Delis and Delis Enterprises in entering into payment arrangements with the Australian Taxation Office (“ATO”) in respect of outstanding liabilities, which were then defaulted upon or cancelled. The Tribunal noted that both applicants had entered into further payment arrangements with the ATO, which remained active at the date of the hearing. At [61] the Tribunal stated that the history of Mr Delis’s personal non-compliance and that of Delis Enterprises disclosed a pattern of behaviour which was most likely to continue into the future. The unchallenged evidence adduced by the Board before the Tribunal was that Delis Enterprises, since 2003, had been in default of its taxation obligations and, as at 13 March 2015, had outstanding tax liabilities totalling $372,415.34, including outstanding superannuation guarantee liabilities to the ATO of $28,946.47 and a history of non-compliance in the lodgement of its business activity statements. The Tribunal stated at [18] that the “increasing debt to the ATO was mainly due to PAYG tax withheld and GST”. As at 22 May 2015, Mr Delis had personal outstanding tax liabilities to the ATO of $11,221.69 in respect of unpaid income tax and a history of non-compliance with his personal tax affairs going back to the income year ended 30 June 2009. Pinia Holdings Pty Ltd (“Pinia Holdings”), another company controlled by Mr Delis, had also failed to make payments of its tax liabilities since June 2010 and as at 19 June 2015 had outstanding tax liabilities totalling $52,840.48. The applicants did not dispute the failures to comply with taxation laws but argued that the non-compliance was not due to deliberate or reckless disregard of relevant taxation laws. The non-compliance with taxation obligations was said to be due to “ongoing episodes of the ill health of Mr Delis which adversely affected his ability to comply with his various taxation obligations and those of Delis Enterprises.” The applicants also claimed that their ability to make payments of outstanding tax liabilities was dependent upon payment of professional fees by the clients of the accountancy practice, which accounted for why payments were made well after they were due. The Tribunal rejected both explanations.

Ratio Decidendi

Legal Principle Established

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