GSXZ and Tax Practitioners Board

[2024] AATA 1303

GSXZ and Tax Practitioners Board [2024] AATA 1303 (30 May 2024)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):2023/2356, 2023/2357      

Re:GSXZ  

  SBJDAnd

APPLICANTS

AndTax Practitioners Board

RESPONDENT

REASONS FOR DECISION

Tribunal:Member Rob Reitano

Date:30 May 2024

Place:Sydney

I vary the decision of the Tax Practitioners Board to terminate the registration of the Applicant so that such termination will take effect from 27July 2024 and the Applicant may not apply for registration as a tax agent before 26 July 2025.

I vary the decision of the Tax Practitioners Board to terminate the registration of the Company so that such termination will take effect from 27 July 2024

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

Member Reitano

CATCHWORDS

TAX AGENT REGISTRATION – termination of registration as a tax agent – preclusion from registration for 12 months – failure to act honestly and with integrity – failure to comply with taxation laws – failure to respond to requests and directions of Tax Practitioners Board – fit and proper person to be a registered taxation agent – decision varied by consent as to date of effect of termination but otherwise affirmed

LEGISLATION

Tax Agents Services Act 2009 (Cth)

CASES

Deli v Tax Practitioners Board [2016] FCA 570

Kishan v Tax Practitioners Board [2017] AATA 271
Ridden v Tax Practitioners Board [2020] AATA 422

REASONS FOR DECISION

Member Rob Reitano

30 May 2024

1. At the centre of the scheme of regulation of tax agent services is registration under the Tax Agent Services Act 2009 (‘the Act’) because without registration a person is unable to provide tax agent services. The main object of the Act is to ensure that tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct. That object is achieved by prescribing that only people who are considered fit and proper can be registered and by requiring adherence to standards of behaviour that are considered appropriate for tax agents.

2. This case is about what happens when a tax agent fails to conform to appropriate standards of professional and ethical conduct and in doing so demonstrates that he is not a fit and proper person to be a tax agent.

3. The matter involves applications for review of two decisions of the Tax Practitioners Board (‘the Board’) which were both made on 2 March 2023. Both decisions were the product of the Board’s finding that the standards of appropriate behaviour had not been adhered to and that it could no longer be satisfied that the tax agent was a fit and proper person.

4. The first decision concerned an individual tax agent who I will refer to as ‘the Applicant’. The Applicant seeks a review of the Board’s decision to terminate the Applicant’s registration as a tax agent under the Act because he ceased to meet the registration requirement in the Act that the Board be satisfied that he was a fit and proper person. That decision included a preclusion imposed on the Applicant, preventing him from applying for registration for 12 months from the date on which the termination of the registration took effect.

5. The second decision concerned a company which I will refer to in this decision as ‘the Company’. This Company seeks a review of the Board’s decision to terminate the Company’s registration as a tax agent under the Act on the basis that the Company ceased to meet the registration requirements that each director be a fit and proper person. The registration requirement was not met as a consequence of the finding made concerning the Applicant not being a fit and proper person and the fact that he was a director of the Company.

6. I have decided to vary the Board’s decisions so far as the effective date of termination is concerned but to otherwise affirm them.

7. I should record two procedural matters that accompany the applications. First, before the decisions took affect an order was made staying their implementation until the application for review was finalised. Second, shortly after the stay was ordered a confidentiality order was made that required matters relevant to this decision to be kept confidential. It also provided for the use of pseudonyms rather that the names of the Applicant and the Company. These reasons do not identify either the Applicant or the Company or include any details which might lead to their identification.

   THE RULES

8. Section 30-5 of the Act provides that the Code of Professional Conduct (‘the Code’) applies to tax agents.

9. Section 30-10 contains the Code and, naturally enough, provides for a series of normative standards to which tax agents must conform. The three relevant obligations for present purposes are: subsection 30-10(1) which requires tax agents to ‘act honestly and with integrity’; subsection 30 - 10(2) which requires tax agents ‘to comply with taxation laws in the conduct of your personal affairs’; and subsection 30 -10(14) which requires tax agents to ‘respond to requests and directions from the Board in a timely, responsible and reasonable manner’. The meaning of these obligations is not in issue.

10. Subsection 20–5(1)(a) of the Act requires that the Board be satisfied that an individual is a fit and proper person to be eligible for registration as a tax agent.

11. Subsection 20–5(3)(a) requires that the Board be satisfied that each director of a company be a fit and proper person for the company to be registered as a tax agent.

12. Subsection 40-5(1)(b) permits the Board to terminate an individual’s registration should they cease to meet one of the registration requirements.

13. Subsection 40-15(1)(b) permits the Board to terminate a corporate registration should it cease to meet one of the tax agent registration requirements.

14. To be satisfied that a person is a fit and proper person, section 20-15 requires that the Board, or the Tribunal on review, consider whether the individual is of good fame, integrity and character. There are some other matters in that section to which regard must be paid but none of them are relevant here. Section 20-15 does not limit the kinds of matters that might be considered in determining fitness and propriety.

15. The phrase ‘fit and proper’ has no exact meaning, it is phrase that is evaluative in nature.  Relevant to that evaluation is the context in which tax agents perform their work. There are three matters of context that are useful to refer to as they inform the words ‘fit and proper’.

16. First, a tax agent is someone who generally will be involved in preparing and lodging tax returns, Business Activity Statements (BAS) and an array of other tax related documents on behalf of others. They need to be both competent and honest because they are trusted to take care of the financial affairs of others, namely their clients. A tax agent is very often an intermediary between people and government officials, usually those working in the Australian Taxation Office (ATO). It follows that that those clients and officials must have trust and confidence that a tax agent is always acting competently and honestly.

17. Second, a tax agent’s conduct of his, her or its own taxation affairs is also contextually relevant to fitness and propriety. It is difficult to imagine how a tax agent who is unable to properly attend to their own tax affairs could or should be trusted to look after the affairs of others. Further, compliance with legal obligations is more generally a matter that goes to good fame and character. Tax agents should be models of compliance with taxation laws, given the role they play in the administration of the taxation system.

18. Finally, assisting the Board as the regulator and the enforcer of the relevant standards of conduct is also integral part of fitness and propriety because it contributes significantly to the establishment and maintenance of professional standards. That includes assisting the Board in its enquiries of the tax agent, him, her, or itself.

19. The obligations in the Code that are relevant in this case: to act honestly and with integrity; to have one’s own tax obligations in order, and to deal with requests by the Board in a timely, reasonable and responsible manner are all matters relevant to a person’s good fame, integrity and character and go to fitness and propriety.[1] A failure to abide the standards in the Code will at least cast a shadow over whether the Board, or the Tribunal on review, can be satisfied that a tax agent is a fit and proper person. Each case will require a close examination of its own peculiar facts and circumstances, including an examination of the nature and seriousness of any departure from those standards, in order to decide whether the satisfaction about fitness and propriety is, or is not, attained.

    [1] Deli v Tax Practitioners Board [2016] FCA 570 at [42]

20. Finally, subsection 40-25(1) provides a power to preclude applications for re-registration in a period of no more than five years as part of the armoury of achieving compliance with the various obligations under the Act. This part of the rules is part and parcel of the sanctions that can be applied to secure adherence to the appropriate standards.

21. It is necessary next to turn to the facts before applying the relevant rules to them to determine the correct decision in this case.

    WHAT HAPPENED

22. The history starts on 31 January 2022 when the Applicant submitted to the Board a renewal of registration form for the Company. The form asked ‘Does the company or any company director have any overdue tax obligations? This includes any associated entities that the company, or director, has direct, or indirect control over’. The Applicant answered ‘Yes’.

23. The next item said ‘Enter the details about overdue tax obligations’ to which the Applicant answered, although in capital letters, ‘[name deleted] Trust – outstanding business activity statements and income tax returns. Integrated client account debt.’ The form invited an explanation about why any overdue tax obligations should not adversely affect eligibility to be registered and the Applicant referred to his and other staff members mental and physical illness over the last ‘couple of’ and ‘three’ years, ‘Covid-19’ and ‘its associated additional workload’ and ‘the difficulty (sic) engaging additional or replacement staff’. 

24. The form was very particular about the ‘Declaration’ that was required to be made. It provided at its conclusion:

    I have answered all the relevant questions to the best of my knowledge, information and belief and they are true and correct in every particular.

    I am aware that if I make a statement that is false or misleading in a material particular, then I may be guilty of an offence pursuant to section 8K of the Taxation Administration Act 1953.

    I understand and will comply with the Tax Agent Services Act 2009, including the Code of Professional Conduct.

    If requested, I will provide the TPB with relevant additional information or documentation in a timely manner.

    The Applicant signed the declaration.

25. As it turned out the Applicant and his associated entities had many more outstanding taxation obligations than those listed on the form.

26. The outstanding obligations were: his personal Business Activity Statement (BAS) for the period 1 July 2021 to 30 September 2021 had not been lodged; the  trust referred in the form had an outstanding debt of $8,400; another trust of which the Applicant and the Company were trustees had four outstanding tax returns for the tax years ending 30 June 2018, 2019, 2020 and 2021, six outstanding BAS lodgements for the period 1 April 2020 to 21 September 2021, a debt to the ATO of $41,242.81 and a further debt that the ATO had written off as ‘uneconomical to pursue’ of $65,677.31; another trust of which the Applicant was a trustee and three outstanding income tax returns for the tax years ending 30 June 2019, 2020 and 2021 and a debt to the ATO of $3273.05 which the ATO had written off as ‘uneconomical to pursue’; another trust for which the Applicant was a director of the corporate trustee that had eight outstanding income tax return for the tax years from 30 June 2014 till 2021 and 31 outstanding BAS’s.

27. It is fair to say that the outstanding obligations were numerous, wide ranging and at least for a tax agent, if not for an ordinary taxpayer, serious.

28. On 20 July 2022 the Board sent a letter by email to the Applicant which referred to the declaration that the Applicant had made and the apparent inconsistency between the outstanding tax obligations that were not found on the form and the declaration. The letter was clear in what was sought: an indication about the steps that were being taken to regularise the outstanding tax obligations, an explanation for why the Applicant had not declared all of the outstanding obligations, and specific information about the illnesses identified on the form. The Board asked for a response by 10 August 2022.

29. On 20 July 2022 the Applicant responded by email to the Board’s letter indicating he had received the letter and would carefully consider it and respond ‘as soon as possible.’

30. By 15 August 2022 the Board, having received no response to its earlier letter, wrote to the Applicant again enclosing a copy of the letter ‘for convenience’ and sought a response to it by 22 August 2022.

31. On 24 August 2022, two days after the requested time for a response, the Applicant wrote to the Board apologising for his ‘tardy response to your emails below’. The Applicant told the Board that he had had an operation on 12 July 2022, had been incapacitated and in hospital and had been provided with a medical clearance on 9 August 2022. He referred to the fact that his sister-in-law had passed away the week before and his need to support his niece and nephew. He also referred to his suffering from depression and his desire to obtain a report from a psychologist to ‘respond to the Board’s enquiries of me’ for which he had an appointment on 21 September 2021. The email included the following:

    I have commenced addressing the matters raised in your correspondence of 28 July 2022. However, I must regrettably advise I that have only made partial progress with respect to providing the Board with a full response to the matters they have raised.

    This delay is primarily due to the abovementioned health issues that I have experienced.

    Please be assured that I take my obligations to respond to the Board’s enquiry, and the need to do so in a timely manner, very seriously. Despite this being the case, the events and issues outlined above, particularly with respect to procuring the report from my treating psychologist, have and still prevent me from providing a full response to the Board.

32. The email sought an extension of the time for reply until 30 September. A reader of the email would have been reasonably entitled to come to the view that the Applicant had made some progress on addressing the matters raised by the Board, that the psychologists’ report was important for a response, and that the Applicant was aware of the obligation to respond to the Board in a timely manner. After all, the email said exactly those things.

33. On 26 August 2022 the Board extended the time for providing a response to 20 July 2022 to 12 September 2022.

34. On 12 September 2022 the Applicant wrote to the Board saying he had prepared his ‘initial response to the Board’s enquiries’ but he was having difficulty with his scanner so he would forward them ‘tomorrow for your consideration’ The response did not arrive the next day.

35. On 20 September 2023 a letter dated 12 September 2023 was sent by the Applicant to the Board. That letter explained what the Applicant had done and was doing in respect of the outstanding tax obligations. The letter said that, so far as the failure to declare matters on the form and his health issues were concerned, the Applicant required the psychologist’s report and was seeing the psychologist ‘tomorrow on 21 September 2022’. That was odd because the letter was dated 12 September 2022. In any event, the letter concluded that the Applicant ‘anticipated a further report from my treating psychologist to include in any further response and shall advise an estimated timeframe with respect to the receipt of his (sic) following the meeting’. No report was provided. No ‘estimated timeframe’ was ever offered.

36. By 21 October 2022 the Board had heard no more from the Applicant. The Board wrote to the Applicant that day telling him that it was commencing an investigation. The letter noted the Board’s obligation to finalise the investigation within six months. The conduct that the Board said it was concerned with was the declaration in the form, the outstanding tax obligations themselves and the failure of the Applicant to respond to the Board’s inquiries in a timely manner. It was also concerned with whether the Applicant continued to be a fit and proper person to be a tax agent. The letter set out in a little detail the facts that were of concern and sought the Applicant’s response specifically about the steps he was taking to redress the outstanding tax obligations and why he did not disclose those obligations in the form. The letter also asked when the psychologists report could be expected and whether the Applicant intended to provide further medical information.

37. On 7 November 2022 the Applicant wrote to the Board saying he had been unwell ‘since last Thursday’ and was unable to respond and would do so ‘as soon as I am able’. He did not explain what had happened and why he had not responded between 21 October and ‘last Thursday’. The next day the Applicant told the Board he had a ‘telehealth consultation’ with a doctor that day and repeated he would ‘then respond as soon as I am able’. The scenario involving excuse after excuse was by now well worn.  

38. On 14 November 2022 the Applicant again wrote to the Board saying that he had returned to the office that day and had had some follow up medical tests to be undertaken and was to have another appointment with his doctor.  The letter concluded that he had ‘a couple of pressing client matters to attend to due to my absence and shall then respond as soon as I am able.’ That statement, in the context of everything that surrounded it, indicated that for the Applicant, the Board’s investigation and response to its enquiries (that were the very same enquiries it had been making for almost four months) held no priority.

39. On 16 December 2022 the Board sent the Applicant a submission and a Notice of Alleged Breach. The three breaches alleged, were that the Applicant had failed to act honestly and with integrity in making a false statement in not fully disclosing his personal outstanding tax obligations and those of his associated entities, his failure to comply with tax obligations concerning his personal affairs, and his failure to respond to requests from the Board in a timely, responsible and reasonable manner which related to its letters of 20 July 2022 and 21 October 2022. A further ‘allegation’ was dealt with in the submission, which was to the effect that the Board could no longer be satisfied that the Applicant was a fit and proper person to be a tax agent. A response was sought by 20 January 2023.

40. It is not necessary to set out the detail of what happened after 16 December 2022. It is sufficient to note that on 20 January 2023 the Applicant sought an extension until 23 January 2023 for his reply which the Board accommodated by an extension until 24 January 2024, a further request for an extension on 25 January 2023 which was also accommodated by an extension to 31 January 2023. The Board ultimately wrote to the Applicant on 7 February 2023 extending the time for a response until 21 February 2023. None was provided.

41. On 24 March 2023 the Board wrote to the Applicant advising him that it had found that he had breached subsections 30–10(1), 30-10(2) and 30-10(14) of the Act and also that it was satisfied that the Applicant had ceased to be fit and proper person to be a tax agent. The Board terminated the Applicant’s registration with effect from 21 April 2023 and applied a 12-month period from that day during which the Applicant was precluded from seeking registration as tax agent.

1. On the same day the Company had its registration terminated because it failed to satisfy the Board that each director was a fit and proper person. No preclusion period was applied to the Company, but it was reminded that should it re-apply for registration it would need to satisfy the requirements for registration, including satisfying the Board that each of its directors was a fit and proper person.

2. I should observe that the Applicant provided a great deal of information to the Tribunal concerning his misfortunes and various medical conditions from about late June 2022 up until the hearing of this matter. I have not detailed those misfortunes and conditions other than where relevant in the chronology of events I have set out because they include personal and private information. I will refer to some of them below where the Applicant has raised them as being relevant, but it may generally be accepted that the Applicant has suffered several illnesses and like conditions since early 2023 up until late 2023.

3. On 19 December 2023, after he was discharged from hospital, almost eighteen months after the matters had been raised with him by the Board, the Applicant dealt with and regularised all of the outstanding tax obligations that were referred to by the Board.

   HONESTY AND INTEGRITY

4. At the core of the Board’s case is the obvious inconstancy between the Applicant’s declared outstanding personal taxation obligations and what those obligations in fact were. The Applicant suggests that the inconsistency between the two can be explained by an ‘unintentional error’ which he suggests arose because he was emotionally affected by the anniversary of his mother’s death ten days earlier. The Applicant suggests that he believed he had completed the declaration correctly and that if he had intended to not to declare an outstanding obligation, he would not have declared those which he did in fact declare. This, so runs the submission, is because by declaring what he did declare on the form he would have been subject to ‘greater scrutiny.’

5. The reasonableness of the Applicants position is difficult to follow. There are several things that bare upon it.

6. First, the outstanding obligations are numerous and longstanding, extending back as far as 2014. They involved serious matters that included not lodging income tax returns over many years and significant tax debts, albeit that some of them had been written off as being matters the ATO would not pursue as it was uneconomical to do so. They are, taken as a whole, very serious even to an ordinary taxpayer let alone to a tax agent. It is difficult to conceive that such serious matters, especially when the question asked directed attention to the very subject matter of outstanding tax obligations, could have readily been forgotten quite irrespective of the personal circumstances at the time.

7. Second, it is significant that when the matter was drawn to the Applicant’s attention his first response was not to say to the Board, ‘oh I have made a terrible mistake’, or something like that, but rather was to delay providing an answer over a significant period.  A person acting honestly and with integrity would immediately have owned the error. The spectre of an admission of a mistake did not raise its head for some considerable time.

8. Third, partial disclosure is as consistent with a dishonest attempt to mislead as it is with anything else. Partial disclosure may, some might think, have gone by unnoticed or perhaps unquestioned, especially having regard to the reasons given, but disclosure of the full extent of the Applicant’s outstanding obligations, given their nature, seriousness, age, and number would have been quite a very different thing. 

9. Fourth, there is no contemporary medical or corroborative evidence that supports the Applicant’s suggestion concerning his depression at the time, following the anniversary of his mother’s death. Again, if that had been the case at the first occasion, when the matter was raised, it would be expected that the answer would have corrected what had been originally said, with a long and detailed list of all the outstanding tax obligations. Also, it would not have been a difficult thing to say, at any time over the long period during which the Board was asking about the claimed ‘mistake’, that it was caused by the Applicant’s emotional and mental state when he had filled out the form.

10. I find that the Applicant, in his declaration in the form submitted to the Board on 31 January 2022, failed to act honestly and with integrity by failing to declare all his personal outstanding taxation obligations and those of his associated entities.

    COMPLIANCE WITH TAX LAWS

11. The Applicant concedes that he failed to comply with taxation laws in the conduct of his personal affairs, which includes entities for which he is ultimately responsible. I have set out earlier the obligations that the Applicant failed to comply with and noted their apparent seriousness by reference to their nature, longevity, and number. The breach of the Code is egregious, having regard to the seriousness of the failure to comply with relevant obligations.  

12. There is an issue about whether the Applicant remained responsible in relation to one entity which had a debt of $3273.05 to the ATO and three outstanding income tax returns. It is not necessary to dwell upon that or to finally decide the issue given the number of other outstanding obligations. Other than that entity, the Applicant’s taxation obligations were brought up to date shortly before Christmas 2023 noting that they had been outstanding for at least nearly two years.

13. The Applicant failed to comply with taxation law laws in the conduct of his personal affairs.

    RESPONDING TO THE BOARD

14. I earlier set out the history of the enquiries made by the Board of the Applicant since 20 July 2022. It is unnecessary here to reproduce the history of the Board’s enquiries and requests for responses and the Applicant’s requests for extension after extension, or worse still, his non-responsiveness.

15. The Applicant submitted that his various ongoing health issues and their effect on him was the main cause of his failure to respond to the Board as and when requested. A difficulty in the way of accepting that answer is that it would hardly have been difficult to identify the error that was made once the declaration was brought to his attention and then to have admitted the failure to conform to taxation obligations. That response did not involve a complex analysis of facts past or present. It was not rocket science to simply say ‘I made a mistake’. That response could have been given immediately, but if not, there were plenty of opportunities over very, many months to provide it. That response would have been reasonable. Yet, email after email sought to explain and excuse, not always for medical reasons (‘a couple of pressing client matters to attend to…’), the delay in providing a response in what became, after a long time, quite unreasonable.

16. In the end, it may slightly mitigate the seriousness of the Applicants conduct that he was ill at some times, even over periods of weeks after 20 July 2022. However, he was not sick for the entirely of the long period of time over which the Board was making its enquiries. He had very many opportunities, not simply to respond in a timely way, but also in doing so to answer the Board’s questions. 

17. I find that the Applicant did not respond to the Board’s enquiries in a timely, responsible, and reasonable manner.

    IS THE APPLICANT A FIT AND PROPER PERSON?

18. I am not satisfied that the Applicant is a fit and proper person to be registered as a tax agent because of all of the conduct he has engaged in. That conduct has involved a failure to act honestly and with integrity, which in my view is at the very core of fitness and propriety and raises significant questions that concern a person’s character. I accept that it may well be the case that the Applicant was affected mentally and emotionally when he made the declaration, but that explains rather than excuses the conduct. The subsequent failure to correct things, and to do so promptly, is relevant as well because it demonstrates a failure to come to terms with and accept responsibility for the conduct. In popular parlance, it demonstrates a failure to show any insight into the wrongdoing. That that failure to accept responsibility extended over a long time is significant because the Applicant was presented with opportunity after opportunity to own his conduct and did not take one of them.

19. A failure by a tax agent, without any reasonable explanation, to comply with taxation laws in their own affairs also demonstrates a lack of fitness to be a tax agent. The public may well ask rhetorically, ‘if he cannot attend to his own lawful obligations, how can he be a fit and proper person to attend to the tax affairs of others?’ That approach has been consistently applied by the Tribunal. I reject the suggestion that the reason for the Applicant not having his tax affairs up to date lay solely in his ‘health issues for several years’. The evidence does not support a conclusion that the health issues existed since 2014 when the Applicant first defaulted in compliance with his obligations. Nor is there much evidence that those issues affected anything much before 2022. To the extent that they did exist, the evidence is self-serving, and I am not persuaded by it so far as it is said to have contributed to the Applicant’s failures to comply with tax laws.

20. As I have found that the Applicant did not act with honesty and integrity and that he did not conform to tax laws in respect of his personal affairs I do not consider that he is of ‘good fame, integrity and character’. That too suggests he is not a ft and proper person to be a tax agent.  

21. The Applicant says he is sorry for his wrongdoing and that is a matter that affects his fitness and propriety. I accept that contrition and remorse, and in particular acceptance of responsibility for conduct, are significant matters that go to fitness and propriety. Nonetheless it is one thing to be contrite at the heal of a hearing when facing the prospect of termination of registration. It is another thing to be contrite when first confronted with the alleged conduct. The Applicant’s claimed contrition is fairly to be judged by his failure to own up to his conduct when confronted with it by the Board over a lengthy period.

22. Finally, the Applicant suggests that his long time (more than forty years) as an accountant and tax agent, his limited prospects of obtaining alternative employment, that he still requires rehabilitation for one of his medical conditions and the fact that he has been put through this process of termination of his registration and this review, are all matters that should be considered in making a decision about the termination of his registration. That submission fails to come to grips with the fact that if I am not satisfied that he is not a fit and proper person, as I am, I am obliged to terminate his registration irrespective of his personal circumstances  

23. Although there is a discretion provided for in subsection 40-5(1) to choose whether or not to terminate a tax agent’s registration, I do not consider it is appropriate to exercise that discretion in circumstances where I do not consider that the Applicant is a fit and proper person. This is a requirement for registration that stands at the centre of the scheme of the Act and is central to achieve the Act’s object of supporting ‘public trust and confidence in the integrity of the tax profession and of the tax system ensuring that tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct.

24. I am not satisfied that the Applicant is a fit and proper person to be a tax agent, so his registration as a tax agent must be terminated.

    DISQUALIFICATION PERIOD

25. The next issue concerns whether there should be a period during which the Applicant should be precluded from applying for registration again. This is usually regarded as part of the sanction imposed on tax agents and requires regard to be had to the seriousness of the conduct, the likelihood of it being repeated, the impact on the individual, the public interest in seeing an appropriate penalty applied, the extent of acknowledgement of the breaches, there seriousness and any relevant contrition or remorse.[2] In my view those matters are all relevant to an assessment of the deterrent effect that any sanction should have. That deterrent effect needs to be specific to the Applicant and, also, more generally to the tax agent community. In simple terms imposing a preclusion period for re-registration will operate to discourage others from engaging in conduct like the Applicant’s. A preclusion period will operate to encourage the Applicant in future to confirm to the obligations on them under the Act.

    [2] Kishan v Tax Practitioners Board [2017] AATA 271 at [19]; Ridden v Tax Practitioners Board [2020] AATA 422 at [23]

26. There is no formula to be applied, or correct number to be arrived at, in determining an appropriate period for prohibiting an application for registration, although there is a maximum period of five years. The question is one of impression and judgment having regard to all the circumstances.   

27. The breaches of appropriate standards in this case are serious, especially so far as the failure to act honestly and with integrity, and to comply with taxation laws in the Applicant’s personal affairs are concerned. The Applicant has belatedly accepted and apologised for his wrongdoing. He has also, again belatedly, brought his tax affairs up to date. It can be accepted that at least some of the time he has taken to do that is attributable to what he describes as his health issues. His failure to engage with the Board over a significant period is also serious, given that it reflects on both his taking responsibility for his wrongdoing and his contrition.

28. In the circumstances, I consider that a prohibition on reapplication for registration for a period of one year is appropriate. In my view that sanction will send a significant message to both the Applicant and the tax agent community more generally about the need to avoid the kind of conduct that the Applicant has engaged in here

    THE COMPANY’S REGISTRATION

29. As I recorded earlier, I may cancel the registration of the Company should it cease to satisfy the registration requirement that each director of the company be a fit and proper person. I have found that the Applicant, who is a director of the company, is not a fit and proper person and so the power is engaged. The only issue is whether I should exercise the discretion against taking that course for one reason or another.

30. The Applicant suggested I should not visit on the Company the consequence of termination because it is a separate legal entity. That suggestion fails to grapple with the fact that the Applicant, who is not a fit and proper person, is at present one of the guiding minds of the Company. It also fails to engage with the scheme of the Act, which contemplates that directors must be fit and proper people to obtain registration.

31. Next the Application suggested that he would resign if his registration were terminated so that the consequence for the Company of him not being director would not arise. He suggested that there is another person who is director and that she could satisfy the supervision requirements so far as the Company was concerned. Further, it was suggested that the consequence of termination would see the clients of the Company disadvantaged and they would lose the benefit of the Company dealing with their tax affairs. It would also see employees losing their employment and livelihoods. In that light it was suggested that a caution would be an appropriate sanction.

32. I consider that the appropriate course is to terminate the registration of the Company mainly because it does not presently satisfy the registration requirements, as one of its directors is not a fit and proper person. There is no sound basis otherwise in circumstances where that director has, until very recently, been the only director of the Company and its sole supervising tax agent. There is no sound discretionary basis for effectively allowing a Company on the verge of termination of registration to adopt some other course that has the effect of skirting around the consequences that necessarily and ordinarily flow from a finding that one of its directors is not a fit and proper person. Terminating the Company’s registration will send a message generally to the tax agent community about the need to have people who are fit and proper persons in control of corporate tax agents. That interest outweighs any private interest of clients or employees, the effect on whom will be partly ameliorated by the date of effect of the termination of registration.

33. I should add that the Board did not suggest there should be any preclusion period during which the Company could not apply for registration. The effect of that would be that the Company could apply for registration again and the Board will have the opportunity then to consider all relevant matters and determine the questions of eligibility for registration in an orderly and proper manner. 

    DATE OF EFFECT

34. The parties agreed that if I decided to terminate the Applicant and the Company’s registration I should do so with effect from a date sixty days from the date of this decision. I will adopt that course.

    DECISION

35. I vary the decision of the Tax Practitioners Board to terminate the registration of the Applicant so that such termination will take effect from 27 July 2024 and the Applicant may not apply for registration as tax agent before 26 July 2025.

36. I vary the decision of the Tax Practitioners Board to terminate the registration of the Company so that such termination will take effect from 27 July 2024.

78.     I certify that the preceding 77 (seventy-seven) paragraphs are a true copy of the written reasons of the decision herein of Member Reitano 79.     

……...............................................................

Associate

Dated: 30 May 2024

Date of hearing:	10 May 2024
For the Applicant:	In person
Counsel for the Respondent:	Mr Kane Loxely