Iacono and Tax Agents' Board of Victoria

[2007] AATA 1045

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1045

ADMINISTRATIVE APPEALS TRIBUNAL                   N° V2006/719

GENERAL  ADMINISTRATIVE  DIVISION
Re		BIAGIO GIOVANNI IACONO

Applicant

And TAX AGENTS’ BOARD OF VICTORIA

Respondent

DECISION

Tribunal:Mr Egon Fice, Member

Date:6 February 2007

Place:Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Mr Egon Fice

Member

TAXATION – tax agent – not a fit and proper person – suspension of registration – appropriate length of suspension – protection of the public

Income Tax Assessment Act 1936 s 251

New South Wales Bar Association v Hamman [1999] NSWCA 404

Pillai v Messiter [No 2] (1989) 16 NSWLR 197

Re Su and The Tax Agents’ Board of South Australia (1982) 82 ATC 4284

REASONS FOR DECISION

6 February 2007  Mr Egon Fice, Member

1. This matter comes before the Tribunal on remittal from the Federal Court of Australia where Finn J ordered that the matter be remitted to the Tribunal to hear and determine the question of the period of suspension in accordance with s 251K(3) of the Income Tax Assessment Act 1936 (the Assessment Act).

2. In my decision, handed down on 17 February 2006 ([2006] AATA 136), I found that Mr Iacono was not, at the time the Tax Agents’ Board of Victoria (the Board) exercised its discretion to suspend Mr Iacono’s tax registration for a period of three months, a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers’ income tax matters.

3.      The only issue now before the Tribunal is whether the Board’s decision to suspend Mr Iacono’s tax agent registration for a period of three months was appropriate. 

RELEVANT LEGISLATION

4. Section 251K(2)(d) of the Assessment Act provides that the Board may suspend or cancel the registration of any tax agent upon being satisfied that the tax agent is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters.

5.      For the reasons set out in my decision of 17 February 2006, at the date of making that decision, I found that Mr Iacono was not a fit and proper person for the purposes of s 251K(2).

6. Section 251K(3) of the Assessment Act provides:

If the registration of a tax agent is not already suspended, a suspension of the registration of the tax agent shall be for such period as the Board concerned thinks fit.

7. Mr Athanasiou, a solicitor who appeared on behalf of Mr Iacono, submitted that the time at which the Tribunal should assess the appropriate suspension was the date of the remittal hearing, 8 January 2007. Mr Athanasiou relied on s 251BC(1) which sets out the factors which, if present, would make a person not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers on income tax matters as at a particular time. However, when this matter was on appeal before the Federal Court, Finn J did not dispute the Tribunal’s findings that at the time of the decision Mr Iacono was not a fit and proper person within the meaning of the Assessment Act. For that reason, in determining the appropriate suspension, if any, which should be applied to Mr Iacono, it is my view that the facts which existed as at 17 February 2006 must be determinative of the issue. It is upon that finding that Mr Iacono finds himself subject to possible suspension under s 251K(2)(d) of the Assessment Act. In any event, Mr Athanasiou did not tender any further evidence upon which he sought to rely for the purpose of this hearing. I am satisfied that the particular time referred to in s 251BC of the Assessment Act is the time when I made the finding that Mr Iacono was not a fit and proper person due to his conviction for taxation offences.

SECTION 251K

8.      Section 251K, which deals with the cancellation or suspension of registration of tax agents, provides no guide as to an appropriate period of suspension where a tax agent is found not to be a fit and proper person.  Mr Athanasiou submitted that if in Mr Iacono’s circumstances, a period of suspension was warranted, it should not be for longer than one month. 

9.      Mr Athanasiou submitted that I should take into account Mr Iacono’s ill health at the time that he failed to complete his own income tax returns.  However, as Mr Small, a solicitor representing the respondent, submitted, there was limited evidence before me regarding Mr Iacono’s health problems at the relevant time.  However, the medical problems of which Mr Iacono complained - high blood pressure, ulcers and sleep apnoea - were all conditions from which Mr Iacono suffered for many years prior to his conviction in 2005 for failure to lodge tax returns.  There was no evidence at all that between 2001 and 2003, which were the years of the income tax returns in question, Mr Iacono suffered from any other transient illness which prevented him from being able to pay attention to his own tax affairs.  In fact, as Mr Small submitted, it was unusual indeed that Mr Iacono complained that his ill health was responsible for him failing to complete his tax returns while, at the same time, there were no client complaints; and he managed, it appears, to complete all of the necessary work for his clients.  In my view, that is a serious anomaly in Mr Iacono’s argument and I am not prepared to accept his long-standing medical problems as having been the cause of his failure to lodge income tax returns for the 2001, 2002 and 2003 income years.

10.     I accept Mr Athanasiou’s submissions that if any suspension is warranted, it should not be imposed by way of penalty.  There are many cases that deal with disciplinary proceedings against professionals where that has been expressly stated.  For example, the New South Wales Court of Appeal in New South Wales Bar Association v Hamman [1999] NSWCA 404 (unreported, Mason P, Priestly JA and Davies AJA, 29 October 1999) in disciplinary proceedings against a legal practitioner said at paragraph 21:

…Disciplinary proceedings against a legal practitioner are concerned with the protection of the public (Wentworth v New South Wales Bar Association (1992) 176 CLR 239 …).  The object is not to punish the practitioner but to protect the public and to maintain proper standards in the legal profession. …

And again, as pointed out by Kirby P in Pillai v Messiter [No 2] (1989) 16 NSWLR 197 at 201:

... The public needs to be protected from delinquents and wrong-doers within professions. It also needs to be protected from seriously incompetent professional people who are ignorant of basic rules or indifferent as to rudimentary professional requirements. Such people should be removed from the register or from the relevant roll of practitioners, at least until they can demonstrate that their disqualifying imperfections have been removed. …

11.      It is clear that Mr Iacono’s registration should only be suspended if it is necessary to protect the public.  While it is true that Mr Iacono’s convictions were not the result of anything he did when dealing with his clients in tax matters, as Davies J said in Re Su and The Tax Agents’ Board of South Australia (1982) 82 ATC 4284 at 4287 (cited in my previous decision):

…A tax agent who allows his own tax affairs to get into a state of disorder, who has constant problems himself with the Taxation Department, may not be a proper person to handle clients’ affairs for there may come a time when dissatisfaction which officers of the Department may have with a tax agent personally may be reflected in their handling of his clients’ affairs. …

12.     In my view, Mr Iacono’s clients have a right to know that their tax agent may not enjoy the confidence of the Australian Taxation Office.  They also have the right to know that Mr Iacono has been found not to be a fit and proper person to prepare income tax returns and transact business on their behalf in income tax matters. Having been made fully aware of Mr Iacono’s convictions and finding that he is not a fit and proper person within the meaning of the Assessment Act, they will then be in a position to decide whether they want Mr Iacono to continue to act for them as their tax agent. It seems to me that the only way by which his clients would become aware of these facts is if Mr Iacono were given a period of suspension. The period of suspension should be of sufficient length to ensure that his clients become aware of his lack of fitness to act in their tax matters. For that to occur, it seems to me that a suspension of one month would be inadequate, particularly at this time of the year when tax activity is likely to be low. In my view, a period of three months is appropriate to ensure that Mr Iacono’s lack of fitness to act in client’s tax matters will be brought to their attention so that they are able to make an informed decision as to whether Mr Iacono should continue to act for them.

CONCLUSION

13.     Having reconsidered this matter, I am of the view that it is appropriate that Mr Iacono be suspended for a period of three months from acting as a tax agent.  Therefore, the Tribunal affirms the decision under review.

I certify that the thirteen [13] preceding paragraphs are a true copy of the reasons for the decision herein of:

Mr Egon Fice

Signed:  Ursula Noyé

Clerk

Date of Hearing:  8 January 2007
Date of Decision:  6 February 2007
Solicitor for the Applicant:            Mr A. Athanasiou, Rigby Cooke Lawyers
Solicitor for the Respondent:        Mr S. Small, Australian Government Solicitor