John Cleary v Tax Practitioners Board
[2014] AATA 218
•3 April 2014
[2014] AATA 218
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/3064
Re
John Cleary
APPLICANT
And
Tax Practitioners Board
RESPONDENT
WRITTEN REASONS FOR ORAL INTERLOCUTORY DECISION
Tribunal Ms A F Cunningham (Senior Member)
Date 3 April 2014 Date of written reasons 14 April 2014 Place Hobart The Tribunal determines that the stay order made by Deputy President Groom on 1 July 2013 be set aside. The suspension of the applicant’s registration will take effect from 17 April 2014.
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Ms A F Cunningham (Senior Member)
TAX AGENT – suspension of registration – Stay order of Tax Practitioner Board set aside
Tax Agent Services Act 2009, s 30B
Administrative Appeals Tribunal Act 1975, s 41(2)
Superannuation Guarantee Charge Act 1992
WRITTEN REASONS FOR ORAL INTERLOCUTORY DECISION
Ms A F Cunningham (Senior Member)
14 April 2014
The applicant John Cleary has applied for the review of a decision made by the Tax Practitioners Board dated 28 May 2013, which pursuant to subdivision 30B of the Tax Agent Services Act 2009 imposed the following sanctions; firstly a written caution and secondly a suspension of Mr Cleary’s tax agent registration for a period of three months. The suspension was to take effect from 26 June 2013 until 26 September 2013. Mr Cleary also applied for an order to stay the operation or implementation of the decision pursuant to subsection 41(2) of the Administrative Appeals Tribunal Act 1975. That provision states that:
“… if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operational implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review”.
On 1 July 2013 Deputy President Groom made an order that the implementation of the respondent’s decision to suspend Mr Cleary’s tax agent registration for a period of three months be stayed until the decision of the Tribunal on the application for review comes into operation or until further order of the Tribunal.
Mr Cleary’s application for review was heard this day 3 April 2014. Mr Cleary represented himself and the respondent was represented by counsel David Brown, assisted by Julia Randall-Smith. Three volumes of T Documents were tendered in evidence on behalf of the respondent. Mr Cleary gave oral evidence and was cross-examined by Mr Brown.
During the course of cross-examination Mr Cleary accepted each of the alleged code of professional conduct breaches being as follows:
A) Failing to lodge his personal income tax returns for 2009, 2010 and 2011 financial years by the respective due dates;
B) Failing to lodge his business activity statements for the period covering 1 July 2011 to 30 September 2012;
C) Failing to lodge the partnership ITR’s for 2009, 2010 and 2011 financial years;
D) Failing to lodge the partnership BAS for the period covering 1 July 2011 to 30 September 2012;
E) Failing to pay by the respective due dates his personal income tax debt of $17,447.00; his Client Account Centre debt of $60,465.06; and the partnerships CAC debt of $716.00;
F) Failing to pay employer contribution to his employee superannuation funds during the 2007, 2010 and 2012 financial years pursuant to the Superannuation Guarantee Charge Act 1992.
Mr Brown informed the Tribunal that the breaches with respect to the Superannuation Guarantee Charge Act should have dated from 2001 which is supported by relevant documentation.
As stated, Mr Cleary acknowledges these breaches but contends that he has since lodged taxation returns for the years 2009 and 2010 and disputes the non-payment of superannuation guarantee contributions for two of his employees. He acknowledges his responsibilities to pay superannuation guarantee contributions as assessed for his other employees. Mr Cleary did not lodge objections with the ATO following the issue of assessment notices.
Despite his contention that he is in negotiation with the ATO regarding payment of his debts, no repayment arrangement has yet been made and all of the debts raised are still outstanding. Although Mr Cleary acknowledges his responsibilities with respect to the payment of superannuation guarantee contributions, the evidence was that he still fails to make these contributions. When asked about his reasons for this, his response to the Tribunal was that the funds have not been available. Mr Cleary’s general explanation for his professional conduct breaches was that he either did not have the required funds or sufficient time due to his workload to comply with his obligations. He contends that he acknowledged the suspension imposed by self-imposing a period of suspension between 26 June 2013 and 26 September 2013. Following this period, Mr Cleary said that he wrote to the respondent on 1 October 2013 advising of his self-imposed suspension. He received a letter in response on 18 November 2013 in which the respondent pointed out that the Tribunal had made an order staying the operation of the suspension and that the respondent did not accept that Mr Cleary’s self-imposed suspension complied with the terms of the order. Under cross-examination Mr Cleary admitted that he had in fact attended to the lodgement of some taxation returns on behalf of his clients which he had received by mail from clients and that some of his staff lodged some business activity statements on behalf of clients.
The explanations put forward by Mr Cleary for his failure to comply with his obligations under the taxation legislation were that his wife underwent three back operations between 2007 and 2010 and that he was repaying the surgeons fees; he undertook a lot of the household and domestic duties during this period; he carried a high workload and lacked the time to attend his own personal obligations; one of his staff had “fleeced the practice” by accessing his data and taking clients away from the practice.
Apart from contending that that he had accepted a three months suspension by refraining from operating as a tax agent between 26 June and 26 September 2013, Mr Cleary gave no indication that he either understood or acknowledged the seriousness of his conduct. In his closing submissions he said that Mr Brown’s suggestion that he failed to understand his obligations as a tax agent was an “indictment and an insult” to him. At no time during his closing submissions did Mr Cleary acknowledge the seriousness of his conduct. He simply urged the Tribunal to consider the impacts of a suspension on his ability to earn an income and the impact that it would have for his family. Despite Mr Cleary’s pledge that he would eventually fulfil his obligations, the Tribunal has no confidence that he will do so for the history does not give any such indication.
Mr Cleary has consistently acknowledged his responsibilities with respect to superannuation guarantee contributions for his employees and has been made aware of such obligations by the ATO from at least 2007. He acknowledges that he continues to breach his obligations. Despite this knowledge he has offered no reasonable or acceptable explanation. The Tribunal heard that as well as working and deriving income as a tax agent and employing a number of staff, Mr Cleary runs and operates a small Marino sheep stud. He contends that at times he has had so much work that he has had no time to attend to his personal affairs. He has continued to employ and pay his staff but has consciously decided to disregard his obligations to pay superannuation guarantee charges.
Mr Cleary’s lack of appreciation of his responsibilities and obligations as an employer and in particular as a tax agent, is most concerning. Whilst Mr Cleary contends that he understands his commitments, his actions do not reflect this. His failure to make these contributions is effectively depriving his employees and the ATO of funds that belong to them.
It is for these reasons that the Tribunal determines that it is no longer desirable to continue the stay of the implementation of that part of the decision of the Tax Practitioners Board imposing a suspension of Mr Cleary’s tax agent registration for a period of three months. The Tribunal considers that the stay order is no longer required for the purpose of securing the effectiveness of the hearing and the determination of the application for review which has been completed.
The Tribunal accordingly determines that the order made by Deputy President Groom on 1 July 2013 be set aside. The suspension of the applicant’s registration will take effect from 17 April 2014.
I certify that the preceding 11 (eleven) paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member) [Sgd]
Administrative Assistant
Dated : 14 April 2014
Date(s) of hearing 3 April 2014 Date of written reasons
Applicant
14 April 2014
In person
Counsel for the Respondent
Mr D Brown
Solicitors for the Respondent
Ms J Randall-Smith, Australian Government Solicitor
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