Lavrik and Tax Agents' Board of Queensland

[2007] AATA 1684

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1684

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q200700001

GENERAL ADMINISTRATIVE  DIVISION		)
Re		VLADISLAV LAVRIK

Applicant

And TAX AGENTS' BOARD OF QUEENSLAND

Respondent

DECISION

Tribunal Dr KS Levy RFD, Senior Member

Date22 August 2007

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.................[sgd].............................

Senior Member

CATCHWORDS

TAXATION – tax agent – registration as a tax agent refused – ‘fit and proper person’ – whether the applicant satisfies the prescribed qualifications requirement – relevant employment – applicant does not satisfy the regulation 156(4) – decision affirmed

Income Tax Assessment Act 1936 (Cth) ss 251BC, 251JA
Income Tax Regulations 1936 (Cth) reg 156

Administrative Appeals Tribunal Act 1975 (Cth) s 37

Nikac and Others v Minister for Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 611
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Tax Agents’ Board of New South Wales v Aqabani (2005) 144 FCR 446
Yan and the Tax Agents’ Board of New South Wales (2005) 61 ATR 1096
McGowan and Tax Agents’ Board of Queensland (1996) 33 ATR 1042

REASONS FOR DECISION

22 August 2007   Dr KS Levy RFD, Senior Member   

Introduction

1.      Mr Lavrik applied for registration as a Tax Agent with the Tax Agents’ Board of Queensland.  That application was rejected on 6 December 2006.  He now applies to the Administrative Appeals Tribunal for review of that decision.

Issues

2.      The issue in this case is whether Mr Lavrik is a fit and proper person to be registered as a Tax Agent.  More specifically, in relation to answering that question, the Tribunal must determine:

(a) Whether Mr Lavrik meets the prescribed qualifications as set out in s 251BC(1)(b)(ii) of the Income Tax Assessment Act 1936 (“ITAA”); and

(b)  Whether Mr Lavrik’s post-graduate qualification meets the required standards of Regulation 156(4)(a) of the Income Tax Regulations 1936, which require a course of study in accountancy of not less than two years duration full-time, or four years duration part-time. 

Evidence

3.      The Tribunal admitted the following documents:

Exhibit 1Documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975

Exhibit 2Statement by the applicant dated 13 March 2007 (with attachments)

4.      Evidence was received from the applicant through an interpreter. The applicant gave evidence and represented himself.  The respondent was represented by Ms M Brennan of Counsel.  Mr Paul Gorrie, employer of the applicant, provided evidence on behalf of the respondent.

5.      The applicant’s evidence was that he had completed a Master of Professional Accounting at Griffith University.  This course, he submitted, satisfied the professional accounting bodies for requirements for admission and as a consequence, entitled him to registration as a Tax Agent.  He also maintained that his experience, based on previous cases determined by the Administrative Appeals Tribunal, indicated that his qualifications satisfied the regulations.

6.      I have considered all the factual material and the oral evidence presented at the hearing.  I have also considered the statutory and regulatory material as well as case law submitted by Mr Lavrik and Ms Brennan and have taken account of all of that material in arriving at the decision in this matter.

7. The statutory requirements are primarily that a person who wishes to be registered as a Tax Agent must satisfy s 251JA of the ITAA. That requires that the Board must register an applicant as a Tax Agent if it is satisfied that “the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters…”  (s 251JA(1)(a)(i)). The requirement to be “a fit and proper person” is amplified in s 251BC(1)(b) of the ITAA. That provision essentially precludes registration of persons who do not hold the prescribed qualifications (both academic qualifications and experience) (s 251BC(1)(b)(ii)). The other sub-sections of s 251BC(1) are not relevant or are not in dispute in this case.

8. The detailed requirements to be able to satisfy s 251BC are set out in regulation 156 of the Income Tax Regulations 1936 (Cth). Relevantly, the following provision must be satisfied:

“Regulation 156

Prescribed qualifications for subparagraph 251BC (1) (b) (ii) of the Act

…

(4)   A qualification is that a person:

(a)    has successfully completed the academic requirements for:

(i)    the award of a diploma or certificate from a college of technical and further education or another educational institution of an equivalent standard; or

(ii)    the award of a post‑graduate degree or graduate diploma from a university, a college of technical and further education or another educational institution of an equivalent standard;

following a course of study in accountancy of not less than 2 years duration of full‑time study or 4 years duration of part‑time study; and

(b)    has :

(i)been engaged in relevant employment on a full‑time basis for not less than a total of 2 years in the preceding 5 years; or

(ii)   otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to the employment mentioned in subparagraph (i); or

(iii)   been engaged in such other employment, and

for such time, as the Board regards as equivalent

to being engaged in the relevant employment mentioned in subparagraph (i); and

(c)    has successfully completed a course of study in Australian income tax law that is acceptable to the Board.

…”

9.      In assessing whether the applicant is a fit and proper person, one must also give consideration to the definition of the term “relevant employment” as used in regulation 156(4) and as defined in regulation 156(6) as follows:

“(6)   In this regulation:

"relevant employment" means employment by a person or a partnership, or as a member of a partnership, in the course of which there has been substantial involvement in income tax matters including:

(a)    the preparation or examination of a broad range of income tax returns; and

(b)    the preparation or examination of objections to assessments issued in respect of such returns; and

(c)    the provision of advice in relation to income tax returns, assessments or objections.”

10.     I was referred by the applicant to the “Explanatory Statement – Statutory Rules 2007 NA” issued under the authority of the Minister for Revenue and Assistant Treasurer.  The respondent’s solicitor was able to determine quite efficiently during the hearing that this document presently has no statutory force but is in draft form only for a consultation phase with the professions and the community, which remains extant.   Those requirements may have regulatory force in the future, but it was apparent that it is of no effect for the present purposes. 

11.     It is clear that regulation 156(4) requires the following cumulative requisites (as far as is relevant):

(a)  Regulation 156(4)(a)(ii) – a post-graduate degree in accounting for not less than two years full-time study or four years part-time study;

AND

(b)  Regulation 156(4)(b)(i) – relevant employment of not less than two years in the preceding five years. 

The definition of “relevant employment” as defined above is also important in this context.

12.     Ms Brennan urged me that the requirements of regulation 156(4) are to be strictly interpreted.  The requirements of regulation 156(4) imply the completion of a course of post-graduate study from a university, college of technical and further education or other educational institution of an equivalent standard.  However, it also refers to qualifications of a diploma or certificate level from a college of technical and further education or from another educational institution of an equivalent standard.  The course must be a study of accountancy of not less than two years full-time.  The Master of Professional Accounting Degree was submitted to be one and a half years full-time student load and this was the benchmark against which the course must be assessed.  Mr Lavrik was given credit in that degree for the following subjects:

·     Accounting theory

·     Income Tax Law

These were apparently passed at Central Queensland University. 

13.     There was no evidence that Mr Lavrik had other accountancy subjects for credit but an applicant in Mr Lavrik’s position may have had such other credits and be in such a position to demonstrate that he has studied other “accountancy” subjects which are not a requirement for the Master of Professional Accounting Degree.  For example an applicant may have studied managerial accounting or taxation accounting, but these were not a requirement of, or even eligible for, the granting of credit towards the Master of Professional Accounting.  It does not follow therefore, that the subjects credited for the purpose of the Master of Professional Accounting are the only academic credits which could be taken into account for the purposes of assessing whether an applicant had completed a course of “two years duration of full time study” as required by regulation 156(4)(a)(ii).   I think the requirements of Regulation 156(4) must be strictly interpreted in terms of the equivalent full time subjects of a course such as the Master of Professional Accountancy, but that would not, in my view, prevent recognition of other accountancy subjects passed at a recognised institution for the purposes of demonstrating subject knowledge of “two years duration of full time study”.

14.     There was nevertheless no additional evidence put to the Tribunal that other credits were available to Mr Lavrik so that he may have been able to establish that he had studied the equivalent of two years full time of accountancy.  Mr Lavrik merely asserted that his course of study is recognised by the professional accounting bodies and he believed that he satisfied regulation 156(4).  On the basis of the evidence available in this case, I find that the provision is not satisfied. 

15.     In respect of regulation 156(4)(b), even if regulation 156(4)(a)(ii) was satisfied (which I have found it is not), then Mr Lavrik must also demonstrate full-time employment for not less than two years in the preceding five years.  “Relevant employment” is defined as outlined in paragraph 9 above.  The terms “substantial involvement” and “broad range” as used in that definition is further amplified in the document headed “General Information for Applicants” provided by the Tax Agents’ Board of Queensland.  The applicant referred to the following amplification in that document:

(a)“Substantial involvement” means “is taken as your major duty whilst employed and would be more than 50% of your work time”;

(b)“Broad range” means “as a minimum, to include individual, partnership, trust and company returns.  Preparing thousands of individual and partnership returns is not covering a ‘broad range’ as there are no trust, company or superannuation fund returns”.

16.     Mr Lavrik has, I believe, had a “substantial involvement” in the preparation of taxation returns.  Whether he has had experience of a “broad range” of taxation returns must be assessed. 

17.     The guidelines submitted by the applicant which emanate from the Tax Agents’ Board of Queensland show they were prepared on 20 February 2001.  Such guidelines reveal the policy adopted by the Tax Agents’ Board and should usually be considered unless they are “so insignificant” so as to not materially affect the decision (Nikac and Others v Minister for Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 611 at 625 per Wilcox J). Where the policy guidelines have some statutory provision relating to their adoption, I would be obliged to take specific notice of it, subject to the requirements that I cannot abdicate my decision-making obligations under the Administrative Appeals Tribunal Act (see Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 590 per Bowen CJ and Deane J).

18.     Here the guidelines are somewhat out of date and refer to an accounting qualification requiring a course of study of not less than three years in accountancy and 18 months in commercial law.  The former standard is now reduced to two years under the current regulation 156.  Also, the guidelines are not equipped with any statutory force and cannot override the plain words of the regulation which refer to two years as being the duration of study required.  I have considered the policy document released by the Tax Agents’ Board of Queensland, but subject to my comments below, they are not of great weight in arriving at the decision in this matter.

19.     Evidence was provided by Mr Gorrie to the effect that he did not believe Mr Lavrik had the experience to interview clients and give advice on more complex taxation matters.   He had been in a fact gathering role but did give some advice as time progressed.  He believed as at December 2006, after reviewing his original estimates of Mr Lavrik’s performance, it indicated he thought his knowledge and capacity was at an appropriate level at that time.  He qualified this by referring to the quality control practices in his firm where most of the accounting work was checked for efficacy.  This was so, even for the more senior accountants within that firm.  However, despite acknowledging Mr Lavrik’s increased professional competence, he said that Mr Lavrik had not undertaken superannuation returns nor had he undertaken objections to assessments or provided advice on objections.

20.     Mr Lavrik submitted that his case was similar to that of the Tax Agents’ Board of New South Wales v Aqabani (2005) 144 FCR 446. However, I note that Mr Aqabani commenced his professional career in Australia, similarly, that is with professional qualifications from an overseas University although in Mr Aqabani’s case, he had an undergraduate degree in accounting as well as a Master of Business Administration. He had passed the CPA exams with the University of Illinois in the United States and also had studied income tax law and some aspects of company law at a post graduate level at the University of Southern Queensland. He also had been admitted as a member of the American Institute of CPAs, of CPA Australia and the Institute of Chartered Accountants in Australia. He was fully exempted from doing the professional year or any other qualifying examination, by those two major professional accounting bodies in Australia in recognition of his professional standing. In addition he had lectured in Jordan before his arrival in Australia in accounting and taxation courses and had been employed in an academic capacity by the University of Sydney. He also taught at the St George College of TAFE on Australian Taxation and had work experience in the Income Tax Department in Jordan, with the World Bank, with the University of Sydney and as a Senior Accountant in public practice with an accounting firm. Most of those characteristics could not be said of Mr Lavrik’s career before his Australian qualification.

21.     Mr Lavrik also submitted that he was entitled to registration as his case was similar to that of Yan and the Tax Agents’ Board of New South Wales (2005) 61 ATR 1096. There, the applicant was granted registration, despite the fact that she had no experience in undertaking objections. This was conceded by Ms Brennan but she noted that there were other characteristics which made Ms Yan’s capacity to practice competently in her practice, despite this lack of experience. Yan’s case seems to be consistent with the evidence of Mr Gorrie that objections are not a large part of his practice and are largely based on structured forms to be completed.  However, the definition of “relevant employment” refers to giving “advices” about objections also, not merely completing a form to lodge an objection.  This would seem to be more in the line of the duties of a senior accountant referred to by Mr Gorrie. 

22.     Mr Lavrik also referred to the decision of McGowan and Tax Agents’ Board of Queensland (1996) 33 ATR 1042. There, Senior Member DW Muller (as he then was) referred to the considerations in deciding when somebody becomes professionally competent to practice independently. He said “[t]here must be some balance struck between the necessity for expertise to practice in the field and the practicalities of getting a start in the field to gain the experience.  In order to achieve this balance in the ranks of their membership, professions and trades organise conferences and seminars to cater for continuing education”.  (See para 7).

23.     In the circumstances, based on the evidence of Mr Gorrie that Mr Lavrik has relevant employment from December 2006, I find that he has not satisfied regulation 156(4)(b).  Mr Lavrik therefore does not satisfy the requirements of two years of relevant employment in the preceding five years. 

Conclusion

24.     Ms Brennan submitted that Mr Lavrik clearly had gained in experience over the past couple of years, but submitted that the evidence shows that Mr Lavrik does not yet satisfy the requirements of the legislation as properly interpreted.  I agree with that submission.  Therefore, the applicant cannot succeed at the present time. 

25.     The decision under review is therefore affirmed.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Dr KS Levy RFD, Senior Member

Signed:         ..................[sgd]............................................................
  F Kamst, Legal Research Officer

Date/s of Hearing  2 July 2007
Date of Decision  22 August 2007
The Applicant was self represented
Counsel for the Respondent     Ms M Brennan
Solicitor for the Respondent     Australian Government Solicitor