Lawlor and Tax Agents' Board of Queensland
[2002] AATA 1183
•11 November 2002
DECISION AND REASONS FOR DECISION [2002] AATA 1183
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/630
GENERAL ADMINISTRATIVE DIVISION )
Re JOHN LAWLOR
Applicant
And TAX AGENTS' BOARD OF QUEENSLAND
Respondent
DECISION
Tribunal Dr EK Christie, Member
Date11 November 2002
PlaceBrisbane
Decision The Tribunal affirms the decision under review. This means Mr Lawlor's application for review is unsuccessful.
..................(Sgd)............................
EK Christie
Member
CATCHWORDS
TAXATION – tax agents - application for tax agent registration - whether applicant engaged in "relevant employment" or equivalent - whether "substantial involvement" in a broad range of returns
Income Tax Assessment Act 1936
Income Tax Regulations 1936 reg 156
Re Civiti and Tax Agents' Board of Victoria (1990) 21 ATR 3781, 90 ATC 2039
Re Chenouda and Tax Agents' Board of NSW (1991) 22 ATR 3179, 91 ATC 2027
Re Egulian and Tax Agents' Board of NSW (1991) 91 ATC 2060
Re Webb and Tax Agents' Board of Qld (1992) 92 ATC 2101, 28 ALD 464
WRITTEN REASONS FOR ORAL DECISION
11 November 2002 Dr EK Christie, Member
This is an application by John Lawlor for a review of a decision made by the Tax Agents' Board of Queensland on 21 August 2002, where the Board declined to grant Mr Lawlor registration as a Tax Agent. Mr Lawlor had applied for registration as a Tax Agent on 30 April 2002.
In reaching its decision the Tax Agents' Board of Queensland concluded that Mr Lawlor failed to satisfy the statutory requirements prescribed by the Income Tax Regulations 1936 for registration relating to "qualifications" and "relevant employment".
Statutory Framework and Relevant Case LawRegulation 156 of the Income Tax Regulations prescribes the qualifications that must be satisfied in relation to registration as a Tax Agent. In Mr Lawlor's circumstances, the relevant regulations that need to be satisfied are either regulation 156(1)(a) or regulation 156(1)(c) or regulation 156(1)(d).
"REG 156: Prescribed qualifications for the purposes of subparagraph 251BC(1)(b)(ii) of the Act
(1)For the purposes of subparagraph 251BC(1)(b)(ii) of the Act, the following qualifications are prescribed:
(a)the person:
(i)shall have completed the academic requirements for the award of a degree, diploma or other qualification from an Australian university, college of advanced education or other tertiary institution of an equivalent standard, and have passed examinations in such subjects, under whatever name, which an appropriate authority of the university, college of advanced education or other tertiary institution certifies to the Board to represent a course of study in accountancy of not less than 3 years' duration and in commercial law of not less than 18 months' duration or shall possess such other qualifications as the Board regards as equivalent to those qualifications;
(ii)shall have:
(A)been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years;
(B)otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or
(C)been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A); and
(iii)shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board; [emphasis added]
…
(c) the person:(i)shall have completed the academic requirements for the award of a diploma or certificate from a college of technical and further education 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;
(ii)shall have:
(A)been engaged in relevant employment on a full-time basis for not less than a total of 2 years in the preceding 5 years;
(B)otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or
(C)been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A) [emphasis added]; and
(iii)shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board; or
(d) the person:
(i) shall have:
(A)been engaged in relevant employment on a full-time basis for not less than a total of 8 years in the preceding 10 years;
(B)otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or
(C)been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A) [emphasis added]; and
(ii) shall:
(A)be a member of and entitled to vote at meetings of the Australian Society of Accountants, the Institute of Chartered Accountants in Australia or the National Institute of Accountants; or
(B)have, by written examination or examinations set by a college of technical and further education (or an examination or examinations of an equivalent or higher standard), successfully completed a course of study in basic accounting principles and have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board."
In addition to prescribed academic requirements, each paragraph of the Regulation requires an evaluation of "relevant employment" as a criteria that must also be satisfied. "Relevant employment" is defined in regulation 156(2) to mean:
"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;(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." [emphasis added]
Regulation 156(2) contains a number of key phrases – "relevant employment", "substantial involvement" and "broad range" – that are central to the determination of this application for review. These terms have been subject to interpretation in other similar fact cases decided by the Tribunal. The following legal principles have been followed in cases decided by the Tribunal in relation to the application of these phrases to the registration of tax agents under Regulation 156 (Tribunal emphasis added in each passage cited):
(a) Re Civiti and Tax Agents' Board of Victoria (1990) 90 ATC 2039 at 2042:
"In the present circumstances it must be satisfied that the applicant has had substantial involvement in income tax matters, including the preparation or examination of a broad range of returns. That necessarily involves an objective assessment of the applicant's experience."
(b) Re Webb and Tax Agents' Board of Queensland (1992) 28 ALD 464:
"…what is contemplated by the phrase [substantial involvement] is a range of income tax returns, spreading over the spectrum of potential taxpayers. A large group of taxpayers consists of small businesses, individual traders and partnerships. If, as the evidence showed, the applicant has not been involved in the preparation or examination of tax returns for any of these classes of taxpayers, then he cannot be said to have had a substantial involvement in the preparation or examination of a broad range of income tax returns."
(c) Re Egulian and Tax Agents' Board of New South Wales (1991) 91 ATC 2060:
"A demonstration of academic capacity or a passing acquaintance with the types of problems that might be thrown up with the preparation or examination of such returns is not, in my view, sufficient to satisfy the requirements of the regulation. Substantial involvement necessarily implies involvement to a substantial extent."
(d) Re Civiti and Tax Agents' Board of Victoria (1990) 90 ATC 2039 at 2043:
"'Broad range' does not mean the same thing as 'substantial involvement' and vice versa. There may be one without the other. The respondent has to be satisfied the applicant has acquired both in order to have been engaged in relevant employment within the meaning of reg 156… It is not a relevant consideration that reg 156 does not specify the categories of returns in defining 'relevant employment'. It is explicit in the language used, that wide-ranging experience is required. A lack of experience in the area of returns … in my opinion, precludes the satisfaction of the test of relevant employment."
(e) Re Chenouda and Tax Agents' Board of New South Wales (1991) 91 ATC 2027 at 2030:
"A few specialised returns resulting from such a broad range of enquiries does not … constitute a broad range of returns. What is contemplated by the phrase [substantial involvement] is a range of income tax returns, spreading over the spectrum of potential taxpayers. A large group of taxpayers consists of small business, individual traders and partnerships. If, as the evidence showed, the applicant has not been involved in the preparation or examination of tax returns for any of these classes of taxpayers, then he cannot be said to have had a substantial involvement in the preparation or examination of a broad range of tax returns."
Consideration of the Issues
The objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times. The issues to decide are whether Mr Lawlor satisfies the prescribed requirements under Regulation 156 for registration as a Tax Agent - specifically, the requirements for "qualifications" and, as well, the test for "relevant employment".
The Tribunal makes the following findings in relation to whether the factual basis for Mr Lawlor's application for review satisfies the statutory requirements for (a) "relevant employment", (b) "substantial involvement" and (c) "broad range" of returns. The Tribunal does so by applying the principles established and applied in earlier cases involving similar fact situations (see paragraph 5):
Mr Lawlor has been involved with a large group of taxpayers from 1996-2001 (T15, Folio 44) and for 1992, 1993 and the 2002 tax years (his oral evidence today);
However, Mr Lawlor's oral evidence was that over 99% of the returns he prepared were individual returns and small business returns. Furthermore, his oral evidence was that these returns were predominantly individual returns (around 90%); only around 10% were small business returns;
Mr Lawlor further acknowledged that he had not prepared any returns involving superannuation funds or fringe benefits;
Mr Lawlor stated that he had provided some materials for particular parts of other partnership returns that had been prepared by others who had the carriage of the matter – as well as providing some particulars in relation to specific parts of objections being prepared by others. However, in these circumstances, the Tribunal concludes that whilst Mr Lawlor may have been exposed to particular parts of a number of returns in this regard, he may not have "examined" or been involved in them to a substantial extent.
Accordingly, the Tribunal is not satisfied that the work undertaken by Mr Lawlor, concentrated as it is on certain types of returns (individual/small business returns) can be described as amounting to "substantial involvement" in a broad range of income tax returns spreading over the spectrum of potential taxpayers as required by Regulation 156(2) and case law principles.
Furthermore, in the past five taxation years, Mr Lawlor has only averaged around three returns each year that were not individual or small business tax returns. Accordingly, the Tribunal does not consider that such a situation represents a "broad range" of returns.
Given these conclusions in relation to the tests for "substantial involvement" and "broad range" of returns prepared or examined - together with the Tribunal's conclusions in paragraph 7, the Tribunal finds that the statutory requirements for "relevant employment" in income tax matters has not been satisfied by Mr Lawlor.
The Tribunal next considers the issue of academic requirements for registration in Mr Lawlor's factual situation.
Mr Lawlor's oral evidence was that he had completed fifteen months of a two year full-time TAFE Associate Diploma in Accountancy, before withdrawing and so not completing the TAFE Course. Mr Lawlor does not meet the academic requirements for registration prescribed by Regulation 156(1)(a)(i). Nor does Mr Lawlor satisfy the academic requirements prescribed by Regulation 156(1)(c)(i).
Based on the information contained in the application for registration (T4 and his oral evidence), Mr Lawlor has been engaged in the following periods of employment in preparing or examining taxation returns:
01.07.92 to 31.08.92 (full-time) 2 months
01.07.93 to 31.08.93 (full-time) 2 months
1994 Not employed in preparing tax returns
01.07.95 to mid-Aug 1995 (full-time) 1.5 months
01.07.96 to 01.09.96 (full-time) 2 months
01.07.99 to 31.10.99 (full-time) 4 months
01.07.00 to 11.11.00 (full-time) 4.3 months
01.07.01 to 31.12.01 (part-time) 6.1 hrs x 26 wks or 1 month (full-time) (equivalent)
04.07.01 to 31.07.01 (full-time) 1 month
01.07.02 to 31.08.02 (full-time) 2 months
TOTAL 19.8 months
Based on this information, the Tribunal concludes that Mr Lawlor does not meet the prescribed requirements for time engaged in "relevant employment" on a full-time basis for the preceding five years imposed by Regulation 156(1)(c)(ii) - in addition to not satisfying the "relevant employment" test (see paragraph 10).
Finally, the Tribunal considers the application of Regulation 156(1)(d). The Tribunal concludes that Mr Lawlor does not satisfy the requirements for qualification imposed by this paragraph as he does not meet the requirements for "relevant employment", in addition to not satisfying the prescribed time requirements to be engaged in relevant employment in the preceding ten years (see paragraph 13).
The Tribunal has considered Mr Lawlor's submissions in relation to academic qualifications for registration as being satisfied through his attaining membership of the National Institute of Accountants through the Institute's "grandfather" mechanism.
The Tribunal makes the observation that recognition of academic qualifications to enable registration as a Tax Agent are prescribed by the Income Tax Regulations – and not the National Institute of Accountants. Accordingly, for Mr Lawlor to satisfy the Board that he has "other qualifications regarded by the Board as equivalent [to tertiary qualifications]" he must satisfy the objective criteria prescribed by Regulation 156(1)(c) or Regulation 156(1)(d). Neither the Tribunal nor the Board has any discretion under the Income Tax Regulations to depart from these requirements.
Whilst these conclusions may seem harsh in the light of Mr Lawlor's past involvement in tax return work over time, the Tribunal has no option other than to make the findings it has. Registration requirements exist for all professional groups who provide specialised advice to the public based on their academic training and knowledge. Consistent application of objective criteria for registration of all professional groups, including tax agents, is central – not only to the maintenance of professional standards but also to ensure public trust and confidence in the professional body itself.
For all of the above reasons the decision under review is affirmed. This means Mr Lawlor's application for review is unsuccessful.
I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed:.....................................................................................
AssociateDate of Hearing 11 November 2002
Date of Decision 11 November 2002
Written Reasons 15 November 2002
The Applicant appeared in person
Solicitor for the Respondent Mr M Belcher, Australian Government Solicitor
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