McCoy and Tax Agents' Board of New South Wales

[2006] AATA 855

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 855

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/926

GENERAL ADMINISTRATIVE DIVISION		)
Re		ROHAN McCOY

Applicant

And TAX AGENTS' BOARD OF NEW SOUTH WALES

Respondent

DECISION

Tribunal MS N BELL

Date6 October 2006 

PlaceSydney

Decision The decision under review is affirmed

..............................................

Senior Member    
  Ms N Bell 

TAXATION – Australian Taxation Office – Tax Agents Board – Renewal of Registration - Fit and Proper Person to be a Tax Agent – Serious Taxation Offence – Failing to Lodge Income Tax Returns – Special Circumstances – Joinder Principle – Professional Responsibility – Decision Under Review Affirmed

Taxation Administration Act 1953

Income Tax Assessment Act 1936

Crimes Act 1914

REASONS FOR DECISION

6 October 2006 MS N BELL            

1.Mr McCoy is a tax agent and in March 2004 he sought renewed registration as a tax agent for a further three years. The Tax Agents’ Board refused his application for renewed registration on the ground that he is not “a fit and proper person” to be a tax agent. The Board reached this view on the basis of information given to it by the Australian Taxation Office about Mr McCoy’s conviction, in August 2004, for breaching the Taxation Administration Act 1953 by failing to lodge income tax returns for the 2001, 2002 and 2003 years. The Taxation Office also provided information about some substantial debts owed by Mr McCoy to the Taxation Office.

2.The Income Tax Assessment Act 1936 provides that a person is not a fit and proper person to be a tax agent if, among other things, the person has been convicted of a “serious taxation offence”. Such an offence is defined in the Income Tax Assessment Act as an offence that, among other things, is punishable by a fine exceeding $2,000.

3.The central issue in this application is whether Mr McCoy is a fit and proper person to be a tax agent.  To answer this question I must determine whether:

(a)  Mr McCoy has been convicted of a “serious taxation offence”.  That requires me to consider whether Mr McCoy has been convicted of an offence that attracts a penalty of a fine exceeding $2,000.  In turn, that requires me to consider whether he has previously offended.

(b)  If I find that Mr McCoy is not a fit and proper person to be a tax agent, then I must consider whether the matters that give rise to that finding should be disregarded because of special circumstances.

Was Mr McCoy convicted of a serious taxation offence?

4.In July 2004 Mr McCoy was served with a court attendance notice concerning his failure to lodge income tax returns for the years ending 30 June 2000, 30 June 2001, and 30 June 2002.

5.The Board submitted that the court attendance notice served on Mr McCoy concerns three separate taxation offences.  It is clear that the particulars of three separate offences are given. 

6.The Board referred me to section 4K(3) of the Crimes Act 1914 which provides for the joinder of offences in the same information, complaint or summons where those charges are founded on the same facts or are similar in character, and to section 4K(4) which allows for the imposition of one penalty in respect of more than one joined offence. On 25 August 2004 Mr McCoy was convicted pursuant to section 8(C)(1)(a) of the Taxation Administration Act for failure to comply with a notice to furnish income-tax returns for the above mentioned years. The Board submitted that Mr McCoy was convicted in respect of each failure and so, after the first offence, was liable to a penalty of a fine not exceeding $4,000, having had a previous conviction.

7.Mr McCoy submitted that, in fact, he had been convicted of only one offence in respect of the single notice issued to him by the Taxation Office under section 8C(1)(a) of the Taxation Administration Act. He submitted he had failed to comply with just one demand, albeit a demand that required him to supply tax returns for three years. On this basis, he argued that he could not have been convicted of more than one offence and so was subject to the lesser penalty of a fine not exceeding $2,000. It follows, in his submission, that he was not convicted of a serious taxation offence.

8.I do not accept this submission. The argument rests on an assumption that a separate notice must be issued in respect of each failure. There is no such requirement in the relevant Acts and, indeed, the argument runs counter to the joinder principle in section 4K(3) of the Crimes Act. In any event, I note that the Court Attendance Notice served on Mr McCoy describes “three prescribed taxation offences” and gives particulars of each offence in respect of each failure to provide an income tax return.

9.I conclude that Mr McCoy was convicted of a serious taxation offence.  It follows that he is not a fit and proper person to be a taxation agent.  This makes it unnecessary for me to consider whether Mr McCoy’s failure to lodge his 2005 tax return, his late lodgement of his 2004 tax return and his outstanding tax debts render him not a fit and proper person.  However, in considering whether special circumstances apply to Mr McCoy’s case, and whether those circumstances are sufficient to make it desirable to disregard the serious taxation offence, it may be necessary to consider the effect, on Mr McCoy’s fitness, of his other contended failures.

special circumstances

10.Mr McCoy gave evidence of his marriage breakdowns in 1997 and 2000.  He said he had developed acute depression, sometimes being unable to get out of bed, but has made “tremendous progress” and sees his psychiatrist each month.  He said his depression was the substantial cause of his delay in lodging returns, but he can now keep his depression separate from his professional affairs.  He said his work for his clients does not involve him emotionally and so he is able to do it.

11.I note the report of Dr T Stanley, Psychiatrist, to the effect that Mr McCoy suffers from an affective disorder with depression which is partly constitutional and exacerbated by external events including marriage breakdown.  Dr Stanley described an inability to organise his life which led to a loss of control over his finances, and delays in dealing with clients’ tax returns and his own.  He was optimistic that, with ongoing treatment, Mr McCoy will be able to competently manage his affairs.

12.I note that, at the date of hearing, Mr McCoy still had an outstanding tax return to be lodged with the Taxation Office for 2005.  There is also an unresolved debt to the Taxation Office but it appears it is being negotiated and Mr McCoy is in the process of selling his house to raise the funds to repay the amount that is settled on.

13.I note there is no evidence of complaints about Mr McCoy by any of his clients, but I am concerned about the “inability to organise his life” described by Dr Stanley.  This is a dangerous ailment in a person whose professional responsibility is to assist and represent clients’ dealings with the Taxation Office.

14.In any event, I do not consider the circumstances relied on by Mr McCoy to be “special”.  It is an unfortunate fact of modern life that many people are afflicted by depressive illness and many more experience marriage breakdown and its effects, both emotional and financial.  While I sympathise with Mr McCoy’s predicament and I encourage him in the progress of his recovery, I do not consider that his circumstances are sufficiently special to warrant his serious taxation offence being disregarded for the purposes of considering whether he is a fit and proper person to be a tax agent.  It is unnecessary, having reached this view, for me to consider whether the other conduct alleged by the Board should be disregarded.

decision

15.The decision under review is affirmed.

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member

Signed          .................. [ Sanjiv Shah ]………………
  Associate

Date of Hearing  11 May 2006
Date of Decision  6 October 2006
Counsel for the Applicant         Mr P Lamder
Solicitor for the Applicant           Frank Vouroudis

Solicitor for the Respondent    Jodie Maurer