Modini and Tax Agents' Board of Queensland

[2004] AATA 427

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 427

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/632

GENERAL ADMINISTRATIVE DIVISION		)
Re		DENISE LESLEY MODINI

Applicant

And TAX AGENTS' BOARD OF QUEENSLAND

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date30 April 2004  

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.......(Sgd) J Cowdroy........

Member

CATCHWORDS

TAX AGENTS – registration - refusal of application for registration – requirements for registration – applicant employed for short periods with a number of employers – some employers have not prepared statements of relevant experience in relation to the applicant - applicant has not demonstrated she has been engaged in relevant employment on a full-time basis for not less than 12 months in the 5 years preceding her application

Income Tax Assessment Act 1936 s 251BC(1)(b)(ii)

Income Tax Regulations 1936 reg 156

Re King and Tax Agents Board (1994) 28 ATR 1047

REASONS FOR DECISION

30 April 2004  Ms J Cowdroy, Member     

1.      This decision relates to a hearing by the Tribunal on 12 December 2003.  The applicant sought review of a decision of the Tax Agents’ Board of Queensland (“the Board”) to refuse her application for registration as a tax agent.

Hearing

2. Ms Modini represented herself and gave evidence. The Board was represented by Mr G Cranwell of the Australian Government Solicitor’s Office. The “T” Documents were entered into evidence as Exhibit 1 pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, together with the following material:

Exhibit 2        Supplementary “T” Documents
Exhibit 3        PAYG Payment Summary – Trustees of the Christian Brothers
Exhibit 4        PAYG Payment Summary – Bachmann Robinson
Exhibit 5        Document headed “Taxation Advice”

Exhibit 6        Document headed “Relevant Work”

3.      After the hearing, the applicant filed with the Tribunal various other material, the last of which was received on 14 January 2004.  The Tribunal had regard to that additional material, together with the responses of the respondent.  The matter was decided on the basis of the exhibits and written material, the evidence of the applicant, the submissions of parties, relevant case law and legislation.

The Issue

4.      The issue to be decided in this case is whether Ms Modini has satisfied the requirements to be registered as a tax agent.

The Legislation

5.      The application for registration as a tax agent is to be considered pursuant to the provisions of the Income Tax Assessment Act 1936 (“the Act”) and the Income Tax Regulations 1936. 

6. Section 251BC of the Act states, in effect, that a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters if that person does not hold prescribed qualifications.

7.      Regulation 156(1) states:

“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 the 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.”

8.      Regulation 156(2) sets out the definition of “relevant employment” as it appears in regulation 156(1).  It states:

“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;

(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 and objections.”

Background

9.      The following material is submitted by way of background information and is not in dispute.

10.     The applicant was born on 14 October 1948.  She has Bachelor of Arts and Bachelor of Commerce degrees.  She completed studies and registration as a certified practising accountant in 1997.  For three short periods from April 1993 to February 1995, she was employed as an accountant.  From January 1996 to October 1999 she was employed, albeit not continuously, as a financial controller by two employers.

11.     The applicant made application to the Board for registration as a tax agent on 28 October 1999 and on 1 March 2001.  The first application was withdrawn and the second was refused by the Board.  She applied for registration as a tax agent again on 14 January 2003, and, in support of that application, she provided statements of relevant experience with a number of employers in 2001.

12.     With the exception of a statement from Bachmann Robinson, all statements were completed by the applicant.  In assessing the merits of her application, the Board had regard to those statements together with oral comments made to the Secretary of the Board by a previous employer in respect to the applicant’s competence, as well as a statement provided by an employer in respect of an earlier application for registration. 

13.     On the basis that the applicant had not demonstrated substantial involvement with a broad range of tax returns, together with concerns that the applicant had not demonstrated competency in some of the returns she had prepared, the Board refused her registration. The matter comes before this Tribunal following that refusal.

Evidence

14.     Ms Modini explained that after being refused her tax agent’s registration in 2001 she was informed by the Board that she needed to gain more experience.  In pursuance of that objective, she then accepted employment at a number of small firms, where she worked for relatively short periods.  She was unable to obtain employment with larger established firms, she believed, as they were prejudiced against employing persons of mature age. 

15.     Mr Peter Robinson of Bachmann Robinson had employed the applicant from 1 July 2002 until 31 October 2002.  According to Mr Robinson, the applicant had completed 235 individual tax returns and was involved in 4 partnership returns in that period.  He stated that the applicant had not been involved in the preparation or examination of objections to assessment.  When the applicant lodged her present application with the Board, she indicated she did not wish that employer to be contacted as their relationship was “rather frosty” due to a dispute over holiday pay entitlements. In any event, Bachmann Robinson had entered into Voluntary Administration, in respect to which she was a creditor. 

16.     In relation to other employment, this information was provided by Ms Modini herself.  She was employed by Coutts Reddington from 5 June 2000 to 19 January 2001.  Whilst there, a total of 80 returns were prepared, of which 27 were partnership returns, 21 were company returns, 6 were trust returns and 2 were superannuation trust returns.  In the year 2001, 9 returns were prepared.  Ms Modini also stated she had dealt with objections in regard to provisional tax during that period of employment and, to a degree, had been involved in the preparation or examination of objections to assessments whilst employed at Bachmann Robinson.

17.     Information about employment with Stuart Hunter and Associates for the period 3 July 2001 to 23 November 2001, again provided by the applicant, discloses 88 returns for that period including 1 partnership return, 1 company return, 1 trust return and 1 superannuation return.

18.     In her own statement, the applicant referred to preparation of individual returns including her own for the period 1990 until 2000 totalling 28 returns.  The applicant had previously provided information in regard to employment with D R Good and Company between 1 January 2002 and 19 February 2002, during which she prepared 1 individual return and 1 partnership return.  She stated also that she had been involved in the preparation and examination of objections to assessments at that firm.

19.     When the Board had requested that the applicant supply verification of her work experience at her various employers, she indicated that she wished only her work with Coutts Reddington and Stuart Hunter and Associates to be considered.  She declared in a statutory declaration that she did not feel able to approach Stuart Hunter as she left that firm in unhappy circumstances (T9(a)/42-43).  

20.     Other former employers, including CE Smith and Co and Harts Accounting were not asked to provide statements of experience as the applicant did not enjoy amicable relationships with the management of those firms.  In the case of Harts Accounting, the firm had been suspended from trading and wound up.

21.     The applicant was critical of the practices of many of the firms where she had worked and in respect to Stuart Hunter, she had raised concern in regard to his  professional standards with her local Member, Mr Peter Lindsay.  She also sought advice from Mr Clarke of CPA Australia. Ms Modini indicated she had raised concerns also about this practice with Mr Roger Cotton, CEO of the National Institute of Accountants. 

22.     Her understanding was that Mr Cotton had contacted Mr Hunter who had indicated he would provide the information.  He had subsequently spoken to the Secretary of the Board and had made adverse comments about her competence.

23.     The applicant strongly refuted the comments recorded by Ian Bosley at T10(2) in which Mr Hunter is stated to have said “Ms Modini was the most incompetent employee he had ever had and he eventually asked her to resign as he could not provide the close supervision she appeared to need”.  A note of that conversation appears at T8-40.

24.     In general terms the applicant indicated that most of her previous employers were incompetent and unprofessional, with the notable exception of Peter Robinson of Bachmann Robinson. 

25.     In respect to Coutts Reddington, the employees of that firm were given unreasonable workloads and many employees had left following nervous breakdowns.  She refuted Mr Coutts statement at T17 that other staff members had to redo her work on company, trusts and superannuation funds returns.  She disagreed with his opinion that she lacked experience in more complex matters. She stated that she had not asked him to complete a form outlining her experience “on account of his manner towards me and the fact that I had an unfair dismissal” (T13-57).

26.     Ms Modini stated that she was forced to work in many practices where the standards were poor and she would not have continued to work in those environments had it not been for the fact that she was highly motivated to gain the necessary experience to be registered as a tax agent.

27.     She considered she had been unfairly treated by the Board in that she was not given sufficient notice of the adverse material upon which the Board relied.  She referred to an interview she had with the Board during which the Board raised its concerns with her work experience.  She described “gross misrepresentations” made about her by the Secretary of the Board, comments which she reinforced in the further additional material provided to the Tribunal after the hearing. 

28.     The applicant was keen to gain registration so she could prepare returns and work to her own high standards.  She was prepared to undergo supervision for a period if that would assist her registration being granted.  The applicant contended she was not to be held responsible for the management problems of past employers. 

Submissions

29.     The applicant pointed to a number of Administrative Appeal Tribunal decisions where applicants with less experience had been granted registration as a tax agent.  In a careful and detailed analysis she pointed out that in the past five years she had completed primarily individual tax returns, however, a sufficient number of other returns had been prepared to satisfy the requirements of the Regulations.  In regard to the problems with previous employers, she considered that she possessed a level of thoroughness and attention to detail far in excess of the principals of the firms for whom she worked. 

30.     She did not call either Mr Hunter or Mr Coutts to give evidence because of financial constraints.  She described the criticisms made by them as unfounded and that in the case of her employment with Mr Hunter, she was left in charge of the office, a situation which would not have occurred if the concerns he had voiced about her competency were valid. 

31.     The applicant pointed to her ten-year membership of the CPA and her range of experience in a number of commercial forums over many years.  She urged the Tribunal to have particular regard to the matter of Re King and Tax Agents’ Board (1994) 28 ATR 1047 where registration was granted, having regard to that applicant’s “overall experience”.  In King, registration was granted to an applicant who had no superannuation return experience, but the Tribunal had regard to other relevant experience.

32.     The respondent pointed out that 92% of the applicant’s expertise related to the preparation of individual tax returns.  In relation to superannuation returns, the applicant had completed two, one of which needed to be re-worked. Whilst acknowledging the applicant had completed 19 partnership returns in the past five years, trust and company returns of 3 and 7 respectively indicated that she did not demonstrate a sufficient range of experience to warrant registration.

33.     The information provided by Mr Hunter, although disputed strongly by the applicant, is consistent in a general sense with the information obtained from Mr Coutts.  Attention was drawn to the fact that the applicant herself had generally completed the Statements of Relevant Experience, and the weight which should be given to those documents was a significant issue.

34.     The respondent’s position was that academic familiarity did not equate to relevant experience.  The fact that the applicant had prepared her own returns and those of her neighbours in addition to those in a work environment did not advance her case, given that such returns were prepared in an unsupervised environment. 

Findings and Conclusion

35. The Tribunal was mindful of the fact that the applicant is highly motivated and keen to gain registration as a tax agent. She provided character references of the highest quality to support her application. Unfortunately for the applicant, she has not had the continuity of employment which would no doubt have assisted her in meeting the Act’s requirements.

36.     The issue in this case essentially relates to whether the applicant has demonstrated that she has been engaged in relevant employment on a full-time basis for not less than 12 months in the preceding five years.  Such relevant employment is the preparation or examination of a broad range of income tax returns, the preparation of or examination of objections issued in respect to those returns and the provision of advice in relation to income tax returns and objections.

37.     The Regulations under consideration do not specify what constitutes “a broad range of income tax returns”, nor what constitutes “a substantial involvement”, however, these terms have been the subject of much discussion in the various cases referred to this Tribunal.

38.     What is clear to this Tribunal is that such matters cannot be decided by reference to a strict mathematical formula.  The Tribunal finds that about 92% of the returns prepared by the applicant in the relevant period were individual returns.  It notes the applicant had prepared tax returns for partnerships, companies, trusts and superannuation, albeit in small numbers.  In relation to superannuation funds returns, the evidence reveals that she has prepared two returns, one of which needed to be re-worked.  The Tribunal notes that when the applicant appeared before the Board she acknowledged that this could have been the case, given that she had not been involved in superannuation fund returns to any great extent (T16-75).

39.     This Tribunal is not so concerned with comparing the number of returns prepared by successful applicants for registration with those completed by the applicant.  What is significant, however, is the applicant has had relatively short periods of employment with a number of employers. The Tribunal accepts that it has been difficult for the applicant to obtain employment in the taxation field.  It appears to be the case that she has been plagued with clashes of personality with various employers in the majority of her work environments. 

40.     The result of these conflicts, however, has meant effectively that, with the exception of Mr Robinson, there is no comment from any employer attesting to the applicant’s competence.  The Tribunal did not have the opportunity of hearing from Mr Hunter or Mr Coutts, whose comments, if accepted would cast doubt on the applicant’s competence.  The Tribunal notes the applicant has strongly disputed the veracity of those comments.  However, at the end of the day, even without giving the adverse statements’ significant weight, this Tribunal was not satisfied that the evidence demonstrates that the applicant has met the requirements of “relevant employment” in the sense of substantial involvement in a broad range of income tax matters. Nor can her other experience be regarded as being equivalent to “being engaged in relevant employment” pursuant to section 156(1)(a)(ii)(C) of the Act.

41.     The Tribunal was mindful of the applicant’s offer to restrict her preparation of income tax returns to those where she can receive supervision if her registration was to be granted.  However, the granting of registration is an unconditional process and the Tribunal is not able to have regard to such matters. 

42.     In summary, therefore, the Tribunal was not satisfied that the applicant has satisfied the requirements for registration as a tax agent and accordingly, the decision under review is affirmed.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member

Signed:          S Oliver

Associate

Date of Hearing  12 December 2003  
Date of Decision  30 April 2004

The Applicant appeared in person
Solicitor for the Respondent     Mr Cranwell, Australian Government Solicitor