OZI Tax Advisors Pty Ltd and Tax Practitioners Board
[2023] AATA 2066
•14 July 2023
OZI Tax Advisors Pty Ltd and Tax Practitioners Board [2023] AATA 2066 (14 July 2023)
Division:TAX AND COMMERCIAL DIVISION
File Number: 2023/2886 & 2023/3136
Re:OZI Tax Advisors Pty Ltd
APPLICANT
AndOsama Suriya
APPLICANT
AndTax Practitioners Board
RESPONDENT
DECISION
Tribunal: Senior Member D K Grigg
Date:14 July 2023
Place:Melbourne
The Applicants’ applications for a stay pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) are refused.
The interim stay granted on 12 May 2023 is discharged.
...............................[SGD]...................................
Senior Member D K Grigg
CATCHWORDS
TAX AGENT REGISTRATION – TERMINATION OF APPLICANTS’ REGISTRATIONS AS TAX AGENTS – APPLICATION FOR A STAY PENDING DECISION UNDER REVIEW – PROSPECTS OF SUCCESS – PUBLIC INTEREST – STAY APPLICATIONS REFUSED
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Tax Agent Services Act 2009 (Cth)
CASE LAW
Le'Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; 11 FLR 203; 2 ALD 634
Re Su and Tax Agents’ Board of South Australia [1982] AATA 127; 82 ATC 4284; 13 ATR 192; 61 FLR 1
SECONDARY MATERIALS
Explanatory Paper TPB (EP) 02/0210: "Fit and proper person"
Explanatory Paper TPB (EP) 01/0210: "Code of Professional Conduct"
REASONS FOR DECISION
Senior Member D K Grigg
14 July 2023
BACKGROUND
Mr Osama Suriya has been operating as a registered tax agent for just over four years. He is 34 years old and the sole director and controlling mind of OZI Tax Advisers Pty Ltd (“OZI”).
On 31 March 2022, the Tax Practitioners Board (“TPB”) wrote to Mr Suriya, as director of OZI, to advise that it would be investigating his and OZI’s conduct regarding a possible breach of the Tax Agent Services Act 2009 (Cth) (“TASA”).[1] The TPB had received a complaint regarding the authenticity of financial information contained within income tax returns (“ITR”) provided by the Applicant to mortgage brokers, including a broker called Strategic Lending Partners (“SLP”).[2]
[1] T Documents, T3, pages 17-18, T12, 874-875, TPB’s Notice of decision to investigate dated 31 March 2022.
[2] T Documents, T14, pages 929-931, Complaint of Amanda Stirling dated 29 April 2021.
The TPB requested the Applicants provide information regarding:[3]
(a)what steps he had taken to verify information with his clients before preparing the financial documents;
(b)if he compared the information he was providing to Mr Prasad from SLP against that which was available to him on Australian Taxation Office (“ATO”) systems as the tax agent; and
(c)what steps he has taken subsequently to amend the ITRs for the years for which he identified incorrect figures.
[3] T Documents, T6, pages 161-167, Letter from TPB regarding preliminary enquiries into conduct dated 31 March 2023, page 165.
Mr Suriya told the Respondent that:[4]
(a)he relied upon the information provided by the clients;
(b)the financial documents he prepared were drafts; and
(c)he was still waiting on information from some clients.
[4] T Documents, T14, pages 1005-1009, Letter from Mr Suriya dated 13 April 2022.
On 16 December 2022 the Board asked Mr Suriya, among other things, to explain:[5]
(a)whether updated (i.e. accurate) ITRs had been forwarded onto the broker and/or lending institution;
(b)whether the broker was made aware of discrepancies between the financial documents he had been sent versus the finalised financials; and
(c)for the clients whose ITRs for the relevant income years were lodged with the ATO prior to the financial information being provided to the broker, what steps have been taken to lodge amendments with the ATO.
[5] T Documents, T6, pages 755-758, Letter from TPB dated 16 December 2022.
On 16 January 2023, Mr Suriya advised the Board that:[6]
(a)neither the bank nor the broker approached him about any discrepancies;
(b)the clients knew about the discrepancies; and
(c)clients have either not contacted him or not authorised the amendments, therefore he has been unable to lodge amended ITRs.
[6] T Documents, T6, 767-768, Letter from Mr Suriya dated 16 January 2023.
On 28 March 2023 submissions were made to the TPB by Mr Suriya’s former solicitors that:[7]
(a)Mr Suriya referred the clients to Mr Prasad, a broker at SLP, to obtain loans on behalf of those clients;
(b)Mr Suriya was instructed by the clients that Mr Prasad had advised them that the profits of the entities needed to be at a certain level before they would be eligible for a loan;
(c)the clients instructed Mr Suriya to adjust the financial documents;
(d)Mr Suriya advised the clients that he could make the amendments in draft provided he was given adequate documentation;
(e)while waiting on the documentation, Mr Suriya prepared the amended financial documents. Mr Suriya provided these draft financial documents to Mr Prasad noting in the subject heading that documents were draft;
(f)Mr Prasad requested by telephone that future emails containing financial documents not indicate that the documents were only draft in form. When Mr Suriya subsequently sent Mr Prasad updated draft versions of the financial documents, he did not indicate in his email correspondence that the documents sent were draft versions; and
(g)Mr Suriya was not paid or remunerated to provide the financial documents to Mr Prasad.
[7] T Documents, T6, pages 26-35, Letter from Mills Oakley dated 28 March 2023; T Documents, T9, pages 858-865, Decision of TPB dated 21 April 2023.
During its investigation the TPB discovered that the financial documents had been used to apply for loans and that the financial institutions had relied on the information therein in assessing the clients’ respective applications.
Mr Suriya acknowledges that he prepared the clients financial documents for the banks without undertaking any independent verification of the contents.
OZI Decision
The TPB advised OZI on 21 April 2023 that it had decided that OZI had failed to comply with subsection 30‑10(7) of the registered tax agents’ Code of Professional Conduct (“the Code”). As a result of the TPB finding that OZI ceased to meet taxation practitioner registration requirement under section 20-5(3)(a) of the TASA, the TPB decided to terminate OZI’s registration as a tax agent pursuant to section 60-125(2)(b)(ii) and 40-15(1)(b) of the TASA (“OZI Decision”). The termination took effect from 21 May 2023 and applies for three years.[8]
[8] T Documents, T9, pages 858-865, Decision of TPB regarding OZI Tax Advisers dated 21 April 2023.
The effect of the termination of OZI’s tax agent registration is that OZI must not provide any tax agent services, or it may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA.
In its reasons for the decision against OZI, the TPB advised that it was satisfied, on the balance of probabilities, that the company had breached 30‑10(7) of the Code in failing to ensure that the services provided on its behalf, was done so competently. The Applicants knew, or ought to have known, that financial documentation prepared in respect of entities associated with a number of its clients, to support loan applications, did not reflect the true financial position of those entities.
The TPB also noted that in relation to one client:[9]
Mr Suriya’s explanation that he had sent the wrong financials and that accounts for the client can sometimes cause confusion due to sales and expenses being transacted in US dollars, did not adequately explain why and how Mr Suriya:
a) sent an email to the broker on 19 February 2020 providing figures for the company’s total income, expense and profit for the 2019 financial year;
b) lodged the company’s ITR for the 2019 financial year with the ATO two days later on 21 February 2020, which contained figures for its total income, expenses and profit that were significantly different to those provided to the broker in the email on 19 February 2020;
c) subsequently sent an email to the broker on 17 May 2020 attaching a copy of an ITR for the company for the 2019 financial year containing the same figures as those provided in Mr Suriya’s email to the broker on 19 February 2020 (and that differed significantly with those in the company’s ITR lodged with the ATO); but
d) did not lodge any amended ITRs for the company that contained the figures provided to the broker in his emails on 19 February 2020 and 17 Mary 2020.
The Board noted that rather than appearing to be a mistake, this appeared to be a deliberate act in order to help an entity Mr Suriya had an interest in receive a loan it may not be otherwise entitled to. While the Board accepted that Mr Suriya would have suffered difficulties due to Covid, the Board did not find that this mitigated Mr Suriya’s conduct in the circumstances.
[9] T Documents, T9, pages 858-865, Decision of TPB regarding OZI Tax Advisers dated 21 April 2023, page 861.
The TPB determined:[10]
[Mr Suriya’s] conduct had demonstrated a significant lack of integrity, and honesty.
The Board noted that while Mr Suriya’s clients may have informed him of the need for their profits to be at a certain level, he should have had the integrity to advise these clients that he would refuse to produce financial documentation (including ITRs) without first obtaining the relevant substantiation to support the figures he was reporting. The Board also noted that while some of Mr Suriya’s conduct may have been influenced by the broker, Mr Prasad’s, purported requests, Mr Suriya (as a registered tax agent) should have had the integrity and honesty to recognise what would be appropriate conduct in the circumstances. For instance, if Mr Prasad had in fact advised Mr Suriya to remove any reference in the draft financial documents to their “draft” status, to better help the clients’ eligibility for loans, Mr Suriya should have recognised that this was wrong.
The Board also noted that a reasonable and responsible tax practitioner in Mr Suriya’s position should have been aware that it was highly unusual to be asked to prepare amended ITRs for clients that reported significantly different figures to those reported in the ITRs he had already prepared and lodged with the ATO. The Board noted that Mr Suriya had also seemingly taken no action to notify the broker or the financial institution of the discrepancies between the figures reported in the relevant ITRs lodged with the ATO and those reported to the broker.
(emphasis added)
[10] T Documents, T9, pages 858-865, Decision of TPB regarding OZI Tax Advisers dated 21 April 2023, page 861.
Following its investigation, the TPB determined it was satisfied OZI did not meet the registration requirement under paragraph 20-5(3)(a) of the TASA that each director is a fit and proper person as Mr Suriya had:[11]
1.engaged in conduct which breached subsections 30-10(1) and 30-10(7) of the Code[;]
2.in his capacity as the sole director and sole supervising agent of [OZI], caused [OZI] to engage in conduct that was found to have breached subsection 30-10(7) of the TASA;
3.demonstrated a significant lack of honesty and integrity by falsifying financial documentation for a company he was a director of, Metalcop Pty Ltd … to facilitate a loan application for himself and the Kohinoor Family Trust (of which he is a trustee) and subsequently taking no action to attempt to rectify the false financial information provided to third parties, despite being aware of the inaccuracies[;]
4.demonstrated a significant lack of competency and integrity across a significant period by repeatedly providing financial documentation in support of loan applications for multiple clients that he knew or ought to have known did not reflect the true financial position of those entities, and subsequently taking no responsibility or action to rectify this incorrect financial documentation.
[11] T Documents, T9, pages 858-865, Decision of TPB regarding OZI Tax Advisers dated 21 April 2023, page 862.
Suriya Decision
The TPB advised Mr Suriya on 21 April 2023 that it had decided that he had also failed to comply with subsections 30-10(1) and 30‑10(7) of the Code and that he no longer met the tax practitioner requirements for registration as he was not a “fit and proper person” as required by section 20-5(1)(a) of the TASA. As a result of that decision the TPB decided to terminate Mr Suriya registration as a tax agent pursuant to section 40-5 of the TASA (“Suriya Decision”).[12] The termination of Mr Suriya’s registration will take effect from 21 May 2023. The effect of the termination is that Mr Suriya must not provide any tax agent services, or he may be subject to civil penalties pursuant to section 50.5, 50.10, and 50.15 of the TASA.
[12] T Documents, T16, pages 1616-1626, Decision of TPB regarding Osama Suriya dated 21 April 2023.
In its reasons for the decision against Mr Suriya the TPB advised that:[13]
[13] T Documents, T16, pages 1616-1626, Decision of TPB regarding Osama Suriya dated 21 April 2023.
(a)it was satisfied that Mr Suriya had breached subsection 30-10(1) of the Code by:
(i) falsifying income documents for a company of which he was sole director, Metalcop Pty Ltd, to facilitate approval for a loan to himself and a trust of which the Applicant was a trustee, Kohinoor Family Trust; and
(ii) providing financial documentation for entities associated with eight clients, in support of loan applications, that he knew or ought to have known was false ;
(b)it was satisfied that Mr Suriya had breached subsection 30-10(7) of the Code by failing to ensure that tax agent services that he provided, or that were provided on his behalf, were provided competently in preparing and lodging ITRs on behalf of the clients. Those clients were subject to ATO compliance activities, and were found to have included overclaimed, or incorrect, deduction claims that were inconsistent with the financial representations made in support of loan applications. The TPB found that Mr Suriya knew, or ought to have known, those documents did not reflect the true financial position of those entities.
(c)it was satisfied that Mr Suriya ceased to be a fit and proper person given that:
(i) he had engaged in conduct which breached subsections 30-10(1) and 30-10(7) of the Code;
(ii) in his capacity as sole director , supervising agent and controlling mind of OZI he was personally accountable for the conduct that breached section 30-10(7) of the Code and resulted in TPB’s decision to terminate OZI’s registration as a tax agent;
(iii) he had demonstrated a significant lack of honesty and integrity by falsifying financial documentation for a company he was a director of to facilitate a loan application for yourself and the Kohinoor Family Trust (of which he is a trustee) and subsequently taking no action to attempt to rectify the false financial information provided to third parties, despite being aware of the inaccuracies;
(iv) he demonstrated a significant lack of competency and integrity across a significant period by repeatedly providing financial documentation in support of loan applications for multiple clients that he knew or ought to have known did not reflect the true financial position of those entities, and subsequently taking no responsibility or action to rectify this incorrect financial documentation.
In relation to Metalcop Pty Ltd, the Respondent noted that Mr Suriya’s explanation that he had sent the wrong financials and that accounts for the client can sometimes cause confusion due to sales and expenses being transacted in US dollars, did not adequately explain why and how Mr Suriya:[14]
a) sent an email to the broker on 19 February 2020 providing figures for the company’s total income, expense and profit for the 2019 financial year;
b) lodged the company’s ITR for the 2019 financial year with the ATO two days later, on 21 February 2020, which contained figures for its total income, expenses and profit that were significantly different to those provided to the broker in the email on 19 February 2020;
c) subsequently sent an email to the broker on 17 May 2020 attaching a copy of an ITR for the company for the 2019 financial year containing the same figures as those provided in Mr Suriya’s email to the broker on 19 February 2020 (and that differed significantly with those in the company’s ITR lodged with the ATO); but
d) did not lodge any amended ITRs for the company that contained the figures provided to the broker in his emails on 19 February 2020 and 17 Mary 2020.
[14] T Documents, T16, pages 1616-1626, Decision of TPB regarding Osama Suriya dated 21 April 2023, page 1619.
In the OZI Decision, the Respondent found that:[15]
“a reasonable and responsible tax practitioner in Mr Suriya’s position should have been aware that it was highly unusual to be asked to prepare amended ITRs for clients that reported significantly different figures to those reported in the ITRs he had already prepared and lodged with the ATO. The Board noted that Mr Suriya had also seemingly taken no action to notify the broker or the financial institution of the discrepancies between the figures reported in the relevant ITRs lodged with the ATO and those reported to the broker.”
[15] T Documents, T9, pages 858-865, Decision of TPB regarding Osama Suriya dated 21 April 2023, page 861.
On 27 April 2023 OZI applied to this Tribunal for review of the OZI Decision and Suriya Decision.[16]
[16] T Documents, T1, pages 9-14, Application for review dated 27 April 2023.
On 10 May 2023 Mr Suriya applied to this Tribunal for review of the Suriya Decision.[17]
[17] T Documents, T10, pages 866-872, Application for review dated 10 May 2023.
The Tribunal has jurisdiction to review the OZI Decision and Suriya Decision pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”) and section 70-10(e) of the TASA.
OZI and Mr Suriya respectively filed stay applications of the TPB’s decisions pursuant to section 41(2) of the AAT Act and submitted:[18]
I am writing to express my deep disappointment and frustration at the recent decision to terminate my tax agent registration. I would like to dispute this decision and request that my registration be reinstated, if not then at least suspend for a short period of time. If the termination continues … it will prevent me from working in this industry for 12 months even as an employee. I have only worked in this industry all my life since the completion of my education. That’s an extremely harsh decision as this was my only livelihood. I do not earn any income from anywhere else, it will put me under enormous financial pressure and mental depression, which will ultimately affect my health and also my family life with 3 young kids all under the age of 6. I have never been a burden on the Australian Welfare system nor do I wish to be. I have a financial commitment of mortgage which I will be unable to fulfill along with other household expenses. This is not very big practice and I'm not making million of dollars here, nor I did get any financial benefit out of that.
As a tax practitioner, I have always taken my responsibilities very seriously and have worked hard to maintain a high standard of professionalism and integrity in all of my dealings with clients and other stakeholders. I believe that I have always acted in accordance with the rules and regulations set out by the TASA, and have never knowingly breached any of these requirements. However, the incident that caused my registration to be terminated is a careless mistake I made, and did acknowledge and am remorseful of what has happened and have made changes in systems and policies and just asked TPB for another chance. That’s all. I'm a human, and was misguided by the broker, and there was no monetary benefit attached to it as well. It was merely a genuine mistake, I have now learned from my mistake and willing to show that it wont happen ever again. I'm willing to put some sort of security/guarantee to abide by TPB's rules and regulations.
Therefore, I was extremely surprised to learn of the decision to terminate my registration. I feel that I have not been given a fair opportunity to address any concerns or issues that may have been raised. I was always professional in
corresponding with TPB, All my tax obligations were up to date, and I have completely cooperated with TPB and have always been compliant which you can confirm with Tax Office as well. This is the first and last incident in the whole of my 12 years career. I deserve a chance to work in the industry and my livelihood not to be taken away from me.I would like to request that the Tax Practitioner Board to reconsider their decision and provide me with the opportunity to demonstrate that I am still a capable and trustworthy (Fit & Proper) tax practitioner. I am willing to engage in any necessary course to address any concerns that may have led to the decision to terminate my registration. I'm approaching AAT because I'm genuinely concerned about my work and profession. I'm very well-known in the community and you can verify my ethics independently from anyone. I fully acknowledge the incident and guarantee it won't happen again and non of the party has been disadvantaged because of this.
I hope that you will take this letter into consideration and request TPB reconsider its decision to terminate my tax agent registration. I am committed to upholding the highest standards of professionalism and integrity in my work as a tax practitioner, and I believe that I have the skills, knowledge, and experience necessary to continue providing valuable services to my clients. My CPD's, Professional education and Professional Indemnity have always been up to date.
(emphasis added)
[18] T Documents, T1, pages 9-14, Application for review dated 27 April 2023, page 13.
The TPB opposes both stay applications.
An interim stay in relation to the OZI Decision has been in place since 12 May 2023. The interim stay is subject to the condition that the applicant undertakes to not take on any new clients to whom it will provide tax agent services as defined in s 90-5 of the TASA for the duration of the order (“Interim Stay Order”).
On 18 May 2023 the Tribunal directed that both stay applications should be heard together as the grounds relied upon by TPB, which give rise to the reviewable decisions, are the same.
At the hearing the Tribunal ordered that the Interim Stay Order remain in force pending this decision.
LEGISLATIVE BACKGROUND
The TASA
The object of the TASA, as stated in section 2-5, is "to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct". Section 2-5 provides that these objects are to be achieved by (among other things):
(a) establishing a national Board to register tax agents and BAS agents; and
(b) introducing a *Code of Professional Conduct for *registered tax agents and BAS agents; and
(c) providing for sanctions to discipline registered tax agents and BAS agents.
The TASA establishes the TPB and provides for the registration and regulation of tax agents. Part three of the TASA sets out the Code of Professional Conduct which applies to registered tax agents.[19] The TPB is authorised to investigate a registered tax agent’s conduct that may breach the TASA pursuant to section 60-95 of the TASA.
[19] Section 30-5 of the TASA.
Pursuant to section 60-125(2) of the TASA, if the TPB investigates conduct under section 60‑95 and finds that the conduct breaches the TASA, the TPB must either
(a) make a decision that no further action will be taken; or
(b) do one or more of the following:
(i) impose one or more sanctions under Subdivision 30‑B;
(ii) terminate an entity’s registration under Subdivision 40‑A;
Section 20-5(1)(a) of the TASA provides that an individual is eligible for registration as a registered tax agent, BAS agent or tax (financial) adviser if the TPB is satisfied that the individual is a fit and proper person.
In determining whether a person is a fit and proper person to be registered as a tax agent, the TPB must have regard to whether the individual “is of good fame, integrity and character”.[20]
[20] Section 20-15(a) of the TASA.
The TPB referred the Tribunal to two explanatory papers:
(a)Explanatory Paper TPB (EP) 02/0210: "Fit and proper person" (“Explanatory Paper 02/2010”) which provides guidance to agents regarding the TPB’s interpretation of the fitness and proprietary requirements of the TASA;
(b)Explanatory Paper TPB (EP) 01/0210: "Code of Professional Conduct" (“Explanatory Paper 01/2010”) which provides guidance to agents regarding the TPB’s interpretation of the Code contained in Division 30 of the TASA.
The Tribunal is not bound to apply the Explanatory Paper 02/2010 but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[21]
[21] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; 11 FLR 203; 2 ALD 634 at 645.
Brennan J explained the relevance of an adopted policy to decision-making in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; 11 FLR 203; 2 ALD 634 at 640:[22]
Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.
[22] Cited with approval by the Full Federal Court in Singh v Minister for Immigration and Citizenship [2012] FCAFC 12; (2012) 199 FCR 404, at [43].
Paragraph 84 of Explanatory Paper 02/2010 explains that:
A failure by a tax practitioner to discharge their responsibilities on behalf of clients could reflect adversely on the tax practitioner's fitness and propriety for registration where it amounts to unsatisfactory or unreasonable failure in the tax practitioner’s circumstances and all the surrounding circumstances of the case.
In Re Su and Tax Agents’ Board of South Australia [1982] AATA 127; 82 ATC 4284; 13 ATR 192; 61 FLR 1 Davies J said, at 4-5:
The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.
(emphasis added)
Section 30-10 of the TASA sets out the Code that registered tax agent’s must comply with to maintain their registration. The following subsections of section 30-10 are relevant here:
(c)Section 30-10(1) provides that a registered tax agent:
“must act honestly and with integrity”
(d)Section 30-10(7) provides that a registered tax agent:
“must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently”
If, having investigated the conduct of a registered tax agent, the TPB is satisfied that the tax agent has failed to comply with the Code, the TPB may terminate the registered tax agent’s registration pursuant to section 30-30 of the TASA.[23] Section 40-15 of the TASA provides that where a registered tax agent is a company the board may terminate its registration for breach of the Code.
[23] Section 30-15 of the TASA.
Pursuant to section 20-5(3) a company will only be eligible for registration as a registered tax agent or BAS agent if, among other things, the TPB is satisfied that each director of the company is a fit and proper person.
The termination of a registered tax agent’s registration takes effect on the day specified in the notice provided by TPG of the decision to terminate the registration.[24]
[24] Section 40-20 of the TASA.
Explanatory Paper 01/2010 provides guidance in relation to general principles and matters relating to the Code that may be relevant to the professional practice of registered tax agents. Explanatory Paper 01/2010 provides guidance:
(a)for how to interpret the obligation to be and act competently (section 30-10(7)). It provides examples of circumstances which suggest a lack of competence such as:
not making sufficient enquiries to ascertain the affairs of clients to enable the registered tax practitioner to be reasonably satisfied that documents they prepare and lodge on behalf of these clients are correct.
(b)in relation to what is “reasonable care” in ascertaining a client’s affairs:
What is ‘reasonable care in ascertaining a client’s state of affairs’?
121.It is considered that ‘more is expected of a registered tax practitioner than a taxpayer completing his or her own return’. This higher standard of care is a reflection of a registered tax practitioner's ‘knowledge, education, experience and skill’.
122.It should be noted at the outset that this requirement under the Code does not create a requirement that a registered tax practitioner effectively ‘audits’ all of the registered tax practitioner's clients before providing tax agent services to avoid breaching the Code.
123.Rather, this requirement is a duty of registered tax practitioner to take care beyond placing complete reliance on the accounts prepared, or work done, by a person without considering their level of knowledge and/or understanding of the taxation laws and the correctness of their work to ensure that the information upon which the provision of the tax agent services is based is accurate.
124.In most cases, this will require that a registered tax practitioner ask the client appropriate questions, based on the registered tax practitioner’s professional knowledge and experience, to ascertain the accurate factual basis upon which the tax agent services are provided and, where appropriate, to obtain supporting documents and records evidencing these facts.
125.The requirement to take reasonable care relates to the services that are to be provided and is therefore subject to the agreed scope of the engagement with the client. A registered tax practitioner would not be required to make further enquiries and it would be reasonable to rely on information or advice, if the scope of the tax agent services excludes the examination of information provided by the client or requires the registered tax practitioner to rely on the information or advice of another expert. These observations must also be considered in light of other paragraphs in this section and with the obligations under the TASA, which must be complied with.
126.Taking reasonable care will in many cases require that a registered tax practitioner ask questions based on their professional knowledge and experience in seeking information. Where there are grounds to doubt the information provided by a client, the registered tax practitioner must take positive steps and make reasonable enquiries to satisfy themselves as to the completeness and/or accuracy of that information.
127.Where a statement provided by a client seems plausible and is consistent with previously established statements and the registered tax practitioner has no basis on which to doubt the client’s reliability or the veracity of the information supplied, the registered tax practitioner may discharge their responsibility by accepting the statement provided by the client without further checking.
128.However, if the information supplied by a client seems implausible or inconsistent with a previous pattern of claim or statement, further enquiries would be required.
129.Again, whilst there is no requirement to audit, examine or review books and records or other source documents supplied by a client, a registered tax practitioner does not discharge their responsibility in such a case by simply accepting what they have been told.
(emphasis added)
Power and Criteria for the Grant of a Stay
The power of the Tribunal to grant a stay of the operation or implementation of a reviewable decision, derives from section 41(2) of the AAT Act which provides:
The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), 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 operation or 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.
(Emphasis added)
Pursuant to section 41(6) of the AAT Act, a stay order may be made subject to conditions.
Section 41(1) of the AAT Act provides that stays are not automatically granted. Without the grant of a stay the appealed decision takes effect and may be implemented.
It is not in dispute that the factors relevant to the exercise of the discretion to grant a stay are:[25]
(a)the prospects of success of the substantive application for review;
(b)the consequences to the applicants if the request for a stay is refused;
(c)the public interest;
(d)the consequences for the TPB in carrying out its functions; and
(e)whether the substantive application for review would be rendered nugatory if the request for a stay order were not granted.
[25] Re Scott and ASIC [2009] AATA 798, per Davies J.
ISSUE FOR THE TRIBUNAL
The issue for the Tribunal is whether to grant a stay of the OZI Decision and Suriya Decision pursuant to section 41(2) of the AAT Act.
CONTENTIONS
Applicant’s Contentions
Mr Suriya provided written submissions and evidence to the Tribunal, including copies of correspondence from his former lawyers who made representations on the Applicants’ behalf to the TPB during its investigation and determination.
The Applicants contend that stays of the TPB’s decisions should be granted on the grounds that:[26]
[26] T Documents, T1, pages 9-14, Application for review dated 27 April 2023.
· he will be prevented from working in the only industry he knows;
· the decision is “extremely harsh”;
· he is under financial pressure;
· his mental health is being affected;
· it will have a negative financial impact on his family – he has a mortgage and two young children;
· The Applicant said he believes he has “always acted in accordance with the rules and regulations set out by the TASA, and have never knowingly breached any of these requirements”.
· the “incident” resulting in the termination of his tax agent registration was “a careless mistake”;
· he is remorseful and the “mistake” will not happen again;
· he was “extremely surprised to learn of the decision to terminate” his registration;
· he has not been given a “fair opportunity to address any concerns or issues”;
· he deserves a chance;
· he is capable and trustworthy;
· he is prepared to undertake any necessary courses;
· he is well known in the community;
· he guarantees the “incident” will not happen again;
· no one has been disadvantaged because of the incident;
· he accepts there were “inconsistencies”.[27]
[27] T Documents, T7, pages 836-839, Cover letter by Mr Suriya dated 13 April 2022, page 839.
In previous submissions made to the TPB by Mr Suriya’s former solicitors, Mr Suriya said he was aware of the significance and consequence of his conduct and displayed remorse and embarrassment by his statements in letters to the TPB. The solicitors’ letter also raised the following matters by way of “mitigation” and/or plea for a different outcome:[28]
(a)impact of COVID 19;
(b)pressure on tax agents with changes to JobKeeper and taxation requirements for clients brough on by COVID 19;
(c)the inability to meet the clients face to face during the lockdowns; and
(d)the Applicant’s limited resources.
[28] T Documents, T7, pages 833-837, Letter from Mills Oakley dated 28 March 2023.
In submissions filed for the purpose of this hearing Mr Suriya submitted as follows:
(a)the relevant conduct was a result of “oversight”; and
(b)he takes “full responsibility”;
(c)blamed the broker as having been equally responsible. “[T]he broker is and should also be equally responsible for this as well”.[29]
[29] Exhibit 70, Cover letter for Mr Suriya’s AAT submissions, received 6 June 2023.
At the hearing Mr Suriya told the Tribunal:
(a)he was under pressure at the time he prepared the clients’ financial documents;
(b)the broker asked him not to indicate the documents were only a “draft” because the bank would not accept the information in that format;
(c)the broker was equally responsible;
(d)one client had forged his signature;
(e)the financials documents were unsigned;
(f)he is not a threat to the public;
(g)he has a good relationship with clients and a solid and good reputation;
(h)this one “one off” conduct;
he had strong client base; and
(j)termination will impact his ability to earn a living and that he has no other source of income.
Mr Suriya stated he had “demonstrated a lack of honesty in his financial judgement”. The Tribunal asked him to explain how he had not been honest. Mr Suriya seemed to have difficulty understanding how to answer the question and said again that he had been under “pressure” and had been “careless”.
At the hearing Mr Suriya again blamed the broker and in addition blamed the lender’s agent saying she should have asked him for more substantiating documents. This is not the evidence one expects from someone who is contrite and understands what they have done and accepts responsibility for that conduct.
Respondent’s Contentions
The TPB contends that stays should not be granted on the grounds that:
(a)The Applicant's application for review has no real prospects of success;
(b)It was not in the public interest; and
(c)the granting of the stays was not necessary in order to secure the effectiveness of the hearing and determination of the application for review.
CONSIDERATION
Prospects of Success
One of the most crucial factors to consider in determining whether to grant a stay is the likelihood of the applicant succeeding at the final review hearing.
It is trite to say that in considering prospects of success, it is not the role of this Tribunal to conduct a “mini trial” on the merits. The Applicant must merely show that they have an arguable case and a basis for their application.[30]
[30] Re Dart and Director-General of Social Services (1982) 4 ALD 553.
It is not this Tribunal’s place to make any findings of fact or findings of credibility for the purpose of the stay application.
Consideration
The Applicants did not put forward reasons, or identify factual or legal errors, to demonstrate the TPB had made an incorrect decision and to support a finding that the prospects on review were good.
Mr Suriya’s primary focus at the hearing was to:
(a)downplay the seriousness of the conduct, either through categorizing his conduct as a naive mistake or an oversight due to pressure; or
(b)explain the personal ramifications to him if the stays were not granted or the decisions were not overturned.
The Tribunal is concerned because of Mr Suriya’s evidence that he fails to comprehend the seriousness of his conduct. He has described the submission of false or unverified documents as a “careless mistake”. This gives cause for concern.
There is a concern regarding whether “TPB and the Commissioner can have confidence in the practitioner’s continued ability to honestly and competently discharge the functions of the profession”.[31]
[31] T Document, T18, pages 1704-1742, Explanatory Paper 02/2010, page 1718.
He submitted through his former lawyers that:[32]
(a)no-one suffered any pecuniary loss because of his conduct; and
(b)he is up to date with his own tax compliance obligations.
[32] T Documents, T7, pages 833-837, Letter from Mills Oakley dated 28 March 2023.
Mr Suriya’s evidence at the hearing indicates that:
(a)he continues to attempt to transfer his responsibilities and obligations onto others;
(b)he was aware that the lending institutions would be relying on the financial information provided by him on his clients’ behalf to assess their capability of servicing a loan, and at what amount;
(c)he has no recognition or insight into the seriousness of his conduct;
(d)he was aware the information contained in the financial documents was false, which demonstrates a lack of integrity and trustworthiness.
The Tribunal asked Mr Suriya to explain why he thought he had good prospects, but he was not able to articulate any arguments and instead focussed more on the fact that he would be restrained from working in his current profession.
The Applicant acknowledged that he knew, and apparently accepted that, the reason for not marking the financial documents as being in “draft” form was because they would otherwise not be accepted. This is quite alarming and raises concerns regarding the applicant’s true comprehension of what he has done and his ability to make sound judgements as expected by registered tax agents. This weighs heavily against his prospects.
The Tribunal is concerned that Mr Suriya appears to take little responsibility for the false and misleading ITRs lodged by him on his clients’ behalf. The comments made by Mr Suriya at the hearings before this Tribunal in relation to those clients’ matters are of great concern and show a lack of understanding of relevant tax laws. He seeks to blame the client, the broker, and the lending institution. This reflects on Mr Suriya’s integrity and competency, and impacts the prospects of success he will have in relation to these matters on final review.
Based on the evidence to date, the Tribunal finds that the Applicant’s prospects at the final hearing are poor.
On the other hand, the Tribunal acknowledges that there is a possibility that some of the Applicant’s evidence and submissions may be accepted and that this could have an impact on whether deregistration, or the length of termination currently imposed, is appropriate.
The Tribunal cannot, based on the information available to it, determine whether there is a “realistic possibility that a different decision could [be] made” at a final hearing concerning the conduct of the Applicant.[33] However, the proper place for determining the credibility of the Applicant’s evidence is at the merits review of the substantive proceeding.[34]
[33] Nathanson v Minister for Home Affairs [2022] HCA 26, [32].
[34] Levi v Companies Auditors and Liquidators Disciplinary Board [2013] FCA 719, [32].
The Tribunal is unable to determine the extent of the Applicant’s prospects. However, there is an arguable question to be determined.
Consequences to the Applicants
Documents provided by Mr Suriya indicate that he was being treated, using non-pharmaceutical methods, by a general practitioner for anxiety and low mood since March 2022.[35] This was not elaborated on at the hearing.
[35] T Documents, T7, page 847, Letter from Mr Suriya’s medical practitioner dated 23 March 2023.
Mr Suriya explained that he would be adversely affected financially as the OZI business is his main source of income, and he would struggle to support his family.
The termination of the registration will have consequences in terms of the ability to maintain clients.
Financial impacts are inevitable in circumstances where a person is estopped from engaging in their chose profession.[36] The potential impacts of a stay raised by the Applicants are not unique circumstances. They are circumstances that would be faced by anyone in the position of losing their tax agency registration. Even so, each case must be considered on its own unique set of facts in line with the principles and purposes of the legislation under review.
[36] Reiterated recently by Senior Member G Lazanas in Thomas and Tax Practitioners Board [2023] AATA 757, at [40] citing Le’Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890 at [32], citing Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130; [2009] FCAFC 185.
The Tribunal acknowledges:
(a)there may be inconvenience to the Applicants’ current clients having to find an alternative tax agent; and that
(b)two staff members may lose their employment.
The termination of the registration will have consequences in terms of the Applicants’ ability to maintain clients. This is a situation that would be faced by anyone in the position of losing their tax agency registration.
The Tribunal acknowledges there may also be some inconvenience to the Applicants’ current clients having to find an alternative tax agent.
However, the corroborating evidence of the potential impact of the stay is extremely limited.
There is no corroborating evidence before the Tribunal to substantiate:
(a)how many of the Applicants’ clients would be affected if the stays were not granted;
(b)the financial loss, if any, or the degree of hardship that would be incurred by the Applicants if the stay is refused.
At the hearing Mr Suriya acknowledged that he was aware the Respondent’s written outline of submissions which he had received two weeks prior, had put him on notice regarding his lack of corroborating material.
Public Interest
Taxpayers have a right to expect that the advice they are receiving from their tax agents is competent.[37]
[37] Taxation Guru Pty Ltd and Gambhir Watts and Tax Practitioners Board [2019] AATA 3249, [51].
Deputy President McCabe highlighted in Le'Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890 at [25]:
“[o]ur tax system works largely on the principle of self-assessment. That system depends on tax agents doing their job. The Commissioner of Taxation needs to know that tax agents are competent, honest and diligent”.
EP 01/2020 explains that “A registered tax practitioner should be a person of such competence and integrity that others may entrust their taxation affairs to the registered tax practitioner’s care”.[38]
[38] T Document, T17, pages 1627-1703, Explanatory Paper 01/2010, page 1648.
The Respondent submits that the public interest weighs against a stay. The Tribunal agrees with the Respondent.
The TPB findings are of a serious nature. The protection of the public outweighs any personal impacts the Applicant may be expected to experience.
The primary consideration in matters such as these must be what is in the best interests of the public. It is only because of public interest concerns that sanctions and terminations are imposed for breaches of conduct. The level of conduct expected must be maintained. The premise underlying professional conduct rules is that certain minimum standards are required to ensure the protection of the public from negative outcomes. This also ensures that the objects of the TASA are upheld.
The findings made by the Respondent are serious. Given the weight of the evidence against the Applicants and the absence of evidence from the Applicants to show the Decisions may be wrong, the public interest favours the protection of the public and the upholding of the standards of conduct discussed above. The need to uphold the integrity of the tax system and preserve the general community’s confidence in the tax profession weighs strongly against the grant of stays.
Application for review would not be rendered nugatory
The Tribunal agrees with the TPB that the application for review would not be rendered nugatory if our stay was refused. If the Applicants are successful at final review, the termination decisions will be set aside or varied, and the Applicants will be able to recommence the provision of tax agent services as registered tax agents.
CONCLUSION
It is not in dispute that the protection of the public is a paramount consideration of the Tribunal in determining whether to exercise its discretionary powers under section 41(2) of the AAT Act.
Given the lack of evidence, the Tribunal is not persuaded that the consequences to the Applicants resulting from not granting a stay outweighs the public interest to justify the grant of a stay.
Mr Suriya expressed remorse, but he does not appear to have “an awareness of the significance and consequences of the misconduct or wrongdoing, such that the TPB and the Commissioner can have confidence in the practitioner’s continued ability to honestly and competently discharge the functions of the profession”.[39] In fact, statements made to the TPB in correspondence appear “naïve”: a word he used to describe himself.
[39] T Document, T18, pages 1704-1742, Explanatory Paper 02/2010, page 1718.
The issue is primarily one of prospects, public interest, and hardship. This is akin to the determination of a Court in considering an interim injunction application. Whether an injunction is granted often hinges not so much on prospects (or whether there is a serious question to be tried), but on balance of convenience aspects.
The Applicants have not provided sufficient evidence regarding the damage that will result if a stay is not granted, including to third parties. The Tribunal is not satisfied that any personal impacts outweigh the need to protect the public where there is concern about Mr Suriya’s fitness and competence. Some of the findings of the TPB that will be under review concern whether Mr Suriya has acted dishonestly. This is a serious matter. This is not a case of having been found to have lodged a couple of late returns.
The Applicants have not satisfied the Tribunal that the stay applications should be granted.
DECISION
The stay applications are refused, and the interim stay order is discharged.
| I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for the decision herein of Senior Member D K Grigg |
................................[SGD].....................................
Associate
Dated: 14 July 2023
Date of hearing: | 5 July 2023 |
Applicant: | Self-represented |
Advocate for Respondent: | N J C Dodds, of Counsel |
Respondent: | Tax Practitioners Board |
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