Shaheed and Tax Agents' Board of NSW
[2006] AATA 880
•17 October 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 880
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/166
GENERAL ADMINISTRATIVE DIVISION ) Re MOHAMMED SHAHEED Applicant
And
TAX AGENTS' BOARD OF NSW
Respondent
DECISION
Tribunal Senior Member M D Allen Date17 October 2006
PlaceSydney
Decision The decision under review is affirmed.
[Sgd] Mr M D Allen Senior Member
CATCHWORDS
Whether to re-register as a tax agent – Whether Applicant was a fit and proper person - Meaning of ‘fit and proper person’ – ‘Fit and proper person’ to be assessed at the time of the decision under review – The requirement to notify the Tax Agents Board if address of place of business changes – Applicant operating offices without permission from the Tax Agents Board – Complaints made against Applicant
Income Tax Assessment Act 1936 - sections 251JC, 251N,
Income Tax Regulations – Regulation 161Davies v Australian Securities Commissioner (1995) 131 ALR 295
Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321
Aged Care Standards and Accreditation Agency Ltd v Kenna Investments Pty Ltd and Anor (2003-4) 138 FCR 428
Briginshaw v Briginshaw (1938) 60 CLR 336REASONS FOR DECISION
17 October 2006 Senior Member M D Allen 1. By application made the 8th day of February 2005 the Applicant sought review of a decision by the Respondent dated 25 January 2005 to refuse his re-registration as a tax agent.
2. The refusal to re-register the Applicant was made pursuant to Section 251JC of the Income Tax Assessment Act 1936 (The Act) on the basis that the Respondent was not satisfied that the Applicant was a fit and proper person to prepare tax returns. Section 251JC of the Act reads inter alia:
[Criteria for re-registration]
(1) The Board shall re-register the applicant as tax agent if the applicant satisfies the Board that-
(a) If the applicant is a natural person-
(i) the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters;
…
3. The term “fit and proper person” was explained by Hill J in Davies v Australian Securities Commission (1995) 131 ALR 295 at 305 as follows:
“The phrase fit and proper person is a familiar one in the context of qualifications for offices or vocations. Discussing the phrase in a context of licenses to use vehicles for the purposes of inter-State trade, Dixon CJ, McTiernan and Webb JJ said in Hughes and Vale Pty Ltd v The State of New South Wales (No2) (1995) 93 CLR 127 at 156-7:
But their very purpose is to give the widest scope for judgement and indeed for rejection. ‘Fit’ (or ‘idoneus’) with respect to an office, is said to involve three things, honesty, knowledge and ability: ‘honesty to execute it truly, without malice, affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it’ -Coke. When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances…
As I observed in Stasos v Tax Agents’ Board of NSW (1990) 90 ATC 4950 at 4959 the content of what is necessary to constitute a person a fit and proper person to occupy a particular office or pursue a particular vocation will vary having regard to the office or vocation under consideration. Thus the characteristics required to show fitness as a tax agent were expressed by Davies J in Re Su and Tax Agents’ Board of South Australia 1982 82 ATC 4284 at 4286 as requiring that person to be:
…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.”
4. Likewise in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380, Toohey and Gaudrorn J J said:
“The expression ‘fit and proper person’, standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of ‘fit and proper’ cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts,, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.”
5. In this matter some four specific allegations were made concerning the Applicant at the outset of the hearing in this matter, these allegations being in the nature of particulars of the actions which were said to render the Applicant not fit and proper to be a tax agent. In evaluating the evidence concerning these allegations I have kept firmly in mind the fact that if I am satisfied of the Respondent’s case then the Applicant will be deprived of his livelihood. As was stated by Dixon J in the well known passage in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 namely:
“…Reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence or they given descriptions, or the gravity of the consequences flowing from a particular finding are considerations which must effect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal.”
6. In approaching the decision under review as has been made clear by cases such as Aged Care Standards and Accreditation Agency Ltd v Kenna Investments Pty Ltd and Anor (2003-4) 138 FCR 428 the question of the Applicant’s fitness to practise has to be determined at the time of the making of the decision under review.
7. The four specific allegations against the Applicant as outlined by counsel for the Respondent in his opening were:
i. The complaint by a Ms Millerd on behalf of her brother Mr Mohammed Nizam Khan, a resident of Fiji to the effect that the Applicant had not accounted to Mr Khan for monies received by way of a refund of tax overpaid following preparation of returns for Mr Khan by the Applicant, and that the Applicant had used undue pressure upon Mr Khan to induce him to withdraw his original complaint to the Respondent.
ii. The volume of tax claims prepared by the Applicant.
iii. The failure by the Applicant to comply with an undertaking he gave to the Respondent to close offices from which he operated at Liverpool and Harris Park and to remove all advertising.
iv. The operation of an office at Dandenong in Victoria despite the Respondent in 1998 disallowing the opening of an office at that location.
8. The evidence and findings in regard to the four particularized defaults can be summarized as follows:
dandenong office
9. On 4 June 1997 the Applicant wrote to the Tax Agents Board NSW requesting “approval” to operate branch offices at 8/209 Macquarie Street Liverpool NSW and 17 Langhorne Street Dandenong Victoria. The Respondent by letter dated 1 September 1998 refused that request on the basis that the Applicant would be unable to satisfy the requirements of Section 251N of the Act. Section 251N at that time read:
“A natural person who is registered as a tax agent shall not allow any person to do anything specified in paragraph (1)(a) or (b) except under the supervision and control of –
(a) the tax agent; or
(b) a registered nominee of the tax agent.
Penalty $1,000
…”
10. The Applicant was also referred to the Tribunal case of Re S & T Income Tax Aid Specialists Pty Ltd and Forward and Tax Agents Board (NSW) (1987) 12 ALD 316; 87 ATC 2001. Although the citation of the above case in the Boards’ letter was incorrect a précis of the case was forwarded to the Applicant.
11. I must admit that I have some difficulty with the concept raised in the complaints against the Applicant regarding offices. There is no provision under income tax legislation for the Tax Agents Board to “approve” where a tax agent may open an office. A tax agent is required pursuant to Regulation 161 of the income Tax Regulations 1936 to notify the Board of his place or places of business and must pursuant to Regulation 164 notify any change of address to the Board “forthwith”.
12. Notwithstanding this reservation it is clear that in respect of both the Dandenong and Liverpool offices the Respondent considered that the Applicant would be unable to exercise sufficient control over their operations and informed him of this.
13. On 19 April 2004 officers of the Victorian Tax Agent Integrity Unit visited premises at Suites 41 and 42A, 1st floor 17 Langhorne Street at Dandenong. No evidence was ascertained linking the Applicant with the taxation service purporting to be operating at these premises.
offices at liverpool and harris park
14. As stated above the Applicant was “denied permission” to operate premises at Liverpool in 1998 on the basis that the Respondent was of the opinion that he would not be able to exercise sufficient oversight and supervision of that office. Notwithstanding this the Applicant did open an office at 209 Macquarie Street Liverpool. In an interview with officers of the Tax Agents Integrity Unit on 10 June 2004 the Applicant stated that the Liverpool office commenced operations in 1998 or 1999.
15. The fact that the Applicant was operating offices at Liverpool and at Parramatta later transferred to Harris Park, was not disclosed by the Applicant to the Respondent until investigations by the Tax Agents Integrity Unit discovered their existence.
16. On 25 November 2004 the Applicant wrote to the Respondent stating that the Liverpool office had been opened in the year 2000. This conflicts with the Record of the Interview officers of the Tax Agents Integrity Unit had with the Applicant where the Applicant stated that the Liverpool office opened in 1988 or 1999 (see T24). In that letter the Applicant also stated “Liverpool and Harris Park offices have now been closed for business. The signs have been taken out and all advertising has ceased”.
17. On 3 December 2004 officers from the Tax Agents Integrity Unit visited 209 Macquarie Street Liverpool. There still existed a sign above the doorway stating that MS Taxation & Accounting Services occupied suite 5 and on the door (of suite 5) was a sign MS Taxation & Accounting Services.
18. In evidence the Applicant stated that he had closed the Liverpool and Harris Park offices in November or December 2004, and had instructed a signwriter to remove the signage. So far as the Liverpool office is concerned I note that the report from the Tax Agents Integrity Unit does not state that the officers entered suite 5 so there is no evidence that any work was being carried out from those offices at that time.
19. Notwithstanding that finding, the fact is that the Applicant opened offices at Liverpool and Parramatta (later Harris Park) knowing that the Respondent had declined to sanction the opening of an office at Liverpool (and Dandenong) citing lack of ability to properly supervise those offices, together with the failure to notify the Respondent of the existence of the Liverpool and Parramatta (later Harris Park) offices leads to the inference, not rebutted by the Applicant, that he set out to deliberately keep the existence of these offices from the Board.
20. I also note that the Applicant in his letter of 25 November 2004 made the positive statement that “the signs have been taken out” where as in fact this had not occurred. I accept that the Applicant at the time had made arrangements for the signage to be removed but his letter to the Board does not say that but rather makes the positive statement that the signage had been removed.
number of clients
21. In his letter of 25 November 2004 the Applicant stated that he had deleted 5000 taxpayers from his client base of approximately 15,000. The Respondent noted in its decision of 25 January 2005 the Applicant still had a client list of 14,156, and that complaints had been received from clients which indicated a lack of proper supervision and control of his practice.
22. In support of its case the Respondent called Mr Cronin who currently is a principal of a leading firm of accountants. His evidence was that a tax agent whose practice consisted mainly of PAYE or small company returns would at the maximum be capable of lodging 5000 returns per annum in order to have those returns properly supervised.
23. The Applicant when interviewed on 10 June 2004 explained that returns were compiled by his staff members, those returns were then sorted by “checkers” and if there were any problems or non-compliant returns they were checked either by the Applicant or an employee, a Mr Lloyd Agha. Spot checks were also conducted.
24. Following the investigations by the Tax Agents Integrity Unit Mr Agha was registered as a Nominee of the Applicant.
25. There had been complaints against the Applicant prior to the current proceedings but I accept the Applicant’s submission that the volume of complaints was small given the number of returns lodged by the Applicant.
26. Notwithstanding the small number of complaints given the number of returns it is difficult to ascertain how the Applicant could exercise personal control over the number of returns lodged by him. I do not accept all of Mr Cronin’s evidence in that the Applicant’s practice is quite different to that of Mr Cronin’s firm, but the numbers appear to be excessive.
27. My view is that although not a ground for cancelling registration as a tax agent the Respondent was justified in refusing to re-register the Applicant in circumstances where he was unable to satisfy it that he had reduced the number of clients and taken all necessary steps to have nominees appointed.
the complaint of jamilla millerd
28. Ms Millerd’s complaint was made on behalf of her brother Mr Mohammed Nizam Khan, who is presently residing in Fiji. The matter referable to Mr Nizam Khan may be summarised by stating that he lodged a complaint with the Respondent on 31 October 2002 regarding the failure by the Applicant to pay to him monies being the proceeds of tax refunds less the Applicant’s fee for preparing the relevant returns. That complaint was withdrawn by Mr Nizam Khan but later resurrected on his behalf by Ms Millerd.
29. The Applicant for his part states that Mr Nizam Khan had given him a written authority to pay the refund monies to one Ali Akbar. He wrote to the Respondent on 28 July 2003 in regard to the complaint by Ms Millerd stating that:
“I have consistently maintained that the written authority was initially obtained from the complainant and was available in our files until the expiry of the five year record keeping period i.e. July 2002. It is true that Mrs J. Millerd approached us just a few months before the five year expiry period and she was made aware that we were holding the written authority…
The Applicant continued:
I did not forsee any future problems with Mr Khan’s records as Mrs Millerd did not dispute the written authority from her brother but the claim that all the refunds did not reach their final destination…”
30. The complainant, Mr Nizam Khan stated in evidence that that he had gone to the Applicant’s office on the recommendation of a friend of his Mr Ali Akbar, and that Mr Akbar had accompanied him. He instructed the Applicant to prepare and lodge tax returns for the years 1994 to 1997 inclusive for him as he was about to return to Fiji. This the Applicant agreed to do but asked to whom any refund monies should be paid.
31. Mr Nizam Khan said that at that time he told the Applicant that he would ask his sister Jubeda Lagari if she would allow him to give her contact details to the Applicant but in the meantime he could contact Akbar Ali. The next day he went to the Applicant’s office and informed a staff member of his sister’s address and details. The staff member said that the details would be passed on to the Applicant.
32. Mr Nizam Khan then returned to Fiji. As he had not received any monies in the nature of a tax refund he asked another sister Jamilla Millerd (the present complainant) to make enquiries on his behalf. Subsequently she informed him that the Applicant had declined to discuss the matter with her, stating he had no authority to discuss Mr Nizam Khan’s taxation affairs with her.
33. Ms Millerd’s evidence was that she had attended at the Applicant’s offices at Lakemba in late 1997 or early 1998. At the beginning the Applicant was pleasant to her and said that he had paid the refund monies to “Mr Ali”. She then asked why he had paid the money to Ali and he became angry. She asked to see the written authority (to pay Ali) but the Applicant angrily told her he did not have to show her anything.
34. In his letter to the Respondent of 28 July 2003 the Applicant stated that Ms Millerd had inspected the “authority document” and was satisfied as to its authenticity. Ms Millerd denies ever having been shown any such document by the Applicant.
35. Cross-examined the Applicant became confused as to whether the authority document had been shown to Ms Millerd or not. At one stage of his cross-examination asked why he did not produce the authority to Ms Millerd he quite angrily retorted “No, I was not obliged to that. I need the authority at that stage for my records and it stayed in the records.” Words very close to those Ms Millerd said he used to her in refusing to show her the authority. Later in cross-examination the Applicant stated that he had produced the authority.
36. Further cross-examined the Applicant also stated that Mr Nizam Khan had been given a copy of the authority. I have checked the transcript of Mr Nizam Khan’s cross-examination and it was never put to him that a copy of the authority to pay Ali Akbar had been given to him. I regard this statement by the Applicant as recent invention.
37. As a result of what he understood to be the Applicant’s refusal to deal with Ms Millerd, Mr Nizam Khan gave to her his Power of Attorney. The document was prepared and registered in Fiji and I understood the Applicant’s solicitor to make some attack upon its validity in New South Wales. Suffice it to say I regard the document as an acknowledgement by Mr Nizam Khan that he authorized his sister Ms Millerd to act on his behalf.
38. By letter dated July 15, 2003 Mr Nizam Khan requested the Respondent to cease its investigations regarding his complaint stating inter alia:
“As I am now satisfied that the monies were paid to Mr Ali Akbar on my instructions.”
39. Controversy surrounds the creation of that letter and two other documents namely a Statutory Declaration dated 24 July 2003 and an Authority dated the same date with both documents bearing the seal of a Notary Public.
40. Mr Nizam Khan gave evidence that the documents were signed by him following the visit to him in Fiji by the Applicant accompanied by three other men all of whom were dressed so as to make him believe they were devout Muslims. These men then used the fact that the Applicant and Mr Nizam Khan were fellow Muslims to induce him to sign the documents and withdraw his complaint.
41. In evidence Mr Nizam Khan said that he recognized one of the men accompanying the Applicant a Mr Rafiq who was employed at the Court in Suva. Mr Rafiq knew Mr Nizam Khan and said “just because of you Mr Shaheed is in a problem and this is the reason he is here to see you.”
42. The other man then said to him that because of him a Muslim brother was getting into trouble and may loose his licence and that Allah would not forgive him for putting a fellow Muslim into a problem. Because of this and other pressures i.e. his daughter’s impending wedding and the fact that he was out of work, he succumbed to the pressure brought to bear on him and signed the documents absolving the Applicant.
43. The Applicant does not deny the fact of the visit. He states that he was accompanied by three other men one of whom was a Mr Singh, the Notary Public whose seal is on the Statutory Declaration and Authority. The documents and the letter withdrawing the complaint were drawn up in the office of solicitors in Suva. He further stated that rather than being dressed in clothing favoured by devout Muslims the persons accompanying him wore in traditional Indian dress.
44. The Applicant denies that any pressure, religious or otherwise was put upon Mr Nizam Khan to withdraw his complaint. He also stated that he had telephoned Mr Nizam Khan from Australia prior to his visit and discussed the matter with him. This was denied by Mr Nizam Khan.
45. Exhibit A10 is a series of Optus telephone accounts which show that on 22 March 2002 and 28 March 2002 the Applicant made telephone calls to a specific telephone number in Fiji. The first of these telephone calls lasted for some 47 minutes. It was stated by the Applicant and confirmed by Ms Millerd that the telephone number shown was the telephone number for the house in which Mr Nizam Khan resided together with his father. It was submitted that those records corroborated the Applicant’s evidence that he had telephoned Mr Nizam Khan and discussed the matter.
46. Also supporting the Applicant’s version of events are two statements by Mr Ali Akbar. The first statement is dated 10 April 2003 and the second became exhibit A3. Those statements support the Applicant’s version of events.
47. There are inconsistencies in the evidence of both Mr Nizam Khan and the Applicant regarding the visit by the Applicant to Mr Nizam Khan in Fiji. What I find strange is that it was necessary for the Applicant to arrive at Mr Nizam Khan’s home, unannounced and accompanied by three other persons. Mr Nizam Khan said that they arrived about 7.30pm and the Applicant himself stated that they left Mr Nizam Khan’s home at about 10pm. If matters had been explained to Mr Nizam Khan’s satisfaction in the telephone calls from Australia it would not have been necessary to have remained for long at his home if indeed necessary to go there at all. Mr Nizam Khan could have been contacted by mail, asked to go to a solicitor’s office in Suva to sign the necessary documents or even the Notary could have attended, by himself or with the Applicant at Mr Nizam Khan’s home. That four men attended apparently in the evening and remained for some time persuades me that some pressure was brought to bear upon Mr Nizam Khan.
48. The Applicant conceded that the letter of July 15, 2003 was drawn up in his solicitors’ office in Suva on his instructions prior to visiting Mr Nizam Khan. I find the last paragraph of that letter puzzling as to why it was thought necessary. It reads:
“I further confirm that this letter has been written on my instructions alone and that I was not coerced or threatened to write this letter but was written on my own free will and choice.”
49. I am strengthened in my conclusion that undue pressure was pressed upon Mr Nisam Khan by the failure of the Applicant to adduce any evidence from any of the three men who accompanied him. If, as alleged, the Notary, Mr Singh was there he could have adduced very cogent evidence given his standing as a Notary. The Applicant had access to the statements of Mr Nizam Khan well before this matter came on for hearing and thus would be aware of the import of Mr Nizam Khan’s evidence. Likewise the final paragraph of the July 15th, 2003 letter quoted above seems to have been worded so as to pre-empt any later complaint.
50. It was clear from the Applicant’s cross-examination that he knows or at least could ascertain where Mr Ali Akbar lives. On the face of his statements Mr Ali Akbar may have defrauded Mr Nizam Khan of monies paid to him on Mr Nizam Khan’s behalf but I would have though that Mr Ali Akbar was an essential witness in the Applicant’s case.
51. I am satisfied that the Applicant did refuse to show the written authority to Ms Millerd and then attended at Mr Nizam Khan’s residence and coerced him by the use of undue pressure regarding their common religion to withdraw his complaint.
52. Various attacks were made upon the credit of Mr Nizam Khan and Ms Millerd and there were times when their evidence was less than satisfactory. Nevertheless I accept them as truthful witnesses in the main and in particular where their evidence conflicts with that of the Applicant, I prefer their evidence. The Applicant’s evidence in cross-examination was not consistent and at times he began to argue with the cross-examiner.
53. The Applicant in his letter to the Respondent of 28 July 2003 stated that he had shown the authority to pay Ali Akbar to Ms Millerd. As stated above I reject this. He also implied improper motives for Ms Millerd bringing her complaint when she did and I reject this suggestion.
54. Consistent with the concept of being a fit and proper person is the attribute to be regarded by the Respondent as a person of such standing that the Respondent and the public can have confidence in him as to his honesty, integrity and competence. In the Applicant’s case he has failed that test.
55. I have found as a fact that contrary to his letter to the Respondent he did not show Ms Millerd the authority to pay Ali Akbar. Further I have found that he used undue pressure to improperly induce Mr Nizam Khan to withdraw the complaint against him. These two incidents would be sufficient to state that the Respondent could have no confidence in him as a person of integrity. To add to this is the fact that he opened branch offices at Liverpool and Parramatta (later Harris Park) with knowledge that the Respondent had informed him such branch offices would not be approved. He then took no steps to notify the Respondent of the existence of those offices despite the requirement of Regulation 161 to so do. I can only regard this as a direct deception on the Applicant’s part.
56. In addition, at the time of the decision under review, the Applicant had not, despite stating he would do so, lodged an application for the appointment of an additional nominee or reduced his client list. I have also commented previously on his stating that matters had been done, where in fact they were to be done.
57. Given all the circumstances referred to above I find that the Applicant is not, in the terms described by Hill J in Davies v Australian Securities Commissions (supra) a fit and proper person and the decision under review is affirmed.
I certify that this and the preceding pages are true copies of the decision and reasons for the decision herein of:
Senior Member M. D. Allen
Signed: ………………………………………………………
Associate
Dates of Hearing 27 - 30 June 2006, 15 September 2006
Date of Decision 17 October 2006
Solicitor for Applicant Mr. Alan Powrie, Powrie & Co, Barristers & Solicitors
Counsel for Respondent Mr. Brian Skinner
Solicitor for Respondent Australian Government Solicitor
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