Surana and Tax Agents' Board of New South Wales

[2009] AATA 981

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 981

ADMINISTRATIVE APPEALS TRIBUNAL      )   

)    No: 2009/2404

GENERAL ADMINISTRATIVE DIVISION        )   

ReShripat SURANA

Applicant

AndTax Agents’ Board of New South Wales

Respondent

DECISION

TribunalMr RP Handley, Deputy President

Date22 December 2009

PlaceSydney

DecisionFor the reasons given orally at the conclusion of the hearing of this matter on 18 November 2009, the decision under review is affirmed.

....................[sgd].......................

Mr RP Handley
  Deputy President

CATCHWORDS

TAXATION AND REVENUE – Application for registration as individual tax agent – fit and proper person – not a registered tax agent – applicant did not hold prescribed qualifications - whether engaged in relevant equivalent employment – decision under review affirmed

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RELEVANT ACTS

Income Tax Assessment Act 1936: ss 251BC, 251JA, 251J

Acts Interpretation Act 1901: s 15AA

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OTHER AUTHORITIES

Income Tax Regulations 1936: reg 156

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PREAMBLE

A. At the conclusion of the hearing in this matter, the reasons for the decision were stated orally. After service upon the Applicant and the Respondent of a copy of the decision that was made, the Respondent, pursuant to s 43(2A) of the Administrative Appeals Tribunal Act 1975, requested the Tribunal to furnish it with a statement in writing of the Tribunal’s reasons for its decision.

B.       The oral reasons for the decision have been transcribed by Auscript, the Commonwealth Reporting Service.  These reasons appear below, with minor corrections of the text where appropriate.

REASONS FOR DECISION

Mr RP Handley, Deputy President

1. Shripat Surana has applied to the Tribunal for the review of a decision of the Tax Agents’ Board of New South Wales refusing his application for registration as an individual tax agent, on the ground that it was not satisfied that he was a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters.  Mr Surana has not previously been registered as a tax agent.

2. On 12 March 2009, the Board received Mr Surana’s application for registration as an individual tax agent.  At a meeting on 16 April 2009, the Board refused his application and the Secretary of the Board subsequently wrote to Mr Surana, notifying him of the decision and of the Board’s reasons.  On 25 May 2009, Mr Surana applied to the Tribunal for a review of this decision. 

3. Section 251J of the Income Tax Assessment Act 1936 states that a person desiring to be registered as a tax agent may apply to the Board for registration. Relevantly, s 251JA(1)(a)(i) provides that, in the case of a natural person, the Board shall register the applicant as a tax agent if “the applicant is a fit and proper person to prepare income tax returns … on behalf of taxpayers in income tax matters”. Section 251BC(1) provides that an applicant is not such a person if – relevantly in this case – the applicant was not registered as a tax agent and does not hold any of the prescribed qualifications.

4. Regulation 156 of the Income Tax Regulations 1936 describes a number of cumulative qualifications, including, in reg 156(2)(c), that the applicant has:

   …

   (i)been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years; or

   (ii)otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to the employment mentioned in subparagraph (i); or

   (iii)been engaged in such other employment, and for such time, as the Board regards as equivalent to being engaged in the relevant employment mentioned in subparagraph (i);

   …

1. I note here, that in terms of subparagraphs (ii) and (iii), the decision-maker may be satisfied by a period of full-time employment other than specifically 12 months in the preceding five years, provided that it is relevant employment that is regarded as equivalent.

2. Relevant employment is defined in reg 156(6) which says that 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; and

   (b)the preparation or examination of objections to assessments issued in respect of such returns; and

   (c)the provision of advice in relation to income tax returns, assessments or objections.

1. Again, I note that the definition does not require employment by a tax agent, but I take the respondent’s point that employment by a tax agent is likely to give an applicant employment which includes the substantial involvement in income matters that the definition requires. 

2. The issue in this case is whether Mr Surana has been engaged in relevant employment or its equivalent, in the course of which he has had substantial involvement in income tax matters.  The evidence before the Tribunal includes that in the T documents, together with that of Geoff Lloyd, a tax agent who has worked with Mr Surana, and who provided a letter dated 4 August 2009 and gave telephone evidence at the hearing.

3. The respondent also tendered some documents produced under summons by Legend Corporation Limited (“Legend”), a public limited company by whom Mr Surana was employed between 27 November 2007 and 31 March 2008.  I was a little surprised that Mr Surana did not, himself, provide a statement or attend the hearing.  In my view, his evidence might have proved to be of assistance to the Tribunal.  However, his solicitor, Mr Rajeev, told me that Mr Surana had declined to attend. 

4. The evidence in the T documents, in particular, Mr Surana’s curriculum vitae, indicates that he has a Bachelor of Commerce degree, and is admitted as a chartered accountant in India, where he had experience in advising clients on Indian taxation matters.  He appears to have worked in Australia since January 2001, during which time he has been employed by a number of companies in an internal auditing/management accounting type role.  Mr Surana’s experience in the period since January 2001 appears to have been in corporate accounting. 

5. Mr Surana is qualified as a certified public accountant in Australia.  He completed a course in taxation law at the University of Southern Queensland in 2008, and completed a Diploma in Financial Services (Financial Planning) in 2009. 

6. One of the companies by whom Mr Surana has been employed is, as mentioned, Legend Corporation Limited, an ASX listed public company whose turnover, according to Mr Lloyd, is approximately $193 million.  Mr Surana worked for Legend from 27 November 2007 to 31 March 2008 - as I have mentioned - a period of approximately four months. 

7. Mr Lloyd’s evidence is that Mr Surana was responsible for assisting in the preparation of Legend’s tax returns and undertook approximately 70 per cent of the work required in this task.  Mr Surana worked with Mr Lloyd, who is the company’s taxation agent, in preparing the returns.  Mr Lloyd said that, in his letter of 4 August 2009, by the reference to Mr Surana’s duties for Legend, including the preparation and lodgement of business activity statements, Mr Lloyd considered this to include Mr Surana’s involvement in addressing income tax matters, such as PAYG (Pay As You Go).

8. Mr Lloyd said a company tax return is much more complex than an individual tax return, and, given Legend’s turnover and the nature of its operations, the degree of complexity of its tax returns were at the upper end of the spectrum of complexity.  In cross-examination, he said that he was not aware of Mr Surana’s experience as to a broad range of income tax matters or of his dealings with objections to income tax assessments. 

9. Mr Rajeev noted that reg 156(6) does not require the person’s relevant employment to be with a registered tax agent, and the number of tax returns completed by a person is not necessarily indicative of the person’s experience.  It is the character of the work undertaken which is important.  In Mr Surana’s case, he has experience from working as a chartered accountant in India.  Moreover, since being in Australia, he has had various accountancy roles, including the preparation of corporate tax returns, which, in the case of Legend, Mr Lloyd gave evidence are of much greater complexity than individual tax returns. 

10. Mr Rajeev said that consideration should be given to the object and purpose of the Income Tax Assessment Act 1936 and, in particular, to the need to protect the public.  The Tribunal should take into account this object and purpose in interpreting the provisions of the legislation. 

11. Ms Gleeson, counsel for the Board, submitted that reliance on Mr Surana’s experience in preparing a corporate tax return for Legend over a four‑month period is not sufficient to establish the substantial involvement in income tax matters required to meet the definition of ‘relevant employment’ in reg 156(6).  She noted there is no evidence of Mr Surana’s involvement in the preparation or examination of objections to assessments, or in the provision of advice in relation to income tax returns, assessments or objections. 

12. Ms Gleeson said Mr Surana’s evidence indicates that, in addition to preparing a corporate tax return for Legend, he may also have prepared, perhaps, two tax returns for Stryker Corporation Limited, for whom Mr Surana was working at the time of his application to the Board for registration.  But the evidence presented, Ms Gleeson said, falls well short of that required to establish the relevant employment experience.

13. Moving to my own assessment of the facts of this case, as I indicated earlier, the issue for me to determine is whether Mr Surana has been engaged in relevant employment in the course of which he has had substantial involvement in income tax matters.  As a result of Mr Surana not attending the hearing or providing a statement in support of his application for review, the only evidence I have before me is that contained in the T documents, together with Mr Lloyd’s evidence.  That evidence establishes that Mr Surana has experience in corporate accounting over a number of years, in the course of which he claims to have been involved in the preparation of seven, albeit complex, tax returns.  The figure of seven is referred to in a letter that he sent to the Board dated 6 May 2009.

14. In my view, the limited evidence I have before me does not establish that Mr Surana has had a substantial involvement in a broad range of income tax returns, which is the matter referred to in reg 156(6)(a), nor does it establish that he has had a substantial involvement in the preparation or examination of objections issued in respect of such returns, which is the matter referred to in reg 156(6)(b), or in the provision of advice in relation to income tax returns, assessments or objections, which is the matter referred to in reg 156(6)(c). 

15. Thus, I am not satisfied that Mr Surana has been engaged in relevant employment, as defined in reg 156(6), nor am I satisfied that he has been engaged in equivalent employment that would meet the requirements of reg 156(2)(c).

16. In terms of Mr Rajeev’s reference to s 15AA of the Acts Interpretation Act 1901, and regard being had to the purpose or object of an Act in interpreting a provision of the Act, I do not find this to be of assistance in this case.  In my view, the plain literal meaning of the provisions of the Income Tax Assessment Act 1936 relevant here is clear, and I am not persuaded that I need to look beyond that literal meaning. 

17. In view of all of this, Mr Surana does not meet the requirements of s 251JA(1)(a)(i) and s 251BC(1) to establish that he is a fit and proper person to prepare income tax returns on behalf of taxpayers in income tax matters. The Tax Agents’ Board’s decision must, therefore, be affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President.

Signed:   ...............[sgd]...........................................................
               A Veness, Associate

Date of Hearing:  18 November 2009
Date of Oral Decision:  18 November 2009
Date of Written Reasons:                  22 December 2009
Applicant representative:                   Mr S Rajeev, Jayram & Associates
Respondent representative:              Ms R Deane, AGS
Respondent counsel:  Ms J Gleeson