Tax Agents' Board v Bray

Case [2004] FCA 1620

FEDERAL COURT OF AUSTRALIA

Tax Agents’ Board v Bray [2004] FCA 1620

ADMINISTRATIVE LAW – judicial review – whether the Administrative Appeals Tribunal (‘AAT’) failed to correctly apply test stated in s 251JC of the Income Tax Assessment Act 1936 (Cth) – fair reading of the AAT’s reasons indicate that the Tribunal was aware of and applied the correct test – complaint amounted to assertion that the AAT came to incorrect conclusion – no error of law established

ADMINISTRATIVE LAW – irrelevant considerations – the AAT’s reasons made reference to matters irrelevant to question before the Tribunal – reference not part of the AAT’s reasoning process – no reviewable error established – application dismissed

Administrative Appeals Tribunal Act 1975 (Cth) s 44
Income Tax Assessment Act 1936 (Cth) s 251JA, 251JA(1), 251BC, 251JB, 251JC, 251JC(1), 251JC(2), 251JG(2), 251L, 251N

Avon Downes Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 cited
Commissioner of Taxation v Zoffanies  Pty Ltd (2003) 132 FCR 52 applied
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 applied
Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 considered
R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 considered
Sinclair v Mining Wardenat Maryborough (1975) 132 CLR 473 applied

TAX AGENTS’ BOARD v STEPHEN BRAY
NSD 995 OF 2004

HELY J
10 DECEMBER 2004
SYDNEY (HEARD IN CANBERRA)

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 995 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:

TAX AGENTS’ BOARD
APPELLANT

AND:

STEPHEN BRAY
RESPONDENT

JUDGE:

HELY J

DATE OF ORDER:

10 DECEMBER 2004

WHERE MADE:

SYDNEY (HEARD IN CANBERRA)

THE COURT ORDERS THAT:

1.        The appeal be dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 995 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:

TAX AGENTS’ BOARD
APPELLANT

AND:

STEPHEN BRAY
RESPONDENT

JUDGE:

HELY J

DATE:

10 DECEMBER 2004

PLACE:

SYDNEY (HEARD IN CANBERRA)

REASONS FOR JUDGMENT

  1. This is an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (‘the AAT Act’) from a decision of the Administrative Appeals Tribunal (‘the AAT’) given on 31 May 2004 in which the AAT decided that Mr Bray is a person of the fame, integrity and character required of one who is to be a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. The AAT remitted the matter to the present appellant (‘the TAB’) with directions that Mr Bray be re-registered for a period of three years from the date of the decision subject to any earlier termination, cancellation or suspension that the TAB might impose on Mr Bray during that period.

  2. The questions of law raised on the appeal are whether the AAT:

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Details
AGLC
Tax Agents' Board v Bray [2004] FCA 1620
Case
[2004] FCA 1620
Decision Date

CaseChat Overview and Summary

In the case of Tax Agents' Board v Bray, the Tax Agents' Board (TAB) sought to prevent the re-registration of Mr Bray as a tax agent, arguing that he was not a fit and proper person to transact business on behalf of taxpayers in income tax matters. The Administrative Appeals Tribunal (AAT) was asked to review the TAB's decision to refuse Mr Bray's re-registration. The AAT had to determine whether Mr Bray met the statutory criteria for being deemed a fit and proper person, specifically under section 251BC(1)(d) of the Act, which considers factors such as good fame, integrity, and character.

The central legal issue was whether Mr Bray's conduct demonstrated that he was unfit to be re-registered as a tax agent. This involved examining four specific matters raised by the TAB: Mr Bray's delays in responding to the TAB's correspondence, the existence of a significant tax debt owed to the Australian Tax Office, a complaint from a former client, and Mr Bray's use of another person to prepare tax returns, which allegedly contravened section 251N of the Act. The AAT's task was to weigh these factors against the statutory criteria and decide whether they collectively indicated that Mr Bray was not a fit and proper person.

The AAT found that Mr Bray's delays in responding to the TAB's correspondence, although partly attributable to personal health and marital issues, still reflected a lack of respect and communication with the TAB. Despite these issues, the AAT considered the debt to the Australian Tax Office, which had been settled by the time of the hearing, as not adversely affecting Mr Bray's fitness. Regarding the complaint from the former client, the AAT found that Mr Bray's failure to complete the tax return for over two years and his subsequent lack of communication had caused significant financial and legal repercussions for the client, indicating a lack of integrity. Finally, the use of another person to prepare tax returns was seen as a breach of professional standards, further undermining Mr Bray's suitability. The AAT concluded that these factors collectively demonstrated that Mr Bray was not a fit and proper person to be re-registered as a tax agent.

The Federal Court upheld the AAT's decision, dismissing Mr Bray's appeal and ordering him to pay costs. This decision underscored the importance of integrity, communication, and adherence to professional standards for tax agents.

Orders

Orders of the court

1. The appeal be dismissed with costs.

Background

Background to the litigation

Section 251BC of the Act expands on the notion of a fit and proper person, by specifying particular circumstances in which 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. One such circumstance is if (s 251BC(1)(d)):‘The person is not of good fame, integrity and character.’The factual background Mr Bray is a qualified accountant. According to the AAT, he has been a tax agent for about ten years. On 23 August 2002 he applied to be re-registered as a tax agent. On 20 March 2003 the TAB refused his registration. Mr Bray sought review by the AAT. In the proceedings before the AAT, the TAB raised four matters which it said affected the fitness and propriety of Mr Bray to be registered as a tax agent, namely:(i) his delay in responding to correspondence from the TAB;(ii)the existence of a significant tax debt due by Mr Bray to the Australian Tax Office;(iii)a complaint lodged against Mr Bray by a former client (‘Mr R’); and(iv)the utilisation by Mr Bray of another person in preparing tax returns in the conduct of Mr Bray’s business as a tax agent, which was said to be contrary to s 251N of the Act.The AAT’s decision The AAT began by describing the issue before it as whether Mr Bray is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. This required findings in relation to the four matters raised by the TAB and summarised above. On the hearing of this appeal, counsel for the TAB accepted that in this section of its reasons, the AAT correctly stated the statutory test. The AAT then proceeded to address each of the four matters identified by the TAB as affecting Mr Bray’s fitness and propriety.Delay in responding to correspondence In relation to the delays in responding to the TAB’s correspondence, the AAT noted the correspondence and then the explanations given for not responding. The AAT then stated that it was its view that it was ‘very much the health and marital problems’ that were affecting Mr Bray during the period of non-response and that ‘it seemed to me that he had some difficulty at the time coping with the full range of administrative functions of a tax agent, especially as regards the tax debt’. It then referred to Mr Bray’s faults in relation to his correspondence as ‘relatively mild by comparison’ with a decision that was quoted to it and then stated:‘However, I do not see [Mr Bray’s] health and relationship problems as sufficient to neutralise the disrespect shown by him to the TAB. As Mr Allatt, counsel for the TAB said, [Mr Bray] was still operating a business in the relevant period. He could have telephoned. He could have explained his personal problems to the TAB. He never did that. This is a matter I will factor into my final decision on [Mr Bray’s] fitness for re-registration.’ The tax debt The AAT referred to the circumstances in which the debt arose, and to the fact that the debt had been paid by the time of the AAT hearing. The AAT concluded that it was not a matter which would adversely affect the appellant in its final decision.Complaint by client

Evidence

Evidence Before The Court

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Decision

Reasons for decision

HELY J
In the proceedings before the AAT, the TAB raised four matters which it said affected the fitness and propriety of Mr Bray to be registered as a tax agent, namely:(i) his delay in responding to correspondence from the TAB;(ii)the existence of a significant tax debt due by Mr Bray to the Australian Tax Office;(iii)a complaint lodged against Mr Bray by a former client (‘Mr R’); and(iv)the utilisation by Mr Bray of another person in preparing tax returns in the conduct of Mr Bray’s business as a tax agent, which was said to be contrary to s 251N of the Act.The AAT’s decision The AAT began by describing the issue before it as whether Mr Bray is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. This required findings in relation to the four matters raised by the TAB and summarised above. On the hearing of this appeal, counsel for the TAB accepted that in this section of its reasons, the AAT correctly stated the statutory test. The AAT then proceeded to address each of the four matters identified by the TAB as affecting Mr Bray’s fitness and propriety.Delay in responding to correspondence In relation to the delays in responding to the TAB’s correspondence, the AAT noted the correspondence and then the explanations given for not responding. The AAT then stated that it was its view that it was ‘very much the health and marital problems’ that were affecting Mr Bray during the period of non-response and that ‘it seemed to me that he had some difficulty at the time coping with the full range of administrative functions of a tax agent, especially as regards the tax debt’. It then referred to Mr Bray’s faults in relation to his correspondence as ‘relatively mild by comparison’ with a decision that was quoted to it and then stated:‘However, I do not see [Mr Bray’s] health and relationship problems as sufficient to neutralise the disrespect shown by him to the TAB. As Mr Allatt, counsel for the TAB said, [Mr Bray] was still operating a business in the relevant period. He could have telephoned. He could have explained his personal problems to the TAB. He never did that. This is a matter I will factor into my final decision on [Mr Bray’s] fitness for re-registration.’ The tax debt The AAT referred to the circumstances in which the debt arose, and to the fact that the debt had been paid by the time of the AAT hearing. The AAT concluded that it was not a matter which would adversely affect the appellant in its final decision.Complaint by client The AAT found that in October 1999 Mr R provided his business paperwork to Mr Bray to be used in preparation of his 1998-1999 business tax return. For over two years Mr Bray failed to undertake work on the tax return, and he eventually notified Mr R that he did not want Mr R’s business. As a consequence, Mr R was unaware of the totality of his tax and child support debts until May 2002. Mr Bray also failed to forward to Mr R an amended 1996-1997 assessment which required a repayment of $9,925.15 which then began accruing interest. Mr R also incurred a child support debt because he did not notify the Child Support Agency that his taxable income had been reassessed and was higher than appeared on the agency’s records. This led to penalties and arrears of $7,545.20. Finally, there was also evidence before the AAT that at some point Mr Bray had offered $1,200 as some form of compensation but Mr R did not consider that sufficient.

Ratio Decidendi

Legal Principle Established

Established by: HELY J

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