FEDERAL COURT OF AUSTRALIA
Tax Practitioners Board v Hinckfuss [2013] FCA 1168
Citation: Tax Practitioners Board v Hinckfuss [2013] FCA 1168 Parties: TAX PRACTITIONERS BOARD v BENJAMIN CHARLES HINCKFUSS File number: QUD 515 of 2012 Judge: DOWSETT J Date of judgment: 12 November 2013 Catchwords: TAXATION – contraventions of ss 50-5(1) and 50-10(1) of the Tax Agent Services Act 2009 (Cth) – provision of tax agent services and advertising tax agent services where respondent not registered tax agent – where respondent admitted contraventions and consented to making of declarations and grant of injunctive relief – where parties disagreed as to quantum of pecuniary penalty – consideration of other decisions of the Federal Court and relevant sentencing principles to determine appropriate penalty Legislation: Tax Agents Services Act 2009 (Cth) ss 50-5, 50-10 Cases cited: Tax Practitioners Board v Hogan [2012] FCA 642 considered
Tax Practitioners Board v Campbell [2012] FCA 1153 considered
Tax Practitioners Board v Munro [2012] FCA 1338 considered
Tax Practitioners Board v Shanahan [2013] FCA 764 consideredDate of hearing: 6 December 2012 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: Ms M Brennan Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr L Crowley Solicitor for the Respondent: Armstrong Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 515 of 2012
BETWEEN: TAX PRACTITIONERS BOARD
ApplicantAND: BENJAMIN CHARLES HINCKFUSS
Respondent
JUDGE:
DOWSETT J
DATE:
12 NOVEMBER 2013
PLACE:
BRISBANE
REASONS FOR JUDGMENT
INTRODUCTION
Section 50-5(1) of the Tax Agents Services Act 2009 (Cth) (the “Act”) provides:
(1) You contravene this subsection if:
(a)you provide a service that you know, or ought reasonably to know, is a tax agent service; and
(b)the tax agent service is not a BAS service; and
(c)you charge or receive a fee or other reward for providing the tax agent service; and
(d)you are not a registered tax agent; and
(e)if you provide the tax agent service as a legal service – either:
(i)you are prohibited, under a State law or Territory law that regulates legal practice and the provision of legal services, from providing that tax agent service; or
(ii)subject to subsection (3), the service consists of preparing, or lodging, a return or a statement in the nature of a return.
Civil penalty:
(a)for an individual – 250 penalty units; and
(b)for a body corporate – 1,250 penalty units.
Note: Subdivision 50-C of this Act and Subdivision 298-B of Schedule 1 to the Taxation Administration Act 1953 determine the procedure for obtaining a civil penalty order against you.
Section 50-10(1) provides:
(1)You contravene this subsection if:
(a) you advertise that you will provide a tax agent service; and
(b) the tax agent service is not a BAS service; and
(c) you are not a * registered tax agent; and
(d) if the tax agent service would be provided as a legal service--either:(i)you are prohibited, under a * State law or * Territory law that regulates legal…
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- Case
- [2013] FCA 1168
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the Tax Practitioners Board's proposed declarations and injunctive relief were appropriate. The Board sought declarations recognising Mr Hinckfuss's contraventions and injunctive relief requiring him to advise any person requesting tax services that he was not a registered tax agent. Mr Hinckfuss did not oppose the injunctive relief, provided its terms were clear and limited. The court considered the proposed relief to be limited and clear, with reasonable prospects of detecting any breach during the tax return process, and granted the relief sought.
The court also needed to decide the appropriate pecuniary penalty for the contraventions. The prescribed penalties were 250 penalty units for each contravention of s 50-5 and 50 penalty units for each contravention of s 50-10. The Board argued for a penalty towards the upper end of a range between $55,000 and $80,000, while Mr Hinckfuss proposed a range between $40,000 and $50,000. The court would need to consider the relevant factors in determining the appropriate penalty.
The court granted the declarations and injunctive relief sought by the Board, with some modifications to the declarations to better identify specific actions and avoid unnecessary disclosure of client names. The court determined that the appropriate penalty was within the range proposed by the Board, towards the upper end, and ordered Mr Hinckfuss to pay a penalty of $70,000.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The relevant taxpayers and details of the alleged contraventions of s 50-5 appear in Schedules A and B to the statement of agreed facts. The basis upon which it is said that there are 25 contraventions is not entirely clear. There has been no real attempt to differentiate the individual contraventions. In principle, individual contraventions should attract individual penalties. However the parties suggest an overall penalty. DECLARATIONS AND INJUNCTIVE RELIEF The Board seeks declarations as to Mr Hinckfuss’s contraventions of the Act. It is appropriate that the Court recognize his misconduct in this way. The Board also seeks injunctive relief, requiring that Mr Hinckfuss advise any person who requests tax services that he is not a registered tax agent. Should such a person persist in requesting such services, Mr Hinckfuss is to provide him or her with a form on which the receipt of that advice is to be acknowledged by that person. He or she is also to state that he or she nonetheless requests that the relevant services be supplied. Mr Hinckfuss does not oppose the making of such injunctions. I have, on other occasions, been reluctant to grant injunctive relief at the suit of regulatory authorities, generally because the proposed terms have been too vague to be capable of enforcement and, in some case far too wide. Often they have failed to reflect the terms of the legislation creating the relevant contravention. In other cases, it has seemed unlikely that any breach would be detected, so that there was a real risk that the Court’s order could be disregarded with impunity. Frequently, there has appeared to be little point in granting such relief, particularly having regard to the risk that community respect for the Court’s orders might be undermined. In the present case, the relief is limited and clear. There are reasonable prospects that any breach will be discovered during the tax return process. Such a regime may deter Mr Hinckfuss from further contraventions. I shall grant the injunctive relief sought. I have two reservations about the proposed declaratory relief. First, I wonder whether it is necessary that the names of the clients be included in the order. They may prefer that their privacy be protected. Secondly, the declaration focusses on “occasions”, as do the Board’s submissions. I am unclear whether this is a reference to individual conversations, to dates or to tax returns for particular tax years. It would be better that the declaration identify particular actions occurring on specific dates.PECUNIARY PENALTIES The prescribed maximum penalties are 250 penalty units for each contravention of s 50-5, and 50 penalty units for each contravention of s 50-10. At the time of the contraventions, a penalty unit was $110. The respondent received $12,475.31 in fees in connection with the contraventions. The Board submits that the appropriate range for any penalty is between $55,000 and $80,000 and seeks a penalty “towards the upper end” of that range. Mr Hinckfuss submits that the appropriate range is between $40,000 and $50,000.