FEDERAL COURT OF AUSTRALIA
Tax Practitioners Board v Kim (No 2) [2015] FCA 263
Citation: Tax Practitioners Board v Kim (No 2) [2015] FCA 263 Parties: TAX PRACTITIONERS BOARD v HANSIG KIM File number: NSD 2602 of 2013 Judge: PERRAM J Date of judgment: 27 March 2015 Corrigendum: 31 March 2015 Catchwords: CIVIL PENALTIES – quantum – matters relevant to determination of appropriate penalty Legislation: Crimes (Sentencing Procedure) Act 1999 (NSW) s 21A(2)
Tax Agent Services Act 2009 (Cth) ss 50-20, 50-35Cases cited: Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR 42-091 applied
Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 applied
Tax Practitioners Board v Li [2015] FCA 233 considered
Tax Practitioners Board v Su [2014] FCA 731 considered
Trade Practices Commission v CSR Ltd (1991) ATPR
41-076 consideredDate of hearing: 13 October 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 54 Counsel for the Applicant: Mr S Vorreiter Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr H Alexander Solicitor for the Respondent: Emmanuel Lawyers FEDERAL COURT OF AUSTRALIA
Tax Practitioners Board v Kim (No 2) [2015] FCA 263
CORRIGENDUM
Order 1 of the Orders dated 27 March 2015 should read:
‘In respect of the 158 contraventions of the Tax Agent Services Act 2009 (Cth) the respondent pay one pecuniary penalty in the amount of $4,000.’
I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 31 March 2015
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2602 of 2013
BETWEEN: TAX PRACTITIONERS BOARD
ApplicantAND: HANSIG KIM
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
27 MARCH 2015
WHERE MADE:
SYDNEY
THE COURT DECLARES THAT:
1.Between August 2010 and December 2010, in relation to the 20 taxpayers named in Schedule A in the statement of claim, the 30 taxpayers named in Schedule B in the statement of claim, and the 29 taxpayers named in Schedule C in the statement of claim, the respondent, by lodging income tax returns in respect of each of the taxpayers, while a registered tax agent, which lodgements were:
(a)accompanied by explicit acknowledgments to the effect that; or
(b)made subsequent to a prompt that the return should not be lodged unless;
(i)the return had been prepared in accordance with the information supplied by the taxpayer;
(ii)he had received a declaration from the taxpayer stating that the information provided to him was true and correct; and
(iii)he was authorised by the taxpayer to lodge the return on behalf of the taxpayer;
when in fact, in respect of each return, none of those things in (b) above was the case, in each case recklessly made a statement to the Commissioner of Taxation (‘Commissioner’) which was false, incorrect and/or misleading in a material particular, in contravention of s 50-20 of the Tax Agent Services…
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- Case
- [2015] FCA 263
- Decision Date
CaseChat Overview and Summary
The court considered that while Mr Kim had limited financial capacity, this did not preclude the imposition of a penalty, as general deterrence was a primary objective. The court also weighed Mr Kim's partial cooperation, noting his initial denial and subsequent admission of wrongdoing. However, it found troubling aspects, such as his failure to identify the scammers and his lack of effort to notify affected taxpayers about the compromise of their tax file numbers. Despite these issues, the court decided to reduce the penalty by 20% due to Mr Kim's cooperation and contrition, and his removal from the register of tax agents.
After considering all relevant factors, the court concluded that the primary goal of general deterrence was already met by Mr Kim's removal from the register. It deemed it unnecessary to impose a penalty that would ruin him financially. Consequently, the court ordered a penalty of $3,000 for the 158 contraventions of the Tax Agent Services Act 2009 (Cth), along with costs. The court emphasized that while general deterrence was important, it should be balanced against the personal consequences for Mr Kim.
Orders
Orders of the court
1. In respect of the 158 contraventions of the Tax Agent Services Act 2009 (Cth) the respondent pay one pecuniary penalty in the amount of $3,000.
2. The respondent pay the pecuniary penalty to the Commissioner on behalf of the Commonwealth of Australia.
3. The respondent pay the applicant’s cost of the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
For reasons I have already given, it is unlikely that Mr Kim has much capacity to pay any civil penalty I order. Authority establishes however that this does not really matter: Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR 42-091 (FC); Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 at 453-454 [122]-[124] per Middleton J. This is particularly so where, as here, the principal purpose of the penalty includes general deterrence.7. Co-operation Although Mr Kim eventually agreed that he had committed the contravention, this was not his initial position. Indeed, his initial position was to try and strike out the Board’s proceedings for want of standing. However, well in advance of any trial he admitted his wrongdoing and this has saved the public resources which would otherwise have been necessary to run the case. On the other hand, there are some aspects which are troubling. When Mr Kim was first interviewed by the ATO he lied to the interviewing officer by claiming that he had met the 79 taxpayers. He did not admit this fact until the pleadings in this case were prepared and the terms of the agreed statement of facts settled. This is not full co-operation but it is some. There is also the problem that Mr Kim has not identified the scammers or proved that he does not know who they are. This appears to me to be a significant matter. The Board submitted that Mr Kim had not sought to rectify the harm he had caused. This was because he had not tried to contact the persons on whose behalf he had purported to act to tell them that their tax file numbers had been compromised. I accept this submission. In the circumstances, I propose to reduce Mr Kim’s penalty by 20% on account of his co-operation.III. Orders I proceed on the basis that what was involved was a single course of conduct involving two distinct contraventions. The maximum penalty the Court could impose is $4,345,000. I remind myself that the purpose of a civil penalty is general and specific deterrence. I see no great need to impose a civil penalty on Mr Kim to deter him in the future. I am more than satisfied that he will not do this again and that his contrition is real. In part this is because he is no longer a registered tax agent, although I acknowledge he may seek re-registration in 2016; principally, however it is because I believe he has learned his lesson. That leaves the issue of general deterrence. It is important that the level of penalty fixed operates to encourage registered tax agents not to repeat the kind of conduct which Mr Kim has engaged in. However, that necessary deterrent must also be informed by the very important fact that Mr Kim has been removed from the register and lost his livelihood. In my view, this is the central issue and Mr Kim is entitled to a significant discount for it. So far as general deterrence is concerned, the profession already know Mr Kim has been struck off for what he has done. I do not think general deterrence requires that he should now be ruined as well.