Thanabalasingam and Tax Practitioners Board (Taxation)

[2021] AATA 5042

Thanabalasingam and Tax Practitioners Board (Taxation) [2021] AATA 5042 (9 December 2021)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):       2021/3563

Re: Suthakaran Thanabalasingam  

APPLICANT

Tax Practitioners BoardAnd  

RESPONDENT

Tribunal:Member Robert Reitano

Date:9 December 2021

Place:Sydney 

DECISION

The decision under review is affirmed.

.....................SGD.....................

Member Robert Reitano

Catchwords

APPLICATION FOR REGISTRATION AS A TAX AGENT – whether the applicant has the required relevant experience to be registered – whether the applicant has worked under the supervision and control of a registered tax agent for the required period – Tribunal not satisfied that this has occurred – decision under review affirmed.

Legislation

Tax Agents Services Act 2009 (Cth)
Tax Agent Services Regulations 2009 (Cth)

REASONS FOR DECISION

1. On 11 November 2020, Mr Suthakaran Thanabalasingam (who I will refer to as 'the applicant' in these reasons) lodged an application for registration as a tax agent with the Tax Practitioners Board (which I will refer to as ‘the Board’ in these reasons). 

2. On 15 April 2021, the Board decided to reject the application for registration because it was not satisfied that the applicant met the requirements prescribed 'by the Regulations (including, but not limited to, requirements relating to qualifications and experience) in respect of registration as a registered tax agent'. 

3. On 6 May 2021, the Board notified the applicant of its decision, and, on 31 May 2021, the applicant applied to the Tribunal for a review of the Board’s 's decision.

4. I have decided to affirm the Board’s decision and these are my reasons for that decision.

   THE REGULATORY REQUIREMENT

5. Section 20.5(1) of the Tax Agents Services Act 2009 (Cth) (which I'll refer to 'the Act' in these reasons) provides, so far as is relevant:

   (1)  An individual, aged 18 years or more, is eligible for registration as a * registered tax agent, BAS agent or tax (financial) adviser if the Board is satisfied that:

   (a)  the individual is a fit and proper person; and

   (b)  the individual meets the requirements prescribed by the regulations (including, but not limited to, requirements relating to qualifications and experience) in respect of registration as a registered tax agent, BAS agent or tax (financial) adviser; and

   (c)  in the case of registration which is not a renewal--the individual maintains, or will be able to maintain, professional indemnity insurance that meets the Board's requirements; and

   (d)  in the case of a renewal of registration--the individual:

   (i)  maintains, at the time of applying for registration, professional indemnity insurance that meets the Board's requirements; and

   (ii)  has completed continuing professional education that meets the Board's requirements.

6. There was no controversy about whether the Board, and in turn the Tribunal standing in the Board's shoes on review, was or should be satisfied about the eligibility requirements in section 20.5(1)(a) or (c) and that the matters referred to in  s.20.5(d) where irrelevant. To avoid any doubt, there was no controversy that the Board was satisfied that the applicant was a fit and proper person to be registered as a tax agent and that the applicant would be able to maintain professional indemnity insurance.

7. Regulation 8 of the Tax Agent Services Regulations 2009 (Cth) (which I will refer to as 'the Regulations' in these reasons) sets out the requirements that a tax agent, who is an individual, must meet in order to be registered. The requirement is that the tax agent meet at least one of the requirements set out in Division 1 of Part 2 of Schedule 2 to the Regulations.

8. Item 201 which is found in Division 1 of Part 2 of Schedule 2 of the Regulations is the only relevant requirement in this matter. Item 201(d) provides as part of the requirement in that Item that:

   The individual has been engaged in the equivalent of 12 months of full-time, relevant experience in the preceding 5 years.

9. The phrase 'relevant experience' is defined by Item 207 of Schedule 2 of the Regulations which provides:

   207For Division 1, relevant experience means work by an individual:

   (a)  as a tax agent registered under the Act; or

   (b) as a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936 ; or

   (c)  under the supervision and control of a tax agent registered under the Act; or

   (d) under the supervision and control of a tax agent registered under the previous regulatory regime contained in Part VIIA of the Income Tax Assessment Act 1936 ; or

   (e)  as an Australian legal practitioner; or

   (f)  of another kind approved by the Board;

   in the course of which the individual's work has included substantial involvement in 1 or more of the types of tax agent services described in section 90 - 5 of the Act, or substantial involvement in a particular area of taxation law to which 1 or more of those types of tax agent services relate. (The underlining is added)

10. In issue in this matter was whether the applicant satisfied (c) of Item 207 it not being suggested that he was able to satisfy any other part of the Item or that the applicant could satisfy any of them.

11. For completeness, I should record that section 90-5 of the Act defines 'tax agent service' to mean:

    (1)A tax agent service is any service:

    (a)  that relates to:

    (i)  ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a * taxation law; or

    (ii)  advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or

    (iii)  representing an entity in their dealings with the Commissioner; and

    (b)  that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:

    (i)  to satisfy liabilities or obligations that arise, or could arise, under a taxation law;

    (ii)  to claim entitlements that arise, or could arise, under a taxation law.

    (2)  A service specified in the regulations for the purposes of this subsection is not a tax agent service .

    Note: For specification by class, see subsection 13(3) of the Legislation Act 2003.

    THE ISSUE

12. The issue is whether the Tribunal is satisfied that the applicant has been engaged in the equivalent of 12 months of full-time work under the supervision and control of a tax agent registered under the Act in the preceding five years in the course of which his work has included substantial involvement in one or of the types of taxation services described in section 90-5 of the Act.

    THE FACTS

13. The applicant began working for Tax Success Pty Ltd (which I will refer to as ‘Tax Success’ in these  reasons) which ran a franchise known as 'Success Tax Professionals' on 10 July 2017.  The evidence was a little uncertain about the capacity in which the applicant worked but, for present purposes, I will treat the applicant as having commenced and continued work either as a franchisee or as a casual employee or, indeed, as both.  One thing is very clear and, that is, that he was working from that date in some capacity for Tax Success.

14. The applicant says he commenced work for Tax Success with a view, or objective, of obtaining his relevant experience so that he could become a registered tax agent.  On 20 June 2020, Mr Gleeson, who was a director of Tax Success, wrote to the applicant and said:

    You now have enough experience to apply for tax agent registration with the Tax Practitioners Board.

    The email, that was written on the day, said little more and certainly did not refer to the fact of any supervision and control or any particular facts that informed the kinds or aspects of experience that were being referred to.

15. The applicant says he has:

    …all the required work experience to become a registered tax agent;

    …other applicants, who were also supervised by Mr Gleeson, have received their tax agent registration;

    And that

    …34 individuals received their 'licence', I am yet to receive my licence despite having undergone the same supervision.

16. The applicant set out in some detail the number of taxations returns he completed over the period 2017 to 2020.  They numbered 80 in 2017 in respect of individuals; 237 individual returns and 12 company returns in 2018; 238 individual returns and 9 company returns in 2019; and 220 individual returns and 29 company returns in 2020.  I may have that last figure slightly wrong but it was a significant number.  All but three, so says the applicant, of his returns were accepted by the Australian Taxation Office.

17. The applicant submitted a statement of relevant experience to the Board which was not completed as it should have been by his supervisor.  The reasons why it appears not to have completed by his supervisor, I will come to in a moment, but they appear to relate to the fact that the applicant's employment and/or franchise relationship with Tax Success had by then been terminated.

18. The statement of relevant experience, that was submitted, is a little bit ambiguous so far as what it says in terms of the applicant's experience, but, in terms of the bigger issue, that I am required to deal with, I note that it is largely self-serving. I do not say that in a critical way of the applicant at all.  I simply note that that is the nature of the document.

19. The applicant told the Board on 7 March 2020, in response to the Board's enquiries, that his supervision was undertaken by him being required to conform to standard procedures for every job and every tax return he prepared being checked by his ‘supervising agent’.  The reference to 'supervising agent' appears to have been a reference to Mr Gleeson. 

20. I note, in passing, that there is no evidence as to what Mr Gleeson in fact did and the conclusion that Mr Gleeson checked the returns appears to be something that was assumed by the applicant. Certainly, the applicant provided no evidence that Mr Gleeson told him that he had checked the returns and, certainly, the applicant provided no other evidence about what was done to check his returns whether by Mr Gleeson or someone else.

21. Contextually, Mr Gleeson was working somewhere in Western Australia and the applicant was working at Pendle Hill, New South Wales.  So, communication between the two were been limited to email, ‘Zoom’ and telephone calls. 

22. The applicant had no knowledge about the number of hours that Mr Gleeson worked a week.  The applicant said that he emailed tax returns that he completed to Mr Gleeson who then lodged them.  Again, it is not possible to know what Mr Gleeson in fact did once he received the tax returns that were sent to him.  The applicant said that if there were problems, he would call Mr Gleeson.  He said he spoke to Mr Gleeson a couple of times a week and that they exchanged emails as well.

23. I should note that Mr Gleeson was a registered tax agent who remained registered until 17 December 2020.  Significantly for the issue in this review his registration was terminated on that date because it was found that he, and Tax Success, failed to have adequate arrangements in place to supervise employees or have a sufficient number of supervising tax agents to provide supervision. He was also found to be a person who failed to comply with taxation laws in the conduct of his personal affairs and he was not a fit and proper person to be tax agent because, amongst other things, he had made false statements in an application for renewal which specified particular agents as nominated supervising agents when they were no such thing. I will say a little bit more about Mr Gleeson in a moment

    CONSIDERATION

24. The requirement to 'supervise and control' is not defined by either the Act or the Regulations.  That is, in a sense, a little unsurprising given that the words 'supervision' and 'control' are fairly commonly used and well-known, ordinary English words.

25. 'Supervision' usually or generally means 'having some oversight or superintendence about what is being done'.  In a very basic sense, it means 'keeping an eye on what someone else is doing'.  'Control' usually means 'having some power of direction or influence or telling someone else what to do'. 

26. In the context of item 207 in Schedule 2 of the Regulations, the words are designed to ensure that a person who wants to be registered as a tax agent is subject to a period, and I should note a fairly lengthy period, of 12 months superintendence and direction so that they are, in a practical way, equipped to carry out the services offered by tax agents.  The words must be, because of the objects of the Act and the Regulations, be given real work to do, because, as the Board suggested, their purpose, like all of the provisions of the Act and Regulations, is to ensure that tax agent services are provided professionally and ethically.  That object can only be achieved if supervision and control are real, in a practical way, so that people who aspire to be tax agents are given an appropriate period of of practical oversight and direction  in order to obtain the requisite skills and demonstrate that they have them.

27. The question will always involve a question of evaluation of the circumstances. and the particular facts that emerge in those circumstances, as to whether a person's work has been subject to 'supervision and control'. It would not generally be satisfied by simply saying  ‘I worked in the practice of a registered tax agent completing tax returns’. More is needed to demonstrate supervision and control.

28. To that end, the kind of evidence that the Board, and in a review the Tribunal, will most often involve the opinion of a registered tax agent themselves.  In part, that is no doubt because registered tax agents are, by definition, identified as fit and proper people who know the work of tax agents, are able to comment upon it and trusted to reflect what they themselves have done by way of supervision and control. They are trusted to make and form an appropriate opinion about what people who work for them have been subject to so far as supervision and control are concerned.

29. That need not be the only evidence about whether a person has been subject to supervision and control.  There are very many other things that could be provided such as the provision of the actual tax returns, comments upon them in written documents, emails,  memorandums or a detailed statement that sets out, in form and substance, exactly what was done by way of supervision and control and what was done to exercise supervision and control.  There may be other ways to demonstrate those thigs to the satisfaction of the Board and the Tribunal such as by providing statements from others who are able to corroborate and detail  what is said to have been done by way of direction and control. 

30. It is important to emphasise that the requirement to be satisfied, as I am required to be, requires very much an evaluative judgment to be made about facts and circumstances and, in this case, the question of supervision and control.  The Tribunal must be affirmatively satisfied that the requirement has been met.

31. In circumstances where a person seeks registration as a tax agent, which is something that is fundamentally important and in the public interest because it has associated with it the attendant needs for professionalism, competence and ethics, that evaluation must have regard to the fact that an applicant themselves, generally, will have some difficulty where all they rely on is their own say-so.  It is even more difficult in  this case because Mr Gleeson, who is said to have been the supervisor and controller is located in a different State.  Nonetheless, it is possible in a given case that an applicant will be able to rely on their own word, but I do not think this is one of them.

32. The applicant did not provide any evidence or information about how, in fact, he was subject to supervision and control or any details of anything that was done or said by Mr Gleeson to supervise or control him. He did not point to any other tax agent who was in the loop about what Mr Gleeson was doing, by way of a claimed supervision and control, and he did not provide any indication that there was anyone else who would know of those things.  The only evidence he provided about that appears to be limited to the fact that Mr Gleeson was said to have checked his tax returns.  I do not know how he would have known that and he has provided no evidence other than his own oral evidence that Mr Gleeson did that which appears to be nothing more than an assumed position.

33. Next, the applicant does not provide any evidence or information from someone else to inform the conclusion that he has made about supervision and control by a registered tax agent.  He refers to the email, dated 10 June 2020, that said ‘You now have enough experience and expertise to apply for tax agent registration with the Tax Practitioners Board’ to provide some corroboration.  The difficulty is  that conclusion was made by a person who was, himself, eventually removed as a registered tax agent who had, for one reason or another, failed to have in place adequate systems of supervision.  The weight or value of his conclusion is diminished not just because it is conclusory in its terms but also because it was made by a person who, on all accounts, fell short so far as the very obligation in question to supervise and control here is concerned. 

34. Ordinarily, it might be appropriate for the Board to act upon expressions of opinion and conclusions drawn by registered tax agents.  But, in circumstances where the tax agent themselves has had their registration terminated because of their own inadequacies in respect of supervision and systems of supervision and a matter that was intimately connected to the opinion there is reason to be cautious about such an opinion and, in the circumstances here I cannot rely on it.

35. This is particularly so because there are other reasons to doubt Mr Gleeson's word on important matters including the findings against him, that the Board has made, about his own failures to comply with taxation laws in the conduct of his personal affairs and that he was not a fit and proper person to be tax agent because, amongst other things, he had made false statements in an application for renewal in June 2020 which specified particular agents as nominated supervising agents when they were no such thing.

36. The applicant says many other people were registered as a result of being supervised by Mr Gleeson.  I do not know how he knows that and I do not know whether it is correct or not.  I have no information on which I am able to conclude about what led to their registration.  Even if it is accepted that they were registered under the mistaken belief that Mr Gleeson has properly supervised and controlled them and they should not have been registered, that does not assist me in forming any satisfaction about the applicant's relevant experience and the supervision and control that was exercised over him.

37. I should deal with the question about the termination of the applicant's employment or franchise by Tax Services because it is, in most respects in my view, not relevant to what I am required to deal with because I have not heard both sides of the story and because it does not directly, of itself, seem to relate to supervision and control. 

38. It is slightly relevant, however, in one respect and that is to the question of supervision and control itself.  In a limited way, it suggests that there was no supervision and control because of the things that did happen which were admitted by the applicant. The applicant admitted  an omission appears of his in checking the identity for some superannuation clients.  If there was supervision or control of the applicant, the inference seems such things are unlikely to have happened. In any event I do not consider these matters to be of much relevance given my main reasons for not being able to be satisfied that the applicant satisfied the requirements of Regulation 8 so far as relevant experience is concerned.

    CONCLUSION

1. In the end, I cannot be satisfied that the applicant has undertaken work under the supervision and control of a registered tax agent mainly because of the position of Mr Gleeson and the findings made by the Board in respect of him.

2. The applicant's own evidence does not provide a sufficient foundation for me to form a satisfaction, in an affirmative sense, that he has been subject to supervision and control by anyone whilst he was working for Tax Success because it simply does not tell me, one way or another, whether anyone in fact did anything and, if so, what they did do to supervise and control the work that he did. His own description of the work that he did as tax services, and his conclusion that he was supervised and controlled in doing that work, are not in the circumstances sufficient to satisfy me that the relevant requirement of the Regulations, that required him to demonstrate that he had been engaged in the equivalent of 12 months of full-time relevant experience in the preceding five years, has been satisfied.

3. I affirm the decision of the Board. 

I certify that the preceding 41 (forty-one) paragraphs are a true copy of the reasons for the decision herein of Member Reitano.

...................SGD....................

Associate

Dated: 10 January 2022

Date(s) of hearing:	9 December 2021
Applicant’s advocate	Mr Thiru Arumagam
Respondent’s counsel	Ms Lucy McGovern
Respondent’s solicitors	Self-represented