Tomkinson and Tax Practitioners Board

Case [2021] AATA 2172

Tomkinson and Tax Practitioners Board [2021] AATA 2172 (8 July 2021)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2020/1357

Re:Grant Tomkinson

APPLICANT

Tax Practitioners BoardAnd  

RESPONDENT

DECISION

Tribunal:Senior Member Linda Kirk

Date:8 July 2021

Place:Sydney

The Tribunal affirms the Reviewable Decisions dated 30 January 2020.

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

Senior Member Linda Kirk

CATCHWORDS

TAX AGENTS – termination of registration as tax agent – non-application period of 18 months imposed – contraventions of the Code of Professional Conduct – Applicant failed to manage personal tax affairs – multiple failures to lodge business activity statements, income tax returns and superannuation statements – multiple failures to pay superannuation, business activity statement, income tax and trust indebtedness – multiple payment arrangement defaults – whether Applicant is a fit and proper person – failure to act honestly and with integrity – Applicant lodged application for renewal with false declaration – Applicant failed to comply with stay order – whether non-application period of 18 months is appropriate – decisions under review affirmed

LEGISLATION

A New Tax System (Goods and Services Tax) Act 1999(Cth)

Administrative Appeals Tribunal Act 1975(Cth) s 25

Income Tax Assessment Act 1936 (Cth)

Income Tax Assessment Act 1997 (Cth) s 995-1

Tax Agents Services Act 2009 (Cth) ss 2-5, 20-5, 30-10, 30-15, 40-5, 40-25, 60-125, 70-10, 90-1

Taxation Administration Act 1953 (Cth)

CASES

Adamec and Tax Agents' Board of Victoria [2005] AATA 913

Cleary and Tax Practitioners Board [2014] AATA 260

Delis and Tax Practitioners Board [2015] AATA 820

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

G J Brown & Co Pty Ltd and Tax Practitioners Board [2016] AATA 740

Hill and Tax Practitioners Board [2020] AATA 678

Kishore and Tax Practitioners Board [2017] AATA 271

Madz and Tax Practitioners Board [2019] AATA 4773

Phillip Same Accountants Pty Ltd and Tax Practitioners Board [2010] AATA 439

Proh and Tax Agents' Board of Victoria [2010] AATA 149; (2010) 78 ATR 663

Re Su and Tax Agents’ Board of South Australia (1982) 61 FLR 1

Ridden v Tax Practitioners Board [2020] AATA 422

Shmuel and Tax Practitioners Board [2019] AATA 2168

Stasos v Tax Agents’ Board of NSW (1990) 21 ATR 974

Toohey and Tax Agents’ Board of Victoria [2009] AATA 603 

Yvonne Anderson and Associates Pty Ltd and Tax Practitioners Board (Taxation) [2020] AATA 1881

SECONDARY MATERIALS

TPB Information Sheet 34-2018

REASONS FOR DECISION

Senior Member Linda Kirk

8 July 2021

INTRODUCTION

  1. Mr Grant Tomkinson (‘the Applicant’) has been a registered tax agent since 23 August 2016.[1] ­

    [1] Exhibit R2, ST10-246.

  2. On 30 January 2020, the Tax Practitioners Board (‘the Respondent’) terminated the Applicant’s tax agent registration pursuant to paragraph 40-5(1)(b) and sub-paragraph 60-125(2)(b)(ii) of the Tax Agents Services Act 2009 (Cth) (‘TASA’).  The Respondent made its decisions based on findings that the Applicant had breached sub-sections 30-10(1) and 30-10(2) of the Code of Professional Conduct (‘Code’) in the TASA and that he was not a fit and proper person…

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AGLC
Tomkinson and Tax Practitioners Board [2021] AATA 2172
Case
[2021] AATA 2172
Decision Date

CaseChat Overview and Summary

This matter concerned an application for review of decisions made by the Tax Practitioners Board (TPB) to terminate the registration of the applicant as a tax agent and to impose an 18-month non-application period. The applicant's conduct, which led to the TPB's decisions, included multiple failures to manage his personal tax affairs, such as failing to lodge business activity statements and income tax returns, defaulting on numerous payment arrangements, and failing to pay superannuation and trust indebtedness. Furthermore, the applicant had lodged an application for renewal of his registration with a false declaration regarding his overdue tax obligations.

The Tribunal was required to determine whether the applicant had breached specific subsections of the Code of Professional Conduct, specifically concerning honesty and integrity. It also had to assess whether the applicant was a 'fit and proper person' to be a registered tax agent, and consequently, whether the termination of his registration and the imposition of the 18-month non-application period were appropriate sanctions. The definition of 'personal affairs' was clarified to encompass not only the tax practitioner's practice but also the affairs of all associated entities under their direct or indirect control.

In reaching its decision, the Tribunal considered the applicant's extensive history of non-compliance with his tax obligations and his failure to act with honesty and integrity, particularly in relation to the false declaration made in his renewal application. The Tribunal found that these actions constituted breaches of the Code of Professional Conduct and demonstrated that the applicant was not a fit and proper person. Applying the principles from Drake (No 2) and considering the applicant's circumstances and comparable Tribunal decisions, the Tribunal affirmed the TPB's decision to terminate the applicant's registration and agreed that an 18-month period during which the applicant could not apply for registration was appropriate.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The issues for the Tribunal are as follows:1)whether the Applicant breached sub-sections 30-10(1) and 30-10(2) of the Code;2)whether the Applicant is a ‘fit and proper person’ within the meaning of paragraph 20-5(1)(a) of the TASA;3)whether the termination of the Applicant’s registration as a tax agent pursuant to paragraph 40-5(1)(b) of the TASA is appropriate; and4)whether the determination pursuant to sub-section 40-25(1) of the TASA that the Applicant may not apply for registration for a period of 18 months is appropriate.EVIDENCE BEFORE THE TRIBUNAL On 26 September 2017, WTM Financial Services Pty Ltd (‘the Company’) was registered as a company tax (financial) adviser with registration number 25683806.[6] The Applicant is the sole director of the Company.[7][6] Exhibit R2, ST11-247.[7] Exhibit R1, T3-13. On 26 October 2018, the Australian Taxation Office (ATO) completed an audit of the Applicant’s superannuation guarantee obligations.[8][8] Exhibit R1, T3-25. On 26 November 2018, the ATO made a referral to the Respondent[9] regarding the conduct of the Applicant for:(a)not meeting his superannuation guarantee obligations for the period 1 January 2017 to 30 June 2018;[10](b)failing to lodge 22 business activity statements (BAS) since January 2017;[11] and(c)defaulting on over 20 payment arrangements since 2002.[12][9] Exhibit R1, T3-22.[10] Exhibit R1, T3-29.[11] Exhibit R1, T3-32.[12] Exhibit R1, T7-81. On 17 January 2019, the Respondent issued a letter to the Applicant regarding his conduct the subject of the ATO referral.[13] A written response addressing what caused non-compliance with his tax obligations, and what actions he had taken and intended to take to resolve his tax compliance issues was required by 31 January 2019.[13] Exhibit R1, T3-49. On the same day, the Applicant responded to the Respondent, stating that he had commenced lodging his outstanding documents and would respond in full by 25 January 2019.[14][14] Exhibit R2, ST1-213. On 1 February 2019, the Applicant responded to the Respondent providing explanations for the non-compliance with his tax obligations.[15][15] Exhibit R1, T3-54. On 3 September 2019, the Respondent commenced an investigation into the Applicant’s conduct pursuant to Subdivision 60-E of the TASA.[16][16] Exhibit R1, T3-37. On 22 October 2019, the Respondent issued a ‘Notice of alleged breach’ letter to the Applicant attaching a submission to the Respondent’s Conduct Committee.[17] A response from the Applicant was requested by 5 November 2019.[17] Exhibit R1, T3-11. As at 30 January 2020, no response had been provided by the Applicant to the Respondent’s letter of 22 October 2019. On 30 January 2020, the Respondent made findings that the Applicant had breached sub-section 30-10(1) of the Code, in that he failed to act honestly and with integrity by lodging an application for renewal of his tax agent registration on 1 August 2019 declaring that he had no overdue personal taxation obligations,[18] when in fact:(a)in his capacity as the Trustee for the WT Martin & Associates Staff Super Fund (‘Super Fund’) he had failed to lodge BAS for the periods from 1 July 2016 to 30 June 2019; and(b)in his capacity as the Trustee for the Elsewhere Trust (‘the Trust’), he had failed to pay an overdue Integrated Client Account (ICA) debt of $2,075.95.[18] Exhibit R1, T3-39.

Decision

Reasons for decision

Having regard to the Applicant’s particular circumstances and similar Tribunal decisions, and respectfully following Justice Brennan’s instruction in Drake (No 2), the Tribunal agrees with the Respondent that a non-application period of 18 months is appropriate.DECISION The Tribunal affirms the Reviewable Decisions dated 30 January 2020.

Ratio Decidendi

Legal Principle Established

The term ‘personal affairs’ includes a tax practitioner’s practice and the affairs of all associated entities that the tax practitioner has direct or indirect control over.[5][5] TPB Information Sheet 34-2018 at [7].Termination of registration Section 30-15 provides that if the TPB is satisfied, after conducting an investigation under Subdivision 60-E, that the agent has failed to comply with the Code, then the TPB may do one or more of the following:(a)give the agent a written caution;(b)give the agent an order under section 30-20;(c)suspend the agent’s registration under section 30-25; and(d)terminate the agent’s registration under section 30-30. Paragraph 40-5(1)(b) provides that the TPB may terminate the registration of a registered tax agent who is an individual if they cease to meet one of the tax practitioner registration requirements.Period of non-application Sub-section 40-25(1) of the TASA provides that if the TPB terminates an agent’s registration, it may impose a period of not more than five years during which an agent may not apply for registration.ISSUES FOR DETERMINATION The issues for the Tribunal are as follows:1)whether the Applicant breached sub-sections 30-10(1) and 30-10(2) of the Code;2)whether the Applicant is a ‘fit and proper person’ within the meaning of paragraph 20-5(1)(a) of the TASA;3)whether the termination of the Applicant’s registration as a tax agent pursuant to paragraph 40-5(1)(b) of the TASA is appropriate; and4)whether the determination pursuant to sub-section 40-25(1) of the TASA that the Applicant may not apply for registration for a period of 18 months is appropriate.EVIDENCE BEFORE THE TRIBUNAL On 26 September 2017, WTM Financial Services Pty Ltd (‘the Company’) was registered as a company tax (financial) adviser with registration number 25683806.[6] The Applicant is the sole director of the Company.[7][6] Exhibit R2, ST11-247.[7] Exhibit R1, T3-13. On 26 October 2018, the Australian Taxation Office (ATO) completed an audit of the Applicant’s superannuation guarantee obligations.[8][8] Exhibit R1, T3-25. On 26 November 2018, the ATO made a referral to the Respondent[9] regarding the conduct of the Applicant for:(a)not meeting his superannuation guarantee obligations for the period 1 January 2017 to 30 June 2018;[10](b)failing to lodge 22 business activity statements (BAS) since January 2017;[11] and(c)defaulting on over 20 payment arrangements since 2002.[12][9] Exhibit R1, T3-22.[10] Exhibit R1, T3-29.[11] Exhibit R1, T3-32.[12] Exhibit R1, T7-81. On 17 January 2019, the Respondent issued a letter to the Applicant regarding his conduct the subject of the ATO referral.[13] A written response addressing what caused non-compliance with his tax obligations, and what actions he had taken and intended to take to resolve his tax compliance issues was required by 31 January 2019.[13] Exhibit R1, T3-49. On the same day, the Applicant responded to the Respondent, stating that he had commenced lodging his outstanding documents and would respond in full by 25 January 2019.[14][14] Exhibit R2, ST1-213.