Wilmot and Tax Agents' Board of NSW

[2006] AATA 788

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 788

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  N2006/85

GENERAL ADMINISTRATIVE DIVISION		)
Re		VICTOR JAMES WILMOT

Applicant

And  TAX AGENTS’ BOARD OF NSW

Respondent

DECISION

Tribunal  Robin Hunt, Senior Member

Date 14 September 2006

Place Sydney

Decision  The decision under review is affirmed.

[SGD]

Ms R. Hunt
  Senior Member

CATCHWORDS

TAX AGENT REGISTRATION – not a registered tax agent – application for registration - not a fit and proper person to prepare income tax returns – employed by accountant - had not engaged in relevant employment as required. 

Income Tax Assessment Act 1936 ss 251BC(1)(b)(ii), 251JA(1)(a)

Income Tax Regulations 1936 regs 156(1)(2))(A), (B), (C), (1)(c)(i), (6)

Re Barlow and Tax Agents’ Board of NSW AAT CASE 9323

Re Civiti and Tax Agents’ Board of Victoria (1990) 90 ATC 2039

Re Egulian and Tax Agents’ Board of NSW 1991 91 ATC 2060

Re Gupta and the Tax Agents’ Board of NSW AAT CASE 9710

Lawlor and Tax Agents’ Board of Queensland [2002] AATA 1183

Modini and Tax Agents’ Board of Queensland [2005] AATA 1200

Re Mula and Tax Agents’ Board of NSW AAT CASE 11490

Re Webb & Tax Agents’ Board of Queensland (1992) 28 ALD 464

REASONS FOR DECISION

14 September 2006 Robin Hunt, Senior Member         

summary

Mr Wilmot does not qualify for original registration as a tax agent because, although he worked in the tax field for about 20 years, he has not engaged in relevant employment on a full time basis for not less than a total of 12 months in the five years preceding the date of his application for registration. 

background

1.      On 12 September 2005, Mr Victor Wilmot, the applicant, applied to the Tax Agents’ Board of NSW, the respondent, for registration as a tax agent.  On 6 January 2006, the Board wrote to Mr Wilmot to inform him that his application was rejected. The letter set out that, on the information before it, the Board was not satisfied that Mr Wilmot had completed the relevant employment requirements prescribed in regulation 156(2) of the Income Tax Regulations 1936.  Mr Wilmot applied to the Administrative Appeals Tribunal for review of the decision.  The tribunal has found that Mr Wilmot does not satisfy the regulation and therefore his claim for registration as a tax agent cannot succeed.

ISSUE

2.      The main issue for the tribunal was whether Mr Wilmot fulfilled the ‘relevant employment’ criteria set out under the Act and Regulations. Without satisfaction of these criteria, Mr Wilmot cannot not be registered as a tax agent.

CONSIDERATION

3. Section 251JA(1)(a)(i) of the Income Tax Assessment Act 1936 (the Act) provides that the Tax Agents’ Board shall register a person as a tax agent if that person is a natural person and satisfies the Board that he or she is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. Section 251BC(1) of the Act explains when a person will not be a fit and proper person for these purposes. Section 251BC(1)(b)(ii) states that the person will not meet requirements where he or she does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed. The prescribed qualifications and experience for the purposes of s 251BC(1)(b)(ii) are set out in reg 156 of the Income Tax Regulations 1936 (Cth) (the Regulations).

4.      Mr Wilmot has a background in dealing with taxation matters and also has some study qualifications. Under the Regulations, however, in order to be registered he must show that his academic qualifications or experience meet the required standard. Regulation 156(2) of the Regulations prescribes the necessary academic qualifications and employment levels. Mr Wilmot mainly relied on his past experience in the Australian Taxation Office (ATO) and his experience working with an accountant firm since.

5.      The requirements of reg 156(2) are cumulative. An applicant for registration must meet academic and work experience tests. The requirements of reg 156(2)(c) sets out that an applicant must have been involved in “relevant employment” for not less than a total of 12 months in the preceding 5 years. Mr Wilmot was refused registration by reference to the requirement that he show a substantial involvement in a broad range of income tax return preparation or examination. This is one of the elements of the definition of ‘relevant employment’ in reg 156(2). The test of relevant employment is included in the reg 156(a), (b), (c) and (d).

6.      To meet reg 156(2)(c)(i), Mr Wilmot must show that he:

has been engaged in relevant employment on a full time basis for not less than a total of 12 months in the preceding five years.

All of the options under reg 156 contain the requirement that the applicant have relevant employment. That is, relevant employment is essential.

7.      Under reg 156(2) “relevant employment” means employment by a person or partnership or as a member of a partnership in the course of which there has been substantial involvement in income tax matters including preparation or examination of a broad range of income tax returns, preparation and examination of objections to assessments issued in respect of such returns and provision of advice in relation to income tax returns, assessments or objections.

8.      The main issue in Mr Wilmot’s case is whether Mr Wilmot has been in relevant employment for a total of 12 months in the five years preceding the date of application in August 2002.  Mr Wilmot told the tribunal he worked in the ATO from 1986 until 2002. Mr Wilmot gave oral evidence describing his service, suggesting that it might suffice for reg 156 purposes, especially when taken with his experience since. I have summarised his oral evidence and written statements about his duties at the ATO below.

9.      During his years at the ATO, Mr Wilmot’s duties included resolving a broad range of return types. He reviewed objections and requests for amendments from various types of taxpayer, individual and others. He dealt with the prescribed payments scheme, fringe benefits and sales tax. He conceded his sales tax was no longer relevant, having been replaced by GST. Mr Wilmot further said he had liaised with original decision makers about taxation matters early in his career. He communicated with taxpayers and representatives with a view to resolving disputes. When he was more senior, he reported on and determined and settled objections and gave reasons for his decisions. He spent 6 years in field audit and prepared briefs of evidence for prosecution cases. During a 12 month period, Mr Wilmot prepared and issued a large number of private binding rulings which are still stored on ATO systems.  His last position was as a national trainer travelling all over Australia training ATO staff in GST and subjects such as the ABN and PAYG. He said he was actively involved in managerial decision making.

10.     Mr Wilmot furnished a statement of service from the ATO confirming his employment from 10 June 1986 to 15 January 2002. ATO records show he was promoted to APS 5, GST complex technical adviser from 25 October 1999, and APS 6, GST technical trainer, from 3 March 2000. He also supplied references from senior ATO officers.

11.     Mr Wilmot gave further oral evidence about his experience after he left the ATO. He told the tribunal he had prepared a great many income tax returns for clients in his capacity as a consultant with a registered tax agency over the last two years. In the bundle of documents he furnished to the Board in response to its letter of 10 October 2005, he stated that he had been a self-employed consultant for 11 months. He told the tribunal that he had continued with the same tax agency on a commission basis and was gaining more experience all the time. He had recently been appointed as the manager of an agency franchise and intended to open his own franchise next year.

12.     A senior partner of Tax Tips, registered tax agents, wrote to the tribunal on 15 August 2006 stating that Mr Wilmot had worked for Tax Tips for over three years and had prepared a very large number of returns, including partnership, trust and company returns. The letter went on to say that Mr Wilmot’s recent training had included additional business returns training. Mr Wilmot and his employer’s letter both stated that he successfully lodged returns electronically. Mr Wilmot also lodged copies of various educational certificates as evidence of his academic suitability for registration.

FINDINGS

13.     Mr Wilmot argued that his employment satisfied the test of relevant employment for the required period. Mr Wilmot’s based his claims that he had engaged in relevant employment during:

§His ATO work from 1986 to 2002.

§His work for Tax Tips, accountants and tax agents, commencing around 2004 and continuing.

14.     If either or both of these activities constitute “relevant employment” under reg 156, Mr Wilmot will have satisfied this aspect of the statutory requirements for registration.  As regards his work at TaxTips, Mr Wilmot said he was spending up to 60 hours per week from June to October each year dealing with income tax matters but attended the office less frequently at other times. Mr Wilmot explained that the demand was seasonal and clients came to see him more when their tax returns were due. Mr Wilmot set out in a written statement forwarded to the Board that, in 2004 and 2005, he prepared or examined approximately:

§422 and 548 individual income tax returns respectively; and

§2 and 3 partnership returns resp[ectively; and

§2 and 3 trust returns respectively; and

§2 company returns in each year (7/10/05 - T6, 35).

15.     In another statement forwarded to the Board Mr Wilmot stated that he had, in 2004 and 2005, prepared or examined approximately:

§675 and 788 individual income tax returns respectively;

§2 partnership returns in each year;

§3 and 2 trust returns respectively;

§2 company returns in each year; and

§15 and 24 objections (to any type of assessment) respectively.

16.     Taking all of Mr Wilmot‘s evidence into account, it is plain that he has not worked full time since he left the ATO in 2002. He has worked long hours six days a week for part of 2004 and 2005 but gave honest evidence to the effect that his services were required only part time for several months of the year. It is clear that Mr Wilmot has not been engaged in full time employment since he left the ATO and that his experience preparing returns and the like will therefore not be sufficient to satisfy reg 156(2)(c)(i) and the similar paragraphs recited above.

17.     In addition, “relevant employment” is a defined term. Reg 156 provides that it means employment by a person or partnership in the course of which there has been substantial involvement in income tax matters including:

(a)Preparation or examination of a broad range of income tax returns; and

(b) Preparation or examination of objections to assessments issued in respect of such returns; and

(c) The provision of advice in relation to income tax returns, assessments or objections.

18.     On the evidence before me, I am not satisfied that Mr Wilmot has been in relevant employment for not less than 12 months over the previous five years. He has not shown that he dealt with a broad range of income tax returns while employed as a consultant over the last 2 years. His involvement with returns other than individual returns was infrequent.

19.     I also am not satisfied that his previous ATO employment was relevant employment. His involvement with examination of objections to assessments issued in respect of such returns and the provision of advice in relation to income tax returns, assessments or objections, while employed at the ATO, took place more than 5 years ago. He took the GST complex technical adviser position effective from 25 October 1999, according to ATO records, and the GST technical trainer promotion from 3 March 2000. Work in the GST field is not part of income tax preparation or examination and does not involve consideration of income tax issues or assessments as envisaged in reg 156. At the ATO in the period I can take into account, that is, from 12 September 2000 onwards, over the 5 years before his application, Mr Wilmot was then concerned more with GST than with income tax rulings, negotiations and objections. If Mr Wilmot were able to mount a solid case under reg 156(2), he would need more evidence of a wider range and depth of income tax work he had done as a consultant. I therefore conclude that Mr Wilmot was not performing relevant work during the period I can take into account under the regulation.

20.     I note that reg 156(2)(c)(ii) permits the Board and this tribunal to have regard to employment equivalent to that referred to in reg 156(2)(a)(i). However, I find that Mr Wilmot fails to meet the requirements in that he has not been engaged in work that is equivalent to relevant employment as provided in reg 156. Work outside the income tax area cannot be equivalent and part time work or work for 5 or 6 months in a year I do not consider equivalent.

21.   Mr Wilmot gave evidence that he was occupied in advising and training as an employee in the ATO from 3 March 2000 until he left in 2002. The letters from the ATO, which he furnished, as well as his own oral evidence, indicates that his duties in 2000 to 2002 primarily involved training for the introduction of GST and associated changes rather than concentration on income tax concerns. I cannot be satisfied that this activity is equivalent to that expected in reg 156(2)(c)(ii). In making these findings, I have had regard to case law brought to my attention. The decisions of Re Webb & Tax Agents’ Board of Queensland (1992) 28 ALD 464, Re Barlow and the Tax Agents’ Board of NSW AAT CASE 9323, Re Civiti and Tax Agents’ Board of Victoria (1990) 90 ATC 2039, Re Egulian and Tax Agents’ Board of NSW 1991 91 ATC 2060, Re Gupta and the Tax Agents’ Board of NSW AAT CASE 9710, Lawlor and Tax Agents’ Board of Queensland [2002] AATA 1183, Re Mula and Tax Agents’ Board of NSW AAT CASE11490 and Modini and Tax Agents’ Board of Queensland [2005] AATA 1200 all emphasise the importance of the terms “relevant employment”, “substantial involvement” and “broad range” to the discharge of reg 156. In Re Webb Deputy President Forgie said:

What is contemplated by the phrase [substantial involvement] is a range of income tax returns spreading over the spectrum of potential taxpayers. A large group of taxpayers consists  of small businesses, individual traders and partnerships. If…the applicant has not been involved in the preparation or examination of tax returns for any of these classes of taxpayers, then he cannot be said to have had substantial involvement in the preparation or examination of a broad range of tax returns.

22.   In Re Egulian Deputy President McMahon similarly considered the term “substantial involvement”. Deputy President McMahon said:

Substantial involvement necessarily implies involvement to a substantial extent. To be substantially involved in one or two or three returns is not what is required by the regulation. What is required is involvement in a substantial number of returns which represent a broad range.

23.   Whilst Mr Wilmot has significant experience in the preparation of individual tax returns, there are statutory guidelines. The tribunal cannot accept Mr Wilmot’s representative’s appeal to the tribunal; that is that it use its powers to allow Mr Wilmot’s application on the basis that the regulations are too onerous and “otherwise, no one would be registered”. As was pointed out by Dr K.S. Levy, Member, in Modini:

In applying [the] legislative provisions the role of the Tax Agents’ Board is to protect the public interest.

24.     In addition to these considerations, Mr Wilmot also does not appear to meet the educational requirements of reg 156. On the evidence before me, Mr Wilmot has not completed any university degree or the academic requirements for the award of a diploma or certificate from a college of technical and further education following a course of study in accountancy of not less than 2 years duration of full-time study or 4 years duration of part-time study. Nor has he shown any certification that he has completed a course of study in accountancy of not less than 3 years duration and in commercial law of not less than 18 months duration. Mr Wilmot did not indicate that he had achieved a degree or diploma or certificate as set out in the reg but gave evidence he has completed some studies at TAFE as well as internal training at the ATO and other academic subjects and tax training. I note that Mr Wilmot has undertaken various courses and has obtained some academic qualifications and practical training which, no doubt, assist him in his tax work. However, it is unnecessary for me to decide this point as Mr Wilmot has not met the relevant employment test.

CONCLUSION

25.     I have concluded that Mr Wilmot does not qualify for original registration as a tax agent because he has not engaged in relevant employment on a full time basis for not less than a total of 12 months in the five years preceding the date of his application for registration. While Mr Wilmot has had considerable experience, this does not empower me to ignore the legislative requirements.

DECISION

26.     The decision under review is affirmed.

I certify that the 26  preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed:         .....................................................................................
  Associate

Date/s of Hearing  16 August 2006
Date of Decision  14 September 2006
Solicitor for the Applicant          Peter Saville
Counsel for the Respondent     Jacqueline Gleeson
Solicitor for the Respondent      Murray Allatt