Worsley and Tax Practitioners Board (Taxation)
[2022] AATA 3742
•4 November 2022
Worsley and Tax Practitioners Board (Taxation) [2022] AATA 3742 (4 November 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2021/8250
Re:Bernard Worsley
APPLICANT
AndTax Practitioners Board
RESPONDENT
Decision
Tribunal:Senior Member Dr Linda Kirk
Date:4 November 2022
Place:Sydney
The Tribunal affirms the Reviewable Decision dated 16 September 2021.
...............................[SGD].........................................
Senior Member Dr Linda Kirk
Catchwords
TAX AGENTS – termination of registration as tax agent – whether applicant breached Code of Professional conduct – whether applicant "fit and proper person" – where applicant breached stay order – whether applicant's personal circumstances mitigate breach – whether to exercise discretion to terminate registration – reviewable decision affirmed.
Legislation
Tax Agents Services Act 2009 (Cth)
Cases
Birdseye and Tax Practitioners Board [2021] AATA 1011
Cleary and Tax Practitioners Board [2014] AATA 260
G J Brown & Co Pty Ltd and Tax Practitioners Board [2016] AATA 740
GB Shaw and Co Pty Ltd Trading as Dalby Air Maintenance and Civil Aviation Safety Authority [2013] AATA 736
Peterson and Tax Practitioners Board [2018] AATA 93.
Proh and Tax Agents Board of Victoria [2010] AATA 149; (2010) 78 ATR 663
Re Adamec and Tax Agents' Board of Victoria [2005] AATA 913
Re Su and Tax Agents' Board of South Australia (1982) 61 FLR 1.
Ridden and Tax Practitioners Board [2020] AATA 422.
Shmuel and Tax Practitioners Board [2019] AATA 2168.
Tomkinson and Tax Practitioners Board [2021] AATA 2172Toohey and Tax Agents’ Board of Victoria [2009] AATA 603
REASONS FOR DECISION
Senior Member Dr Linda Kirk
4 November 2022
INTRODUCTION
Mr Bernard Worsley (‘the Applicant’) has been a registered tax agent since 2 February 1993.[1]
[1] Exhibit R1, T5, 52.
On 13 May 2021, the Tax Practitioners Board (‘the Respondent’) issued a Notice of Investigation to the Applicant advising that it had commenced an investigation into the Applicant’s conduct pursuant to Subdivision 60-E of the Tax Agents Services Act 2009 (Cth) (‘TASA’).[2]
[2] Exhibit R1, T3, p 11.
On 6 July 2021, the Respondent issued a letter to the Applicant attaching a submission to the Respondent’s Conduct Committee with details of alleged breaches of the Code of Professional Conduct (‘Code’) in the TASA by the Applicant (‘Notice of Alleged Breach’) and inviting the Applicant to respond by 26 July 2021.[3]
[3] Exhibit R1, T4, pp 12-15; T5.
On 5 August 2021, the Respondent determined that it was satisfied that the Applicant had breached ss 30-10(2), 30-10(8) and 30-10(14) of the Code.[4]
[4] Exhibit R1, T7, 176-180. The Respondent also determined to defer consideration of sanctions in respect of the Applicant’s breaches of the Code, and a decision on whether he continued to meet the tax practitioner registration requirement that he be a fit and proper person, until a later date in order to provide evidence of personal circumstances he had raised in an email dated 28 July 2021.
On 9 August 2021, the Respondent wrote to the Applicant, advising that following consideration of two emails from him dated 28 July 2021, it had determined to defer its decision to allow for enquiries to be made to verify the information provided in these emails.[5]
[5] Exhibit R1, T8, 182-184.
By emails dated 23 August 2021,[6] 3 September 2021,[7] and 6 September 2021,[8] the Applicant provided the Respondent with further information and documentation.[9]
[6] Exhibit R1, T9, 183-193; 194-200.
[7] Ibid, 201-209.
[8] Ibid, 210-211.
[9] Ibid, 183-193.
On 16 September 2021, the Respondent determined that the Applicant had ceased to meet the tax practitioner registration requirement that he be a “fit and proper person” as required under s 20-5(1)(a) of the TASA.[10] The Respondent decided to terminate the Applicant’s tax agent registration pursuant to s 40-5(1)(b) of the TASA. (‘Reviewable Decision’).
[10] Exhibit R1, T11, 460.
On 30 September 2021, the Respondent issued a letter to the Applicant advising of the outcome of the Respondent’s investigation and of the Reviewable Decision.[11]
[11] Ibid, 457-468.
On 27 October 2021, the Applicant filed with the Tribunal an application for review of the Reviewable Decision (‘Review Application’).[12]
[12] Exhibit R1, T1.
On 8 November 2021, the Applicant applied for a stay of the operation of the Reviewable Decision under s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’).
On 13 December 2021, the Tribunal ordered that the operation of the Reviewable Decision be stayed until the decision of the Tribunal on the Applicant’s Review Application subject to conditions requiring him to inform any existing or new clients of the Respondent’s decision, and enter into, and maintain, payment arrangements with the ATO in respect of his outstanding taxation liabilities.
The Review Application was heard by the Tribunal on 10 June 2022. The Applicant attended the hearing by video-conference and was self-represented.
The following documents were admitted into evidence at the hearing:
·Exhibit R1 – Section 37 T-documents (T1-T15) filed 30 November 2021
·Exhibit R2 – Combined Supplementary Section 37 T-documents (ST1-ST12) filed 2 June 2022
The Tribunal has jurisdiction to review the Reviewable Decisions pursuant to s 25 of the AAT Act and s 70-10(e) of the TASA.
The Tribunal has reviewed the evidence before it and refers to relevant materials below.
LEGISLATIVE FRAMEWORK
Regulatory scheme
The object of the TASA, as stated in s 2-5 is ‘to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct’. This objective is achieved through the registration regime found in Part 2 of the TASA, the Code in Part 3 of the TASA, and a graduated system of sanctions for disciplining tax practitioners.
Registration requirements
The TASA establishes the Respondent and provides for the registration and regulation of tax agents. Part 2 of the TASA contains the registration regime that applies to all entities who provide tax agent services. The term ‘tax practitioner registration requirements’ is defined in the dictionary in s 90-1 of the TASA and means ‘the matters about which the Board must, under Subdivision 20-A, be satisfied before the Board is obliged to grant an application for registration under this Act’. Being a “fit and proper person” is a ‘tax practitioner registration requirement’.
Paragraph 40-5(1)(b) provides that the Respondent 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.
Fitness and Propriety
Paragraph 20-5(1)(a) of the TASA provides that an individual is eligible for registration as a registered tax agent, BAS agent or tax (financial) adviser if the Respondent is satisfied that the individual is a “fit and proper person”. In determining whether a person is a “fit and proper person” to be registered as a tax agent, the Respondent must, pursuant to paragraph 20-15(a) of the TASA, have regard to whether the individual ‘is of good fame, integrity and character’.
Code of Professional Conduct
Part 3 of the TASA contains the Code that applies to all registered tax agents, BAS agents, and tax (financial) advisers. Section 30-10 sets out the Code which includes relevantly:
(2) You must comply with the *taxation laws in the conduct of your personal affairs.
(8)You must maintain knowledge and skills relevant to the tax agent services that you provide.
(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.
In respect of -s 30-10(2) of the Code, the term ‘taxation law’ is defined in s 995-1 of the Income Tax Assessment Act 1997 (Cth) and refers to the TASA and regulations made under the TASA, and any Act of which the Commissioner of Taxation has general administration (for example, the Income Tax Assessment Act 1936 (Cth), Income Tax Assessment Act 1997 (Cth), A New Tax System (Goods and Services Tax) Act 1999 (Cth) and the Taxation Administration Act 1953 (Cth), and any regulations made under those Acts).
Investigations
Under Subdivision 60-E of the TASA, the Respondent is empowered to commence an investigation into, amongst other things, any conduct that may breach the TASA. When the Respondent conducts an investigation under Subdivision 60-E, and finds that the conduct in issue breaches the TASA, then under s 60-125(2) the Respondent must either:
a) make a decision that no further action will be taken; or
b) do one or more of the following:
i. impose one or more sanctions under Subdivision 30-B;
ii. terminate an entity's registration under Subdivision 40-A;
iii. apply to the Federal Court for an order for payment of a pecuniary penalty under Subdivision 50-C; or
iv. apply to the Federal Court for an injunction under s 70-5.
Sanctions
Section 30-15 provides that if the Respondent is satisfied, after conducting an investigation under Subdivision 60-E, that the tax practitioner has failed to comply with the Code, then the Respondent may do one or more of the following:
(a)give the agent a written caution;
(b)give the agent an order under s 30-20;
(c)suspend the agent’s registration under s 30-25; and
(d)terminate the agent’s registration under s 30-30.
Obligation to notify a change of circumstances
Paragraph 30-35(1)(c) of the TASA relevantly provides that registered tax agents must notify the Respondent in writing when there is a change in their address for service of notices or of any other circumstances relevant to their registration. Pursuant to s 30-35(4) of the TASA, such notice must be given to the Respondent within 30 days of the day on which they become, or ought to have become, aware that the event occurred.
Address for service of notices
On 1 January 2021, the TASA was amended with the addition of s 70-60, which provides the following:
s 70-60 – Address for service of notices
(1)An entity's address for service of notices by the Board for the purposes of this Act is:
(a) a physical address in Australia; or
(b) a postal address in Australia; or
(c) an electronic address;
that the entity has given the Board as the entity's address for service for the purposes of this Act.
(2)If an entity has given the Board more than one address for service for the purposes of subsection (1), the entity's address for service is such of those addresses as the Board considers reasonable in the circumstances.
(3)If an entity has not given the Board an address for service, the entity's address for service is the address that the Board reasonably believes to be the entity's address for service for the purposes of this Act.
ISSUES FOR DETERMINATION
The issues for the Tribunal are as follows:
1)whether the Applicant has breached s 30-10(2) of the Code, being the requirement to “comply with the taxation laws in the conduct of your personal affairs”;
2)whether the Applicant has breached s 30-10(8) of the Code, being the requirement to “maintain knowledge and skills relevant to the tax agent services that you provide”;
3)whether the Applicant has breached s 30-10(14) of the Code, being the requirement to “respond to requests and directions from the Board in a timely, responsible and reasonable manner”;
4)whether the Applicant has ceased to meet the “tax practitioner registration requirement” in paragraph 20-5(1)(a) of the TASA, being the requirement that he is a "fit and proper person”; and if so
5)whether the Applicant’s registration as a tax agent should be terminated under paragraph 40-5(1)(b) of the TASA.
EVIDENCE BEFORE THE TRIBUNAL
Background
The Applicant has been a registered tax agent since 2 February 1993.[13] He was automatically registered as an individual tax agent at commencement of the TASA on 1 March 2010.[14]
[13] Exhibit R1, T5, 52.
[14] Pursuant to the transitional provisions of the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009, if an entity was a registered tax agent within the meaning of the old law (the Income Tax Assessment Act 1936 (Cth)), the entity was taken to be registered tax agent under the new law (TASA) upon commencement.
Between 10 May 2018 and 28 September 2020, the Applicant was also sole director of Addersons Accounting Services Pty Ltd (‘Addersons’), until its de-registration by the Australian Securities and Investments Commission (‘ASIC’) pursuant to s 601AB of the Corporations Act 2001.[15]
[15] Exhibit R1, T5, 49-51.
ASIC records reflect that Addersons listed Shop 5, 2 Marsden Road Ermington NSW 2115 as its:[16]
a) registered office between 9 August 2019 and 28 September 2020; and
b) principal place of business between 31 July 2019 and 28 September 2020.
[16] Ibid.
The Respondent’s records reflect that until 10 June 2021, the Applicant’s contact details recorded on its systems were as follows:
a) Postal – PO Box [Redacted], Ermington NSW 1700 (‘the Postal Address’);
b) Business – Shop 5, [Redacted] Road, Ermington NSW 2115 (‘the Business Address’);
c) Email – myteam@... (‘the Addersons Email Address’);
d) Phone – 02 9…054 (‘the Phone Number’); and
e) Mobile Phone – 04…195 (‘the Mobile Phone Number’).[17]
[17] Exhibit R2, ST1, p 3: extract of the Respondent’s records in respect of the Applicant showing mobile and other contact details added on 17 July 2017.
Australian Taxation Office (ATO) systems reflect that during the period 9 August 2019 and 24 May 2021, the Postal Address, Business Address, Addersons Email Address and Phone Number were recorded as being contact details for the Applicant, as well as a business address of 541 [Redacted] Road, Lower Macdonald NSW 2775 (‘the Lower Macdonald Address’).[18]
[18] Exhibit R1, T5, 110-115.
Data extracted from ATO systems reflects that during the period 1 December 2020 and 15 June 2021, the Applicant, in his capacity as a tax agent, lodged 84 income tax returns (ITRs), and provided the Addersons Email Address as the tax agent contact email address on 26 of those ITRs.[19] The Mobile Phone Number was also listed as the contact telephone number on each of the ITRs.[20]
[19] Ibid, 57.
[20] Ibid
Previous decision of the Respondent in respect of the Applicant
On 26 November 2020, the Respondent determined that the Applicant had breached:[21]
[21] Exhibit R1, T5, 40-45.
a) s 30-10(2) of the Code by failing:
i. to pay or make arrangements to pay outstanding taxation liabilities as and when they fell due, comprising an integrated client (‘ICA’) debt of $39,599.25 and income tax (‘IT’) debt of $235.81 (as at 26 November 2020);
ii. to lodge his ITRs for the income years ending 30 June 2018, 30 June 2019 and 30 June 2020 by their respective due dates;
iii. to lodge his business activity statements (‘BAS’) for the quarterly reporting periods ending 30 September 2017, 31 December 2017, 31 March 2018, 30 June 2018, 31 March 2019, 30 June 2019, 30 September 2019, 31 December 2019, 30 June 2020 and 30 September 2020 by their respective due dates (‘the Outstanding Taxation Obligations’);
b) subsection 30-10(14) of the Code by not responding to the Respondent in a timely, responsible and reasonable manner, by failing to provide a substantive response (or any response at all) to the following requests from the Respondent:
i. an email dated 16 April 2020;
ii. an email dated 24 April 2020;
iii. an email dated 13 August 2020;
iv. a notice to give information issued to the Applicant under s 60-100 of the TASA dated 4 September 2020; and
v. an email dated 5 October 2020.
In making the findings, the Respondent noted that as at 26 November 2020:[22]
a) the Outstanding Taxation Obligations remained outstanding;
b) the Applicant had not responded to any of the requests from the Respondent referred to above at [33(b)];
c) the Applicant had not provided a response contesting the alleged breaches of s 30-10(2) and (14).
[22] Exhibit R1, T5, 41-42.
On the basis of the above findings, the Respondent determined to issue an order to the Applicant under s 30-20 of the TASA dated 9 December 2020 (‘the s 30-20 Order’),[23] which required him, within the next six months to:
a) lodge all outstanding ITRs and BAS with the ATO;
b) pay all outstanding taxation liabilities, or enter into and adhere to payment arrangements acceptable to the ATO;
c) continue to lodge and pay any future taxation obligations when they fall due and/or payable during the time of the s 30-20 Order.
[23] Ibid, 46; The Respondent also decided to issue a written caution to the Applicant pursuant to s30-15(2)(a) of the TASA, noting that this is not a reviewable decision under s70-10 of the TASA: Exhibit R1, T5, 40; T10, 248.
The s 30-20 Order also required the Applicant to provide a written response to an officer of the Respondent by 31 January 2021, to acknowledge receipt of the s 30-20 Order, and provide an update on what steps he had taken to comply with requirements of the s 30-20 Order.
Failures to respond to the Respondent
On 16 March 2020, in order to address the ongoing impacts of Covid-19, the Respondent published guidance which advised that it had temporarily revised its approach to what activities would meet its continuing professional education (‘CPE’) requirements.[24] The guidance advised that it had removed a 25% cap for relevant technical/professional reading activity in its CPE policy until 30 June 2022 (allowing for such activities to comprise a greater proportion of CPE activities undertaken by the tax practitioner). Notwithstanding the lifting of this cap, the Respondent reminded tax practitioners that they must keep a log book detailing all CPE activities undertaken, and that they were still required to complete the annual minimum hours of CPE.
[24] . These concessions were then extended by the Respondent to 30 December 2020 on 7 September 2020: >
On 16 November 2020, the Respondent wrote to the Applicant by email at the Addersons Email Address advising that it had received a complaint against him (‘the Complaint Email’).[25] The email further advised that the Respondent had tried to contact the Applicant on the Phone Number but that it was disconnected, that it had tried to contact him on the Mobile Phone Number, and had left a voicemail. The email requested a response by 23 November 2020.
[25] Exhibit R1, T5, 86.
On 24 November 2020, the Respondent wrote to the Applicant noting that, despite its request for a response by 23 November 2020, it had not received a response to the Complaint Email, and requested a response by 26 November 2020.[26]
[26] Ibid, 85-86.
On 24 November 2020, the Applicant wrote to the Respondent and requested further time within which to reply to the Complaint Email.[27] The Applicant further advised that he would “endeavour to have a response to [the Respondent] by Friday” of that week “or Monday at the latest”.[28] The Applicant’s email signature also listed the postal address of the Applicant as being the Postal Address.[29]
[27] Ibid, 84-85.
[28] Ibid.
[29] Ibid.
On 1 December 2020, the Respondent requested that a response to the Complaint Email be provided by 2 December 2020, and that in the event that no response was received, the complaint would be escalated to further enquiries.[30]
[30] Ibid, 84.
On 29 January 2021, the Respondent emailed the Applicant reminding him of the s 30-20 Order’s requirements and the ramifications of failing to comply.[31] No correspondence was received by the Respondent from the Applicant by 31 January 2021 as required by the s 30-20 order.
[31] Ibid, 104.
On 1 February 2021, the Respondent telephoned the Applicant and left a voicemail regarding his failure to comply with the s 30-20 Order.[32]
[32] Ibid, 106.
On 3 February 2021, the Respondent wrote to the Applicant by email requesting that he comply with the s 30-20 Order and advising him that a failure to do so may result in further sanctions being imposed, such as a suspension or termination of his tax agent registration.[33]
[33] Ibid, 107-108.
On 22 April 2021, the Respondent sent a letter to the Applicant advising that it was making preliminary enquiries into his failure to respond to requests made by the Respondent, his failure to comply with his personal tax obligations, and requesting a current address for service and up to date contact details (‘the Preliminary Enquiries Letter’).[34] The letter requested a written response to the matters raised therein by no later than 6 May 2021.
[34] Ibid, 117-121.
The Preliminary Enquiries Letter was sent to the Addersons Email Address and the Postal Address by registered post.[35] Australia Post records do not indicate that the Preliminary Enquiries Letter sent to the Postal Address was received.
[35] Ibid, 122.
On 11 May 2021, the Respondent commenced an investigation into the Applicant under Subdivision 60-E of the TASA,[36] and informed the Applicant of this by the Notice of Investigation dated 13 May 2021.
[36] Exhibit R1, T3, 11.
The Notice of Investigation was sent to the following addresses by registered post, with a Preliminary Enquiries Letter updated to reflect the later date of issue and deadline for a response (27 May 2021) (‘the Updated Preliminary Enquiries Letter’):[37]
a) the Email Address;[38]
b) the Postal Address;[39]
c) the Business Address;[40] and
d) the Lower Macdonald Address.[41]
[37] Exhibit R1, T5, 132.
[38] Ibid, 127.
[39] Ibid, 131-135.
[40] Ibid, 136-140.
[41] Ibid, 141-145.
Australia Post records extracted from its website on 27 May 2021 and 2 June 2021 reflect the following in respect of the Notice of Investigation and Updated Preliminary Enquiries Letters sent to the Applicant at the various addresses:
a)the Postal Address – awaiting collection at the Ermington Post Office as of 17 May 2021 at 9:23am and 18 May 2021 at 4:19pm;[42]
b) the Lower Macdonald Address – delivered on 17 May 2021 at 10:13am.[43]
[42] Ibid, 157, 160.
[43] Ibid, 148, 151.
An email received by the Respondent on 17 May 2021 at 11:18am indicates that the Notice of Investigation and the Updated Preliminary Enquiries Letter sent by email to the Addersons Email Address were not received, and were subsequently deleted off the server.[44]
[44] Ibid, 130.
On 27 May 2021, the Respondent wrote to the Applicant by email to the Addersons Email Address,[45] and registered post to the Lower Macdonald Address,[46] requesting evidence of his CPE and current professional indemnity insurance (‘PII’) by 10 June 2021 (‘the CPE and PII Request’).
[45] Ibid, 73-75.
[46] Ibid, 74-75.
Australia Post records extracted from its website reflect that the CPE and PII Request letter was delivered to the Lower Macdonald Address on 31 May 2021 at 10:21am.[47] An email received by the Respondent on 31 May 2021 at 4:11pm indicates that the CPE and PII Request sent by email to the Addersons Email Address was not received.[48]
[47] Ibid, 78.
[48] Ibid, 79.
On 31 May 2021, the Respondent telephoned the Applicant and left a voicemail regarding the CPE and PII Request and s 30-20 Order, requesting an urgent call back.[49]
[49] Ibid.
On 8 June 2021, the Respondent telephoned the Applicant and left a voicemail regarding the Notice of Investigation and the CPE and PII Request.[50]
[50] Ibid.
On 10 June 2021, the Respondent’s records for contact details for the Applicant were updated.[51] The Postal Address and Business Address were removed and replaced with the Lower Macdonald Address.[52] The Respondent’s records for the Applicant’s email address were also amended to bpworsley@...[53]
[51] The Respondent’s records do not show who updated the contact details.
[52] Exhibit R1, T5, 55.
[53] Ibid.
On 10 June 2021, the Respondent’s records in respect of the Applicant’s PII were also updated to reflect a PII policy provided by Berkley Insurance Australia that commenced on 10 June 2021 and expired on 10 June 2022 (‘the 2021-22 PII Policy’).[54] The Respondent’s records in respect of PII held by the Applicant reflect that prior to the 2021-22 PII Policy, the latest PII policy held by the Applicant was for the period 1 February 2020 to 1 February 2021.[55]
[54] Exhibit R1, T5, 55, 82.
[55] Ibid, 82.
On 15 and 16 June 2021, the Respondent received the Notice of Investigation and Updated Preliminary Enquiries Letter sent to the Applicant at the Business Address, which had been marked “return to sender” after being unclaimed.[56]
[56] Ibid, 166-169.
A summary of the Respondent’s correspondence issued to the Applicant, and its various attempts at contacting him for the period 16 November 2021 to 6 June 2021 is set out below:
Date of correspondence
/attempted contact
Date reply due Result Method of communication 16 November 2020 23 November 2020 No response Email 24 November 2020
26 November 2020
Reply with request for extension
Email
1 December 2020
2 December 2020
No response
Email
9 December 2020
31 January 2021
No response
Email/Post – Notification of the Board’s Decision of 26 November 2020 & the s 30-20 Order
29 January 2021
31 January 2021
No response
Email
1 February 2021
N/A
No response
Phone/voicemail left
3 February 2021
N/A
No response
Email
22 April 2021
6 May 2021
No response
Email/Post
13 May 2021 27 May 2021 No response Email/Post 20 May 2021
N/A
No response
Phone/No. disconnected
20 May 2021
N/A
No response
Phone/voicemail left
27 May 2021 10 June 2021 No response Email/Post 31 May 2021
N/A
No response
Phone/voicemail left
8 June 2021
N/A
No response
Phone/voicemail left
Mitigating circumstances
On 28 July 2021, the Applicant wrote to the Respondent, advising:[57]
“I refer to the issues raised in the Notice [being the Notice of Alleged Breach dated 6 July 2021 sent with together the Submission] and I do not dispute the allegations in respect of the notice.
I will send a separate email in respect of the reasons for the failures and request as to why I am requesting leniency”.
[57] Exhibit R1, T6, 170.
On 28 July 2021, in a separate email to the Respondent, the Applicant cited a number of personal circumstances including that:[58]
a) his residence was subject to fires in November and December 2019;
b) his residence and area in which he resides has been subject to flooding;
c)he has suffered a loss of income as a result of Covid-19 and the resultant restrictions;
d)his partner was diagnosed with cancer in April 2020, and underwent treatment between May 2020 to April 2021, which included chemotherapy, surgeries and radiotherapy. Following her last treatment, she was found to be free of cancer;
e)he has had treatment for depression, either by way of counselling or medication, for many years, and in April 2020 he suffered “the worst bout of anxiety [he has] ever experience (sic)”. He remains on medication;
f)there was a “mix-up with [the Addersons Email Address] and the provider” and he “ceased being able to receive emails to this address in February 2021”, which “was just a mix-up at [his] end which has been rectified now”. Emails sent to that address “bounced back to the sender without [him] knowing of the problem” but “there was no deliberate “not replying intent” on [his] part.
[58] Ibid, 171.
Tax compliance of the Applicant
On 8 July 2021, the Applicant lodged the following outstanding ITRs:[59]
[59] Exhibit R2, ST2, 4-7: lodgement details of the Applicant’s ITRs for the 2018, 2019 and 2020 income years.
Period ending Lodgment due date Lodgment date Days late 30 June 2018 31 October 2018 8 July 2021 981 30 June 2019 31 October 2019 8 July 2021 616 30 June 2020 2 November 2020 8 July 2021 248 Quarterly Period ending Lodgment due date Lodgment date Days late 30 September 2017 27 November 2017 7 July 2021 1318 31 December 2017 28 February 2018 7 July 2021 1225 31 March 2018 28 May 2018 7 July 2021 1136 30 June 2018 27 August 2018 7 July 2021 1045 31 March 2019 28 May 2019 8 July 2021 772 30 June 2019 26 August 2019 8 July 2021 682 30 September 2019 28 May 2020 31 December 2020 217 31 December 2019 28 May 2020 31 December 2020 217 30 June 2020 25 August 2020 8 July 2021 317 30 September 2020 25 November 2020 31 December 2020 36 Between 31 December 2020 and 8 July 2021, the Applicant lodged the following outstanding BAS that formed part of the Outstanding Taxation Obligations:[60]
[60] Exhibit R2, ST3, 8-17: lodgment details of the Applicant’s BAS.
On 8 December 2020, the ATO wrote to the Applicant, advising that he had an outstanding tax debt in the sum of $39,835.06, comprising ICA liabilities of $39,599.25 and IT liabilities of $235.81.[61] In its correspondence, the ATO provided links to information regarding assistance with paying, or setting up payment arrangements.
[61] Exhibit R1, T5, 58-59.
On 8 April 2021, the ATO wrote to the Applicant providing a statement of account in respect of his outstanding ICA liabilities that, as at 1 April 2021, amounted to $44,331.27.[62]
[62] Ibid, 60-63.
On 13 December 2021, the Applicant entered into a payment arrangement with the ATO in respect of his outstanding IT liabilities in the sum of $1,287.33, with the first instalment of $35.75 due to be paid on 24 January 2022.[63]
[63] Exhibit R2, ST5, 41-44: ATO correspondence confirming the Applicant’s payment plan in respect of his IT liabilities.
On 13 December 2021, the Applicant entered into a payment arrangement with the ATO in respect of his outstanding ICA liabilities in the sum of $55,406.51, with the first instalment of $1,539.06 due to be paid on 24 January 2022.[64]
[64] Exhibit R2, ST6, 45-48: ATO correspondence confirming the Applicant’s payment plan in respect of his IT liabilities.
On 24 January 2022, the Applicant failed to pay the agreed-to instalments to the ATO in respect of his outstanding ICA and IT liabilities.[65]
[65] Exhibit R2, ST4, 18; ST7, 49: ATO statements of account in respect of the Applicant’s ICA and IT liabilities
At the hearing, the Applicant advised the Tribunal that on or about 10 June 2022 he had paid the outstanding income tax debt owed to the ATO. Following the hearing the Respondent confirmed that a payment in the amount of $1,180.08 was made to the Applicant’s income tax account, with an effective date of 10 June 2022, and that there is no longer any outstanding IT liabilities.[66]
SUBMISSIONS
[66] Email from Respondent to Tribunal dated 14 June 2022.
Applicant
The Applicant does not dispute the facts above in respect of the non-lodgement of his BAS returns, income tax returns and payment of his income tax debt. However, he does not admit that this should be construed as him admitting that he is not a fit and proper person.[67]
[67] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
In relation to the three alleged breaches of the Code, the Applicant contends:[68]
·Section 30-10(2) – he supplied reasons for not completing his lodgements (tax and BAS) due to his health issues, his partner’s health issues as well as living in an area which suffered fires, two floods as well as being quite isolated during Covid-19 (over more than one period).
·Section 30-10(14) – he either did not receive the notice or if he was locked down by either flood, fire or Covid-19, he would not have been able to get to his Post Office Box. Furthermore, there would have been no point in getting the mail transferred to his residential address as the roads for the most part of the fires and floods were cut off and no mail deliveries were being made.
·Section 30-10(8) – during the 2020 year, he did not do enough CPD hours. This was also due to his personal circumstances.
[68] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1-2.
During the relevant period and for many years before, the Applicant was dealing with depression. The sessions he was attending with his psychologist ceased as he felt they were of no real value, as due to Covid-19 they had to be conducted over the phone.[69]
[69] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 2.
The Applicant’s partner underwent cancer treatment during the relevant period. Whilst being locked down due to the floods, his partner had to look after herself and get herself to her treatments.[70]
[70] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
The Applicant lives in Lower MacDonald and his partner lives approximately 65 kilometres away in Ermington. He has responsibilities in both locations, and he would frequently spend the day travelling from one location to the other, preparing meals, attending hospital, taking and collecting his daughter from school.[71]
[71] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 2.
The Applicant provided a timeline of when his personal issues arose and their duration. He contends it is necessary to take into account the issues together, not on an individual basis.[72]
[72] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
The Applicant has been a registered agent since 1993 and this is the first time a complaint has been made against him.[73]
[73] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 2.
The Respondent has four options available to it by way of sanctions and it has not explained why it has not chosen to give him a written caution; make an order under s 30-20; or suspend his registration under s 30-25.[74]
[74] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 3.
The Applicant is a sole-trader and his income has reduced considerably over the past few years due to him having to move offices twice in twelve months to a location that was out of the way or working from home. Some clients refused to come to see him, and he lost their business. Deregistration will mean he has no available source of income, and he may not be able to find alternative employment.[75]
[75] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 3.
Respondent
The Respondent contends that the Applicant breached s 30-10(2) of the Code in that he did not comply with the taxation laws in the conduct of his personal affairs by failing to pay taxation debts as and when they fell due, being:[76]
a)IT liabilities which as at 16 February 2022 amounted to $1,287.33, and are subject to a payment arrangement in relation to which the Applicant is in default;[77] and
b)ICA liabilities which as at 16 February 2022 amounted to $55,406.51, and are subject to a payment arrangement in relation to which the Applicant is in default.[78]
[76] RSFIC, 15 at [74].
[77] Exhibit R2, ST7, 49.
[78] Exhibit R2, ST4, 18.
The Respondent contends that the Applicant breached s 30-10(8) of the Code by not providing evidence of his CPE for the period 27 May 2018 to 27 May 2021 when requested by the Respondent on 27 May 2021, and thereby failed to demonstrate that he maintains knowledge and skills relevant to the tax agent services that he provides as a registered tax agent.[79]
[79] RSFIC, [75].
The Respondent contends the Applicant breached s 30-10(14) of the Code in that he did not respond to the following requests from the Respondent in a timely, responsible and reasonable manner by:[80]
a) failing to comply with the s 30-20 Order in that he did not:
i.lodge multiple BAS, forming part of the Outstanding Taxation Obligations, within the six month period specified in the s 30-20 Order, as detailed above at [33(a)(iii)]
ii.pay, or enter into payment arrangements for, his outstanding IT and ICA liabilities, within the six month period specified in the s 30-20 Order, as detailed above at [33(a)(ii)]; and
iii.provide a written response to the Respondent by 31 January 2021 acknowledging receipt of the s 30-20 Order and providing an update on what steps he had taken as at 31 January 2021 to comply with the requirements of the s 30-20 Order.
b)failing to respond to requests from the Respondent detailed above at [38]-[51].
[80] RSFIC, [76].
The Respondent contends that the Applicant has ceased to meet the “tax practitioner registration requirement” in paragraph 20-5(1)(a) of the TASA, being the requirement that he is a “fit and proper person”.[81] In addition to the Applicant’s breaches of the Code he has:
a)demonstrated a systematic and long-term failure to comply with his taxation obligations across a number of years, which began well before the matters raised by the Applicant in his responses to the Respondent between 28 July 2021 and 6 September 2021 were said to have occurred;[82]
b)consistently failed to engage appropriately with the Respondent in circumstances where:[83]
i.he has previously been the subject of determinations of breaches of the Code by the Respondent, including for similar conduct in failing to respond to (or even acknowledge) numerous requests by the Respondent, and a compulsory notice issued under s 60-100 of the TASA;
ii.at the same time as failing to respond to the Respondent’s requests, he continued to practice as a tax agent, lodging ITRs for clients;
[81] RSFIC, [77].
[82] RSFIC, [78(a)].
[83] RSFIC, [78(b)].
The Respondent acknowledges, and is sympathetic to, the Applicant’s personal circumstances, but does not consider that there is sufficient evidence to demonstrate that they impacted the Applicant such that he could not comply with his obligations as a registered tax practitioner.[84]
[84] RSFIC, [78(c)].
A related and significant factor relevant to the assessment of the Applicant’s fitness and propriety is his breach of a condition of the stay order, being that he “enter into, and maintain, a payment arrangement with the Australian Taxation Office in respect of all outstanding taxation liabilities”. The evidence establishes that the Applicant failed to maintain the payment arrangement he entered into with the ATO on 13 December 2021 as a condition of the stay order.[85]
[85] Respondent’s Outline of Submissions, [16].
In the context of the discretion to terminate under s 40-5(1) of the TAS Act, the Applicant’s failure to comply with his tax obligations and his breach of the Tribunal’s condition for granting a stay weigh substantially in favour of termination.[86] The Applicant has not provided to the Tribunal any further or updated material concerning his personal circumstances to further explain either in mitigation of his past breaches, or as to why non-compliance is unlikely to occur in the future. The absence of up-to-date evidence about these matters weighs further against exercising the Tribunal’s discretion in the Applicant’s favour.[87]
[86] Respondent’s Outline of Submissions, [24].
[87] Respondent’s Outline of Submissions, [25].
The issues raised by the Applicant’s sympathetic personal circumstances do not outweigh the demonstrated and admitted departures from “the high standards expected of a tax agent by the TASA and the general public”.[88] In the circumstances, the correct or preferable decision is to affirm the termination of registration.[89]
[88] Tomkinson at [72].
[89] Respondent’s Outline of Submissions, [28].
CONSIDERATION AND REASONS
Has the Applicant breached sub-sections 30-10(2), 30-10(8) and 30-10(14) of the Code?
86.Based on the evidence before it, the Tribunal is satisfied that the Applicant breached ss 30-10(2), 30-10(8) and 30-10(14) of the Code. The Applicant conceded in correspondence with the Respondent and in his submissions at the hearing, that during the relevant period he did not satisfy the relevant provisions of the Code in that he did not comply with taxation laws in the conduct of his personal affairs (s 30-10(2)), he did not maintain knowledge and skills relevant to the tax agent services that he provided (s 30-10(8)), and he did not respond to requests and directions from the Respondent in a timely, responsible and reasonable manner (s 30-10(14)).
In response to the Notice of Alleged Failure dated 6 July 2021, which set out these three alleged breaches of the Code, the Applicant stated in his reply to the Respondent in an email dated 28 July 2021, “I do not dispute the allegations in respect of the notice.” In relation to the Applicant’s alleged breaches of s 30-10(2) of the Code, in his Statement of Facts, Issues and Contentions dated 15 March 2022, the Applicant stated, “I admitted to the claims made by the [the Respondent] which were in respect of non-lodgement of my BAS returns, Income Tax Returns and my income tax debt.” In relation to the alleged breaches of s 30-10(8) and (14) of the Code, the Applicant admitted that in 2020 he “did not do enough CPD hours”, and he conceded that he did not respond to the Respondent’s letters because he “did not receive the notice or … would not have been able to get to my Post Office Box” due to “flood, fire or Covid-19”.[90]
[90] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
Based on the evidence before it, and the concessions made by the Applicant, the Tribunal is satisfied that the Applicant breached ss 30-10(2), 30-10(8) and 30-10(14) of the Code.
Is the Applicant a “fit and proper person” within the meaning of paragraph 20-5(1)(a) of the TASA?
Whereas the Applicant admits to the Code breaches, he does not admit that he fails to meet the eligibility requirement for registration as a tax agent in s 20-5(1)(a), namely that the individual is a “fit and proper person”. Section 20-15(a) of the TASA relevantly provides that, in deciding whether the Tribunal is satisfied that an individual is a “fit and proper person”, it must have regard to “whether the individual is of good fame, integrity and character”.
In assessing these issues, the Tribunal must reach its own conclusion as to the correct or preferable decision: Peterson and Tax Practitioners Board (‘Peterson’).[91] In particular, as the Tribunal observed in Birdseye and Tax Practitioners Board,[92] an important aspect of the Tribunal’s consideration of fitness and propriety turns upon its assessment of a tax agent’s “contemporary fitness”, and not only instances of non-compliance that were before the Respondent at the time of its decision.
[91] [2018] AATA 93 at [62] per DP Forgie.
[92] [2021] AATA 1011 at [66], [74].
The application of the “fit and proper person” criterion must be made in the context of the objectives of the TASA. These were recently outlined by Deputy President McCabe in Ridden and Tax Practitioners Board (‘Ridden’):[93]
[93] [2020] AATA 422 at [1]-[3].
Tax agents play an important role in our community. They assist ordinary taxpayers and businesses to manage their (sometimes complex) tax affairs. Tax agents deal with the Commissioner of Taxation on a client’s behalf. Tax agents must exhibit a high level of competence and skill if Australia’s self-assessment system is to work efficiently as intended. They must also be trustworthy. There is a strong public interest in ensuring that tax agents are properly regulated.
To that end, Parliament established a regulatory regime for tax agents … At the heart of the regime is a requirement that a person providing tax agent services must be registered by the Tax Practitioners Board…
A registered tax agent enjoys a privileged position relative to others who are not registered. The privileges associated with registration come with expectations. For example, a person must have appropriate qualifications in order to be registered. The person must also conform to certain rules and standards in order to maintain their registration.
For the reasons that follow, the Tribunal finds that the Applicant’s admitted breaches of s 30-10(2), s 30-10(8), and s 30-10(14) of the Code, together with his continued non-compliance with his tax obligations by defaulting on his payment plans in breach of the stay condition, are such that he does not satisfy the “fit and proper person” requirement for the purposes of s 20-5(1)(a) of the TASA.
In relation to the Applicant’s breaches of s 30-10(2) of the Code, there is authority to support the Tribunal’s finding that a failure by an agent to meet their own taxation obligations is ‘sufficiently serious of itself to justify a finding that a person fails to meet the fit and proper person requirement.” In Shmuel and Tax Practitioners Board (‘Shmuel’),[94] the Tribunal found that an agent’s conduct in failing to comply with their own tax obligations reflects adversely on their good fame and character and is inconsistent with the “fit and proper person” requirement. Senior Member Groom stated:[95]
[94] [2019] AATA 2168.
[95] at [23]-24] footnotes omitted.
There is clear authority that a failure by a tax agent to comply with taxation obligations is sufficiently serious of itself to justify a finding that a person fails to meet the fit and proper person requirement. Complying with taxation obligations is a fundamental duty of a tax agent and goes to the heart of an agent’s capacity and willingness to perform their function. A failure to comply with taxation obligations must raise serious doubt about the capacity and commitment of an agent to competently handle other people’s taxation affairs. As described by Deputy President Handley and Senior Member Professor Creyke, in the case of a tax agent, compliance with taxation obligations is a matter that goes to the agent’s competence and ability and that “a tax agent’s demonstrated conduct should be above reproach, being central to the service provided to his clients”. In addition, a failure to comply with taxation laws in the conduct of your personal affairs is a breach of the Code, which itself provides basis for termination of a tax agent’s registration under section 30-30 of the Act.
For these reasons the Tribunal is satisfied that the applicant’s conduct in failing to comply with his taxation obligations must reflect adversely on his good fame, integrity and character, is not consistent with a tax agent maintaining reasonably expected standards of professional and ethical conduct and is therefore not consistent with him meeting the fit and proper person requirement set out in the Act.
The Tribunal has consistently recognised that compliance by tax agents with their own tax obligations is necessary to ‘uphold the confidence and trust that the public are entitled to expect in the services offered by a registered tax agent’: Cleary and Tax Practitioners Board.[96] In Proh and Tax Agents' Board of Victoria.”,[97] Deputy President McDonald observed:
[96] [2014] AATA 260 at [19]; See also G J Brown & Co Pty Ltd and Tax Practitioners Board [2016] AATA 740 at [71].
[97] [2010] AATA 149; (2010) 78 ATR 663 at [15].
It is generally accepted, and the Tribunal accepts, that a failure of an agent to attend to his/her own taxation affairs demonstrates a lack of suitability, rendering the agent unfit to handle the affairs of those who may seek to utilise his/her services.
In Tomkinson and Tax Practitioners Board (‘Tomkinson’),[98] this Tribunal relied on Davies J’s reasoning in Re Su and Tax Agents’ Board of South Australia[99] that a failure by an agent to comply with their taxation obligations may render them not a “fit and proper person” to be a registered tax agent because of the impact such conduct would have on the person’s relationship with the ATO, which may in turn reflect on their handling of their client’s taxation affairs:
[98] [2021] AATA 2172 at [55].
[99] (1982) 61 FLR 1 at 5.
... A tax agent who allows his own tax affairs to get into a state of disorder, who has constant problems himself with the Taxation Department, may not be a proper person to handle clients’ affairs for there may come a time when dissatisfaction which officers of the Department may have with the tax agent personally may be reflected in their handling of his clients’ affairs … Undoubtedly, even minor offences, if sufficient in number, can so interfere with a tax agent’s standing that he is rendered not a fit and proper person to be registered as a tax agent.
The Applicant’s non-compliance with his tax obligations spanned several years starting in November 2017 when he failed to lodge his BAS by the due date. Since 29 March 2019, the Applicant has been continuously indebted to the Commissioner of Taxation. Consistent with the reasoning in the decisions referred to above, the Tribunal finds that the Applicant’s non-compliance with his tax obligations reflects adversely on his good fame, integrity and character such that he does not meet the registration requirement that he be a “fit and proper person.”
A related and significant factor relevant to the contemporary assessment of the Applicant’s fitness and propriety is his breach of a condition of the stay order. The Tribunal’s order for a stay was subject to a condition that the Applicant “enter into, and maintain, a payment arrangement with the Australian Taxation Office in respect of all outstanding taxation liabilities”. The evidence establishes that the Applicant failed to maintain the payment arrangement he entered into with the ATO on 13 December 2021 as a condition of the stay order. He defaulted on the first instalment required under the payment plan and his ICA debt to the Commissioner of Taxation, which remains in arears, and has increased since the Respondent’s termination decision. Whereas the Applicant defaulted on payments due under the payment plan for his IT liabilities, on 10 June 2022 he paid $1,180.08 and thereby discharged in full his outstanding debt.[100]
[100] Email from Respondent to Tribunal dated 14 June 2022.
The breach of a condition of the Tribunal’s stay order is a serious matter. As the Tribunal observed in Tomkinson, the contravention of a stay condition “add[s] to the evidence supporting the Tribunal’s finding that the Applicant is not a “fit and proper person” for registration as a tax agent.”[101] To underscore the seriousness of such a breach, Deputy President Hack SC in GB Shaw and Co Pty Ltd Trading as Dalby Air Maintenance and Civil Aviation Safety Authority[102] referred to “one narrow, and essentially undisputed, aspect of the evidence”, namely that the applicant’s “breach of one of the conditions on which a stay” was granted. The Deputy President found that this was such a serious matter that it alone “so clearly demonstrates an absence of fitness and propriety I do not intend to deal with the vast array of evidence that touches upon the other allegations made by the respondent even though I am clearly of the view that those matters also demonstrate egregious breaches of the applicant's duty and that the applicant is not a fit and proper person.”
[101] at [73].
[102] [2013] AATA 736 at [8].
Although the Deputy President’s observations were made in a different review context, they highlight the seriousness of the Applicant’s non-compliance with the condition of a stay order. In circumstances where the Applicant’s default in meeting his obligations under the payment plan, and his ongoing breach of a condition of an order of the Tribunal remains unexplained, the Tribunal finds that the Applicant is not a “fit and proper person” for the purposes of s 20-5(1)(a) of the TASA.
In relation to the Applicant’s stated personal reasons for his lodgement delays and defaults in his debt repayments, the Tribunal finds that these do not justify his breaches of the Code. In Re Adamec and Tax Agents' Board of Victoria,[103] the Tribunal stated:
[103] [2005] AATA 913 at [70].
Family sickness, bereavement, domestic responsibilities, personality clashes in the workplace, fluctuating work loads and failed business ventures are not uncommon… No doubt, some people are better equipped, psychologically, than others to cope with these vicissitudes, but this cannot alter the characterisation of the events themselves. In making an allowance for "special circumstances", the authorities provide that something more than misfortune is required. The existence of professional standards would become impossibly compromised if they were to be subject, as a matter of course, to the prevailing domestic harmony, physical wellbeing and general equanimity of the individual professional.
The Applicant’s circumstances include his battles with depression and his wife’s treatment for cancer. He also relies on the difficulties he encountered due to various natural disasters, including bushfires and floods, and the COVID-19 pandemic. The Tribunal finds that the circumstances the Applicant encountered are examples of the vicissitudes of life, which unfortunately must often be confronted by individuals, including tax agents. They do not mitigate or justify his breaches of the Code which have spanned several years starting in November 2017 when he failed to lodge his BAS by the due date.
The Applicant’s admitted breaches of s 30-10(8) and s 30-10(14) of the Code are further matters that support a finding that he is not a “fit and proper person” for the purposes of s 20-5(1)(a) of the TASA. This is particularly so when considering his “contemporary fitness” for registration. Unlike in Peterson,[104] on the evidence before the Tribunal, the Applicant cannot mitigate his past breaches of s 30-10(14) of the Code by pointing to “changes to his business systems” made by the “time of the hearing” to provide reassurance that a similar breach will not occur in the future. The Applicant relies only on the difficulties in his personal circumstances and complaints about the Respondent’s communication processes, for example, suggesting that the Board should have “tak[en] the initiative to send the notices by post sooner”.[105] In the absence of evidence of progress or mitigation strategies developed by the Applicant since the Respondent’s termination decision to avoid similar breaches of the Code in future, the Tribunal finds that these matters further support a conclusion that the Applicant is not a “fit and proper person” for the purposes of s 20-5(1)(a) of the TASA.
[104] at [87].
[105] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
In Toohey and Tax Agents’ Board of Victoria (‘Toohey’)[106] Deputy President McDonald observed:
[106] [2009] AATA 603 at [36].
As a tax agent, the applicant should hold himself up to a higher standard than the general public. He has an intricate knowledge of tax laws and it is reasonable to assume that he knows the importance of lodging tax returns on time. His clients, as well the general public, should be able to entrust their taxation affairs to him and have confidence that he is able to lead by example and file his tax returns on time as required by the law.
Having regard to the evidence before it and the relevant authorities cited above, the Tribunal finds that the Applicant’s conduct in breach of the Code indicates a deficiency in his integrity and character such that it cannot be satisfied he is a “fit and proper person” as required for registration as a tax agent. The Applicant’s conduct falls short of the high standards expected of a tax agent by the TASA and the general public. As Deputy President McDonald observed in Toohey, a tax agent’s clients and the public should be able to have confidence that the agent is able to ‘lead by example’ and meet his or her tax obligations on time as required by law.[107] The Applicant’s non-compliance with his personal taxation obligations demonstrate that he did not ‘hold himself up to a higher standard than the general public’ nor did he ‘lead by example’ by meeting his tax obligations in a timely manner.
[107] at [36].
On the evidence before it and for the reasons stated above, the Tribunal finds that the Applicant does not meet the tax practitioner registration requirement of being a “fit and proper person”.
Is the termination of the Applicant’s registration as a tax agent pursuant to paragraph 40-5(1)(b) of the TASA appropriate?
The power to terminate a tax agent’s registration under s 40-5(1) of the TASA is discretionary.[108] Accordingly, the Tribunal’s finding that the Applicant is not a “fit and proper person”, and therefore ceases to meet one of the tax practitioner registration requirements, is a necessary condition for exercising the power to terminate under s 40-5(1) of the TASA, however it is not itself determinative of the outcome. However, as this Tribunal noted in Tomkinson, a finding that a tax agent does not meet the tax practitioner registration requirement of being a “fit and proper person” will generally mean that termination of registration as a tax agent under s 40-5(1)(b) of the TASA is an appropriate sanction.[109] This is because a lack of fitness and propriety, along with adverse findings concerning Code breaches, are matters that weigh substantially in favour of termination as the appropriate sanction for meeting the statutory objective of protecting the public. In this case, the following factors are also relevant to the Tribunal’s decision under s 40-5(1) of the TASA.
[108] Shmuel at [58].
[109] at [79].
On 26 November 2020, the Respondent previously determined that the Applicant had breached s 30-10(2) and s 30-10(14) of the Code.[110] Following those findings, the Respondent issued an order to the Applicant under s 30-20 of the TASA requiring him, within six months, to lodge all outstanding returns, pay all outstanding liabilities, and to continue to lodge and pay any future taxation obligations when they fall due.[111] The Respondent also issued the Applicant with a written caution under s 30-15(2)(a) of the TASA at this time.[112]
[110] Exhibit R1, T5, 40-45.
[111] Ibid, 46.
[112] Ibid, 40.
The sanctions previously imposed on the Applicant are of relevance because they counter a criticism made by the Applicant that “no explanation was forthcoming as to why none of the first three [sanctions] were not chosen.”[113] Noting that “this is the first time a complaint has been made against me”, the Applicant asked “[d]oes a good record count for anything?”.[114] The Applicant contends that taking “into account the issues together” the Respondent’s decision is “either inconsistent, wrong or harsh”.[115]
[113] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 3.
[114] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 2.
[115] Applicant’s Response to the Statement of Issues, Facts and Contentions of the Respondent, 1.
The Tribunal does not accept the Applicant’s submissions in relation to the appropriate sanction. Contrary to the Applicant’s contention his disciplinary history, which includes a written caution and an order under s 30-20 of the TAS Act made in November 2020, demonstrates that he does not have a “good record” which may warrant greater leniency in the imposition of a sanction other than termination of his registration. Moreover, as discussed above, in the context of the “fit and proper person” criteria, the Applicant’s failure to comply with his tax obligations and his breach of the Tribunal’s condition for granting a stay are serious matters. In the context of the discretion to terminate under s 40-5(1) of the TAS Act, these matters weigh substantially in favour of termination.
A final factor relevant to the exercise of the discretion to terminate registration is the Applicant’s submissions concerning his personal circumstances. In Shmuel, the Tribunal acknowledged that “in appropriate circumstances regard should be had to extenuating personal circumstances in exercising its discretion to terminate a tax agent’s registration under section 40-5(1) of the Act.” [116] However, the Tribunal also observed in the same paragraph, “in the absence of credible independent corroborating evidence, the Tribunal cannot be satisfied as to the precise nature of the health difficulties the applicant has suffered nor the precise impact they have had on his capacity to manage his affairs and to attend to his tax, legal and regulatory issues.”
[116] at [58].
The Applicant did not provide to the Tribunal any further or updated material concerning these personal circumstances, either as evidence in mitigation of his past breaches of the Code or to explain why non-compliance is unlikely to occur in the future. The absence of further supporting evidence about the impact of the Applicant’s personal circumstances on his ability to comply with his obligations weighs against exercising the Tribunal’s discretion in the Applicant’s favour.
As the Tribunal observed in Shmuel, any discretion the Tribunal has to take account of an applicant’s personal circumstances must be exercised in accordance with the central purpose of the TASA, namely the protection of the public:[117]
[117] at [59].
In addition, any discretion that the Tribunal has to take account of personal circumstances must be exercised in accordance with the overriding object of the Act which is to ensure that tax agent services are provided to the public in a professional and ethical manner. The central purpose of the Act is the protection of the public. With that in mind, the Tribunal is of the view that it would be an inappropriate use of its discretion to disregard the nature and extent of the applicant’s conduct in failing to meet his legal and regulatory obligations and the risk that repeated conduct of that kind may have for existing and future clients of the applicant, as well as the public at large, on the basis of uncorroborated health issues which by the applicant’s own evidence remain ongoing. This is particularly so where, as in this case, the applicant has not demonstrated any reasonable level of acknowledgment, contrition or remorse for his conduct. The Tribunal is also not able to give any great weight to the applicant’s contentions with respect to his child’s medical condition or the health issues experienced by his employee and the impact those circumstances have had on him for the same reasons.
Consistently with the principles outlined above, the Tribunal finds that the Applicant’s personal difficulties do not outweigh his demonstrated and admitted departures from “the high standards expected of a tax agent by the TASA and the general public”.[118]
[118] Tomkinson at [72].
Having found that the Applicant does not meet the tax practitioner registration requirement of being a “fit and proper person”, the Tribunal is satisfied that the termination of the Applicant’s registration as a tax agent under paragraph 40-5(1)(b) is appropriate.
DECISION
The Tribunal affirms the Reviewable Decision dated 16 September 2021.
I certify that the preceding 115 (one hundred and fifteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr Linda Kirk
................................[SGD]........................................
Associate
Dated: 4 November 2022
Date(s) of hearing: 10 June 2022 Date final submissions received: 14 June 2022 Applicant: In person Counsel for the Respondent: Mr T Liu
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