Yeung and Tax Agents' Board of New South Wales
[2005] AATA 953
•30 September 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 953
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/474
GENERAL ADMINISTRATIVE DIVISION ) Re SHUN KEE EDWARD YEUNG Applicant
And
TAX AGENTS' BOARD OF NEW SOUTH WALES
Respondent
DECISION
Tribunal Professor I A Shearer, Senior Member Date30 September 2005
PlaceSydney
Decision The decision under review is affirmed.
……………………………..
Professor I A Shearer
Senior Member
CATCHWORDS
TAX AGENT – cancellation of registration as tax agent – consideration of evidence – re-hearing of matter and consideration of the question of law identified by the Federal Court as one where the Tribunal previously fell into error – question to be considered is whether the Applicant has been engaged in relevant employment on a full-time basis for not less than 12 months in the preceding 5 years in accordance with Regulation 156 of the Income Tax Regulations – decision under review is affirmed.
Income Tax Assessment Act 1936 ss 251BC(1), 251JC(1)
Income Tax Regulations 1936 – Regulation 156
Re D’Allesandro (1993) 25 ATR 1037, 93 ATC 2028 at 3033-34
Re Downes and the Tax Agents’ Board of Queensland (1993) 27 ATR 1014 at 1019
Re Egulian and the Tax Agents’ Board of New South Wales (1991) 91 ATC 2060
Re Ellis and the Tax Agents’ Board of Queensland (1991) 92 ATC 2001
Re Grolier Enterprises and Australian Postal Commission (1977) 1 ALD 10
Bramwell v Repatriation Commission (1998) 51 ALD 56
Jebb v Repatriation Commission (1988) 80 ALR 329 at 333
Secretary, Department of Employment, Education, Training and Youth Affairs v MacKay (1998) 58 ALD 130
Re Tiknaz and Director-General of Social Services (1981) 4 ALN No.44
Re Webb and the Tax Agents’ Board of Queensland (1992) 92 ATC 2101
REASONS FOR DECISION
30 September 2005 Professor I A Shearer, Senior Member 1. This is an application for review of a decision by the Tax Agents Board of New South Wales refusing to re-register Shun Kee Edward Yeung (“the Applicant”) as a tax agent.
2. The same matter was previously before the Tribunal. On 30 November 2004 Senior Member P J Lindsay affirmed the decision under review. The Applicant appealed against that decision to the Federal Court of Australia. On 10 March 2005 Branson J of that Court allowed the appeal, set aside the decision of 30 November 2004, and by consent of the parties remitted the matter to the Tribunal to be decided according to law. The Court noted that:
“the error of law of the Administrative Appeals Tribunal was its failure to consider the question whether the Applicant had been ‘engaged in relevant employment on a full-time basis for not less than a total of twelve months in the preceding five years’ in accordance with Regulation 156 of the Income Tax Regulations”.
3. The present proceedings have been conducted on the footing of a full rehearing of the matter including a consideration of the question of law identified by the Federal Court as one where the Tribunal previously fell into error.
4. At the hearing the Applicant appeared in person. The Respondent was represented by Mr R Hamilton, instructed by the Australian Government Solicitor.
facts
5. The Applicant, Mr Yeung, was admitted as a certified practising accountant in the Australian society of Certified Practising Accountants (CPAs) in February 1997. He holds a Master’s degree in Commerce (Accounting and Finance) from the University of Sydney. He was registered as a tax agent on 1 November 2000 for a period of three years. He worked as an accountant for a firm of accountants in Sydney from 28 September 1988 to 30 July 1999, and as a senior accountant for a firm of chartered accountants in Sydney from 16 August 1999 until 17 November 2000, and for another firm of chartered accountants from 20 November 2000 until 29 June 2001. He left Australia on 27 August 2001 fro Hong Kong where he has since resided. He is presently employed by the firm J Enterprise Secretarial and Taxation Ltd in Hong Kong.
6. He applied for re-registration in October 2003, but owing to delays in the postal system, for which neither the Applicant nor the Board were responsible, his application was not received by the Board until mid-November., after the deadline for the application had expired. The Secretary of the Board, by letter dated 25 February 2004, notified the Applicant that his application would nevertheless be considered, exercising the discretion allowed to the Board under section 251JB(4)(b) of the Income Tax Assessment Act 1936 (hereinafter referred to as “the Act”).
7. By letter dated 1 July 2004 the Secretary of the Board notified the Applicant of its decision not to re-register him as a tax agent. Referring also to its letter to the Applicant of 20 April 2004, which attached a statement of concerns raised by the Tax Agent Integrity Unit (TAIU), and the Applicant’s reply of 11 May 2004, the Secretary stated that the Board had:
“noted that the Australian Taxation Office lodgement records show you have not lodged any tax returns for the years 1999 to 2003 and that you have no recorded clients for the years 1999, 2000, 2002, and 2003. In the circumstances, at its meeting of 24 June 2004, the Board resolved to refuse to re-register you as a tax agent pursuant to section 251JC of the Act. Having regard to the concerns the Board has raised in the above mentioned letter, you have failed to satisfy the Board that under this registration you are carrying on the business of a tax agent.”
8. That decision is made reviewable by the Tribunal by section 251QA of the Act.
contentions of the parties
9. Mr Yeung contends that the sole question at issue is whether he has permanently ceased to carry on business as a tax agent (section 251JC(1)(d)). He relies on a finding of fact by Senior Member Lindsay in the previous proceedings before the Tribunal (at paragraph 14 of his Reasons for Decision dated 30 November 2004 ):
“Under cross-examination Mr Yeung agreed that he has not lodged any income tax returns while registered as a tax agent. He did emphasise, however, that he has acted for two Hong Kong based clients in discussions with the ATO concerning settlement of their disputes….
I find that his undertaking work in August 2003 as a tax agent for the two Hong Kong based clients demonstrates his intention to offer his services as a tax agent. His evidence was that his employer, J. Enterprise Secretarial and Legal Ltd., is not a registered tax agent. His registration has allowed the employer to represent the clients in matters that it could not otherwise have undertaken. It could be inferred that there would be logistical advantages for a client to have their Australian tax agent based in their home city. While the evidence (for example T1-11 & 12) demonstrates that the clients are the employer’s, I find that the applicant, though an employee, is acting as a tax agent in the negotiations and discussions with the ATO. …
I find therefore as a fact that he has demonstrated an intention to carry on acting as a tax agent. It follows that I am not satisfied that he has permanently ceased to carry on business as a tax agent…..”
10. Upon the basis of the evidence before me in the present proceedings I concur in Senior Member Lindsay’s findings and conclusions on this issue. The Applicant has not permanently ceased to carry on business as a tax agent.
11. But that is not an end of the matter, since Senior Member Lindsay, and – by clear inference – The Federal Court, considered that section 251JC required also a determination of the application of subparagraph (1)(a)(i) of that section relating to whether “the Applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters…”
12. The Applicant objects that by reason of the remittal of the matter by the Federal Court to the Tribunal, the Board “is given a second bite at the cherry”. This objection, however, cannot be sustained: the powers of the Federal Court and the duty of the Tribunal to reconsider the application, are clearly set out in the Administrative Appeals Tribunal Act 1975, section 44(5).
13. As an alternative submission, in the event that the Tribunal should consider that section 251JC(a)(i) calls for application, and that Regulation 156 applies to the interpretation of the words “fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters” equally in section 251JC as in section 251BC, Mr Yeung contends that he satisfies the requirement of regulation 156 paragraph (1)(a)(ii)(A) [now renumbered (2)(c)(i)] in 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 5 years”.
14. In his submission it does not matter whether the period of five years is calculated as the period immediately preceding (a) 1 November 2003 – the date of expiry of his initial registration, (b) 1 July 2004 – the date of refusal of re-registration, (c) 30 November 2004 – the dated of the first decision of the Tribunal, or (d) 10 March 2005 – the date of the decision of the Federal court, although he would contend for the first. On any of these interpretations he claims that he has practised on a full-time basis as a tax agent for a period of or less than a total of 12 months during the period of five years. He gave evidence of his work in taxation matters in both Australia and Hong Kong during the relevant periods. He also declared in evidence that he keeps himself abreast of current developments in Australian taxation law, and further, that the tax laws of Hong Kong and Australia are very similar.
15. Mr Hamilton for the Respondent contended that, even if the Board’s decision to refuse the re-registration of the Applicant as a tax agent were to be regarded as based solely on the ground that the Applicant had permanently ceased to carry on business as a tax agent (decision of 1 July 2004, which incorporated by reference its letter and enclosure to the Applicant dated 20 April 2004), the Tribunal is not precluded from considering other relevant grounds for possible refusal. The Tribunal is not bound in reviewing a decision by the grounds on which the decision maker reached his or her conclusions; the decision may be affirmed on different grounds. (D. Pearce, Administrative Appeals Tribunal 137 (2003); Re Grolier Enterprises and Australian Postal Commission (1977) 1 ALD 10; Bramwell v Repatriation Commission (1998)51 ALD 56; Secretary, Department of Employment, Education, Training and Youth Affairs v MacKay (1998) 58 ALD 130 (where Kenny J. reaffirmed that the function of the AAT is not limited to deciding whether the original decision-maker erred in making the decision under review, but extends to making the correct and preferable decision on the material before the Tribunal).
16. Mr Hamilton urged on the Tribunal the view that the registration and re-registration provisions of the Act, which had been changed in 1988, were designed as a species of “consumer protection”. This means that applicants for registration, or applicants for re-registration, must have wide experience and knowledge of taxation law and practice, so that clients, and the ATO, may have confidence in them, especially since in recent years the Australian taxation system has come to rely heavily on self-assessment by taxpayers: Re Downes and the Tax Agents’ Board of Queensland (1993) 27 ATR 1014, at 1019; Re D’Allesandro (1993) 25 ATR 1037, 93 ATC 2028 at 3033-34. Hence the Tribunal must consider whether the Applicant in the present case is a fit and proper person, in this sense, to prepare income tax returns and transact business on behalf of taxpayers in income tax matters as evidenced by the fulfilment of the qualifications set out in the Act, and particularly in Regulation 156. He also invited the Tribunal to consider that the taxation laws of Hong Kong and Australia were, contrary to the Applicant’s submission, significantly different in material respects.
the applicable law
17. Part VIIA of the Act is headed “Registration of Tax Agents”. Division 1 deals with matters of interpretation, in which the following provision is made with respect to Fit and Proper Persons to Prepare Income Tax Returns”.
“251BC(1) Without limiting the generality of an expression used in this Part, but subject to this section, a person is not a fit and proper person to prepare income tax returns and transact business on behalf of tax payers in income tax matters, as at a particular time, if:
(a)…
(b) …
(ii) the person does not hold such qualifications (whether academic, by way of experience, or otherwise) as are prescribed.
….”
18. Division 3 Deals with registration of tax agents. Subdivision A deals with original registration of tax agents. Subdivision B, relevant to the present case, deals with re-registration of tax agents. In that subdivision, section 251JC, as it applies to the Applicant in the present case provides:
“251JC(1). The Board shall re-register the applicant as a tax agent if the applicant satisfies the Board that:
if the applicant is a natural person:
the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; …and
(d) in all cases – the applicant has not permanently ceased to carry on business as a tax agent.”
19. It thus appears from this legislative scheme that an Applicant (who is a natural person) for registration (section 251JA) as well as re-registration (section 251JC) is required to be a fit and proper person according to the relevant provisions, and according to the criteria set out in the Income Tax Regulations, Regulation 156, made for the purposes of subparagraph 251BC(1)(b)(ii), which applies generally to Part VIIA.
20. Regulation 156 was amended shortly before the present hearing by SLI No. 117 of 2005, reg 3 and Sch item 1. However, the provisions relevant to the present case remained unchanged, although re-numbered. That regulation, relevantly to the present Applicant, provides in subparagraph (2)(c) that:
“A qualification is that a person:
…
…
has:
been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years; or
otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to the employment mentioned in subparagraph (i); or
been engaged in such other employment, and for such time, as the Board regards as equivalent to being engaged in the relevant employment mentioned in subparagraph (i); ….
21. Regulation 156(6) defines “relevant employment” for the purposes of the Regulation:
“In this regulation relevant employment means employment by a person or a partnership in the course of which there has been a substantial involvement in income tax matters including:
the preparation or examination of a broad range of income tax returns;
the preparation or 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.”
22. Mr Yeung argued that the relevant period of five years should run from 1 November 1998 to 31 October 2003. Mr Hamilton argued that the relevant period should be calculated backwards from the date of the present hearing before the Tribunal, i.e. 27 June 2005, and not from any earlier date. He argued this on the basis of the proposition that the Tribunal was standing in the shoes of the decision-maker and deciding the matter in the light of all the material presently before the Tribunal. In support of this proposition he cited Re Ellis and the Tax Agents’ Board of Queensland (1991) 92 ATC 2001, a decision of Deputy President Forgie. Although that was a registration, not a re-registration case, I can see no relevant distinction, and it seems correct in principle to apply the same rule to both cases. In that case it was held that there was nothing in Regulation 156 which attributes any particular significance to the date of the initial application or to the date of the hearing. In a later case, Re Webb and the Tax Agents’ Board of Queensland (1992) 92 ATC 2101, Deputy President Forgie had to consider a contrary decision on the point by Deputy President McMahon in Re Egulian and the Tax Agents’ Board of New South Wales (1991) 91 ATC 2060, where it had been held that the “preceding five years” meant the five years preceding the date of the application (for registration). Noting that the decision in Egulian had been handed down only a few days before Ellis (and therefore presumably she had no knowledge of that decision), and having re-considered the matter very carefully with all respect to her colleague, Deputy President Forgie adhered to the view she had expressed in Ellis. In Webb a distinction was drawn between cases of an entitlement and cases of cancellation of an entitlement. Deputy President Forgie cited a passage from the reasons of Davies J in Jebb v Repatriation Commission (1988) 80 ALR 329, at 333:
“[T]he general approach of the tribunal has been to regard the administrative decision making process as a continuum, so that, within the limits of a reconsideration of the decision under review, the tribunal considers the applicant’s entitlement from the date of application, or other proper commencing date, to the date of the tribunal’s decision. That function was enunciated in Re Tiknaz and Director-General of Social Services (1981) 4 ALN No.44.”
As a consequence Deputy President Forgie calculated the relevant period back from the date of the hearing (at para. 15, page 2105).
23. Since this question has not since been raised before the Tribunal I should express my own view that the decisions on the point in Ellis and Webb are correct and should be followed by me in the present case. Registration as a tax agent, or re-registration as a tax agent, is a question of entitlement. We are not concerned here with the cancellation of an entitlement.
the evidence and the questions to be decided
24. The question for consideration is whether the Applicant has been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years in accordance with Regulation 156 of the Income Tax Regulations. As explained above in these Reasons, the preceding period of 5 years will be treated as the period between 28 June 2000 and 27 June 2005.
25. The Applicant was first registered as a tax agent on 1 November 2000. Details of Mr Yeung’s employment prior to the original registration on 1 November 2000 were given in evidence but no argument was advanced by the Respondent in relation to this period. Presumably Mr Yeung must have satisfied the test of not less than 12 months relevant experience prior to 1 November 2000; otherwise registration would not have been granted by the Board. Therefore I would hold that Mr Yeung was engaged in relevant employment for a period extending from the starting date of the applicable period of 5 years, i.e 28 June 2000 to 1 November 2000 (4 months).
26. There followed a period of employment as a senior accountant with two firms of chartered accountants continuously between 1 November 2000 and 27 June 2001 (8 months). Evidence as to Mr Yeung’s experience during this period was given in the previous proceedings before the Tribunal, including letters of reference from those firms. Senior Member Lindsay made a finding that:
“his employment duties covered the preparation of financial accounts and statements, as well as income tax returns for individuals, partnerships, trust, companies and superannuation funds. There was no mention of his preparation or examination of objections or providing taxation advice generally in relation to returns, objections or assessments.”
27. Neither the Applicant nor the Respondent contested this finding in the present proceedings. My own evaluation of the material in evidence on this point confirms the finding of Senior Member Lindsay.
28. If the above period of 8 months had been spent in relevant employment as defined in Regulation 156, that, together with the period of 4 months prior to original registration, might have got Mr Yeung “across the line” for the purposes of re-registration. But the uncontested findings of fact by Senior Member Lindsay, above, in relation to this period tell against Mr Yeung. Even if Mr Yeung’s work in preparing income tax returns exposed him to “a broad range of income tax returns” (156(6)(a)), his work did not embrace “substantial involvement” in “the preparation or examination of objections to assessments issued in respect of such returns” (156(6)(b), or “the provision of advice in relation to income tax returns, assessments or objections” (156(6)(c).
29. The question of Mr Yeung’s experience in Australian taxation matters since returning to Hong Kong in August 2001 must therefore be considered. Could any of this be counted as “relevant employment” satisfying Regulation 156 for the “missing” 8 months, at least?
30. Mr Yeung submitted a Statement of Relevant Employment, dated 30 September 2003, in support of his application for re-registration as a tax agent. This set out the approximate number of tax returns prepared or examined in the years ended 30 June of 2001, 2002, and 2003. Typical is 2003, in which the applicant stated that he had prepared or examined 10 individual returns, 5 partnership returns, 30 company returns, 1 trust return, and no superannuation fund returns. Mr Yeung further stated in the form the approximate percentage of working time spent in dealing with income tax matters: a. income tax matters – 50%, b. accounting matters – 10%, c. interviews with clients – 10%, d. liaising with ATO – 10%, e. provision of advice – 10%, f. objections – 10%. By means of an asterisk, inserted by hand on the form, there is an annotation by the applicant “Most of these cases are Hong Kong cases”. In cross-examination by Mr. Hamilton, Mr Yeung confirmed that these were mainly Hong Kong cases, and that in fact he had only two clients whose affairs were subject to Australian taxation law.
31. Indeed Mr Yeung further conceded in his evidence that he had not presented any income tax returns to the ATO since re-settling in Hong Kong in 2001, even in relation to the two named clients, since these cases “were still in dispute”. Nor had he carried out any objections against assessments in Australia, since he left Australia. Nor had he given tax advice on Australian law, other than to the two clients mentioned above. So far as keeping abreast of current developments in Australian taxation law was concerned, Mr Yeung stated that he attended “occasional seminars” in Hong Kong conducted by the Hong Kong Branch of the CPA, and through researches on the ATO website through the internet. He did not subscribe to any of the loose-leaf services on Australian taxation law.
32. In a statement submitted on 22 June 2005 the Secretary of the Tax Agents’ Board, Mr. P Rowley, declared that in the period of 18 months since 20 November 2003, when Mr Yeung’s registration expired, there had been no activity in regard to taxation matters by Mr Yeung, that Mr Yeung had been registered and treated as a non-resident of Australia for taxation purposes for the years ending 30 June 2002 and 2003, and that there was no ABN number registered to Mr Yeung. Mr Yeung did not challenge these statements in cross-examination, other than to elicit from Mr. Rowley confirmation that he was managing objections on behalf of the two clients previously mentioned.
conclusion
33. It should be pointed out in conclusion that there has been no suggestion in these proceedings that Mr Yeung is not a person of good fame, integrity and character. His former employers have given favourable references as to the quality of his work. The sole issue has been whether his work since he was first registered as a tax agent has been sufficiently broad and varied as to warrant his continued registration as a tax agent under Australian law.
34. I find that Mr Yeung has failed to satisfy the Tribunal that, in relation to the work he has carried out in Hong Kong since October 2001, he has satisfied any of the criteria set out in Regulation 156(6). I also find that, having regard to the entire period of 5 years under review, Mr Yeung has not been engaged in relevant employment on a full-time basis for not less than a total of 12 months in accordance with Regulation 156 of the Income Tax Regulations.
35. The decision under review is affirmed.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Professor I A Shearer, Senior Member
Signed: Associate
Date of Hearing 29 June 2005
Date of Decision 30 September 2005
Applicant self represented
Counsel for the Respondent Mr Roger Hamilton
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