Yvonne Anderson and Associates Pty Ltd and Tax Practitioners Board

[2020] AATA 4022

Yvonne Anderson and Associates Pty Ltd and Tax Practitioners Board [2020] AATA 4022 (13 October 2020)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2020/1621

Re:Yvonne Anderson and Associates Pty Ltd

APPLICANT

AndTax Practitioners Board

RESPONDENT

File Number(s):      2020/1622

Re:Yvonne Anderson

APPLICANT

AndTax Practitioners Board

RESPONDENT

DECISION

Tribunal:Member D K Grigg

Date:13 October 2020

Place:Brisbane

The Tribunal affirms the decisions under review.

......................[SGD]........................................

Member D K Grigg

CATCHWORDS

TAX AGENT REGISTRATION – termination of applicants’ registrations as tax agents – whether applicants breached Code of Professional Conduct – whether applicants “fit and “proper” as required by the Tax Agents Services Act 2009 – decisions under review affirmed

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)

Income Tax Assessment Act 1997 (Cth)

Tax Agent Services Act 2009 (Cth)

CASES

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

Re Scott and Australian Securities and Investments Commission [2009] AATA 798
Re Su and Tax Agents’ Board of South Australia (1982) 61 FLR 1

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

SECONDARY MATERIALS

Explanatory Paper TPB(EP) 01/2010: “Code of Professional Conduct”

Explanatory Paper TPB(EP) 02/2010: “Fit and Proper Person”

REASONS FOR DECISION

Member D K Grigg

13 October 2020

Introduction

1. This matter concerns an application for a review of a decision made by the Tax Practitioners Board (“TPB”) to cancel the Applicants’ tax agent registrations on the grounds that they breached various provisions of the Code of Professional Conduct (“Code”) contained within the Tax Agents Services Act 2009 (Cth) (“TASA”).

2. The TPB is concerned about the Applicants’ competency and the Applicants’ failure to take reasonable care in the provision of tax agent services.[1] The TPB contends that Ms Anderson is not a “fit and proper person” as required by section 20.5 of the TASA and that, therefore, the Applicants are not eligible to be registered as tax agents.

   [1] Transcript dated 26 August 2020, page 35.

   BACKGROUND FACTS

3. Prior to the final hearing the Applicants applied for a stay of the TPB’s decisions pending the Tribunal’s final determination. The Tribunal refused the stay applications. A significant portion of relevant facts were set out in the stay application decision and they are repeated here.

4. The Applicants, Yvonne Anderson and Associates Pty Ltd (“YAA”) and Ms Yvonne Anderson have been operating as registered tax agents since 23 July 2007 and 1 March 2010, respectively.[2]

   [2] Exhibit 1, T documents, T4, pages 53.

5. Ms Anderson has been the sole director and controlling mind of YAA since 18 May 2007[3] and was a supervising tax agent for YAA.[4]

   [3] Exhibit 1, T documents, T4, page 62.

   [4] Exhibit 1, T documents, T4, page 53; T5, page 533; see also TASA section 20-5(3)(d)(i).

6. Since 18 May 2007 YAA has been the trustee of the Anderson Family Trust (“the Trust”).[5]

   [5] Exhibit 1, T documents, T4, page 65.

7. In 2018 the Australian Tax Office (“ATO”) decided to monitor some of YAA’s clients because of concerns that some of YAA’s clients had claimed work related expense deductions for 2017 which were unusually high.[6] Following the monitoring operation the ATO decided to audit 19 of YAA’s clients (“the Clients”).[7]

   [6] Exhibit 1, T documents, T5, page 573; T5, pages 676-710.

   [7] Exhibit 1, T documents, T4, page 67.

8. As a result of its audit investigation the ATO determined that:[8]

   (a)some of the deductions and claims made by the Clients in their 2017 and 2018 Income Tax Returns (“ITRs”) were incorrectly claimed. The ATO found there was an insufficient nexus between the expenses claimed by the Clients as work related expenses;

   (b)YAA had prepared the ITRs of the Clients who had made work-related expense claims;

   (c)the Clients were required to amend their ITRs resulting in a tax shortfall of $135,089.51; and

   (d)penalties should be imposed on some of the Clients totaling $52,694.55.

   [8] Exhibit 1, T documents, T5, 711-728; T5, 545-546.

9. As a result of its findings and determinations, the ATO referred YAA to the TPB for potential misconduct.[9]

   [9] Exhibit 1, T documents, T4, page 66-68; T5, pages 562-565.

10. On 13 September 2019, the TPB wrote to YAA and advised:[10]

    [10] Exhibit 1, T documents, T4, pages 522-524.

    1. On 16 July 2018, the Australia Taxation Office (ATO) contacted you to discuss your client’s work-related expenditure (WRE) and advised they would monitoring your client’s lodgements.

    2. As part of this process, you received phone calls from the ATO in relation to your client’s income tax returns lodged and their WRE claims. You lodged some amendments to your clients returns based on these calls.

    3. On 29 September 2018, the ATO advised you that they would review the tax affairs of twenty tax returns of your clients, being those lodged by:

    [Client F, Client G, Client K, Client C and Client A]

    4. Between December 2018 and June 2019, the ATO lodged amendments to your clients ITR’s to reduce the WRE claimed. In some cases, they also increased the income declared. This resulted in Income Tax shortfalls for your clients.

    5. On 27 June 2019, the ATO finalised the audits of your client’s tax affairs and provided recommendations for your accounting practice and accuracy of WRE claimed, such as

    a. Expenses are reasonably calculated;

    b. Meet the deductibility test;

    c. Are incurred during your clients performing their work duties;

    d. Can be substantiated by employers; and

    e. Ensure all deductions claimed are supported by evidence.

    Additional Information identified

    6. According to the Board’s records, your professional indemnity insurance (PII) policy expired on 1 July 2019, and there is no evidence that you have renewed this policy.

11. Ms Anderson explained in response that, among other things:[11]

    [11] Exhibit 1, T documents, T4, pages 525-28.

    ·Our office procedures for the processing of tax returns, relies on the honesty of the taxpayer to be telling us the truth.

    ·We ask them to fill in an income declaration form and to sign a substantiation form that they are responsible for keeping all receipts for all work-related expenses claimed and that where necessary the claims need to apportion for personal usage.

    …

    ·For each expense we advise that the expense must show a nexus and show how it relates to the taxpayer's employment income.

    …

    ·We now also ask them to sign declarations for car expenses …

    ·If the taxpayer is claiming travel expenses for work, we ask if they received any allowances or reimbursements, if they have kept receipts and if they have international travel we ask if they had kept a travel log. We also ask how the travel is work related, and if receipts have been kept.

    ·…claims against work related clothing expenses we explain that the workwear needs to be either occupation specific…,

    ·Taxpayers are asked if receipts have been kept. To help with this we often use the clothing and laundry PDF in the ATO tax time toolkit.

    …

    ·For work related study expenses, we ask the taxpayer how the study is related to their employment or what is the nexus between the study and their employment.

    …

    ·We go to the ATO toolkit …

    ·[Client F]

    o… It comes into the conversation about having the receipts as proof of the expense. Relying that we are told the truth and that the taxpayer does have the receipts.

    o…We had never claimed any Rental Income or Expenses on [Mrs F’s] Returns as from information given to us from her husband the Rental Properties' income and expenses were always claimed exclusively on his return

    ·[Client G]

    o… He assured us he had receipts and signed the substantiation form

    ·[Client K]

    oHe claimed car expenses, clothing expenses, etc

    o… He was asked if he had kept receipts he said yes.

    ·[Client C]

    oRelied on client’s instructions

    ·[Client A]

    oRelied on client’s instructions

    oSaid she had receipts…

    ·Please find attached a copy of each of the above clients signed Income Declaration and signed Substantiation Declaration.

    ·… we have now implemented the declarations set out as templates from NTAA …

    ·We have found by using these the taxpayers are realising that they must keep much better records and not just tell us that they are doing so.

    ·… I have attached a copy of my current Pll Policy. In future I will ensure to update the TPB records at time of renewing the policy.

12. On 22 September 2019, two of YAA’s clients (“Mr and Mrs B”), made a complaint to the TPB. Mrs B told the TPB that: [12]

    [12] Exhibit 1, T documents, T4, pages 69-73, 77-93; T5, pages 566-570.

    (a)Ms Anderson had provided them with incorrect advice resulting in their 2017 ITRs being audited by the ATO;

    (b)the ATO were investigating claims for work related expenses, rental income, and rental property deductions;

    (c)information/numbers in their ITRs had been entered incorrectly;

    (d)Ms Anderson had claimed large amounts on Mr and Mrs B’s behalf which did not exist;

    (e)when she contacted Ms Anderson to discuss her ITRs Ms Anderson said she:

    ·was unable to explain how she had arrived at the figures she used in their ITRs;

    ·didn’t want anything to do with helping Mr and Mrs B; and

    ·was no longer liable as Mr and Mrs B had signed the ITRs.

13. As a result of the audit, the ATO determined that Mr and Mrs B collectively owed more than $15,000 in extra tax for the 2017 income tax year.[13]

    [13] Exhibit 1, T documents, T4, pages 94-101; T5, pages 790-797.

14. The TPB advised that as a result of the information it had obtained it was concerned that YAA may have breached sections 30-10(7), 30-10(9), 30-10(10) and 30-10(13) of the Code. Ms Anderson was given until 27 September 2019 to inform the TPB of the following: [14]

    1. What processes or procedures you use (in particular, whether you use any checklists or questionnaires) to determine if your clients are entitled to claim particular WREs;

    2. In relation to the five clients outlined above, what steps you took in particular to verify their income or other earnings and any deductions to which they were entitled. You should also produce a copy of your working papers and/or substantiation declarations for these clients;

    3. What advice you give (if any) to ensure that your clients are advised of their record keeping obligations for substantiation and nexus of their WRE claims; and

    4. The currency of your PII policy and why you have not updated the Board’s records in relation to your PII coverage.

    [14] Exhibit 1, T documents, T4, page 523.

15. On 21 November 2019 the TPB contacted another of YAA’s clients, Client F (Mr and Mrs F).[15] Mr and Mrs F had been audited by the ATO regarding deductions claimed on some rental properties.

    [15] Exhibit 1, T documents, T4, pages 129-130.

16. Mr F told the TPB that Ms Anderson never queried the list of deductions they provided her each year and that he was not aware that the deductions had to be claimed by both himself and his wife and not just him alone.[16] They are currently challenging the ATO’s amended income tax assessments and imposition of penalties. When he contacted Ms Anderson, she said she would pay the penalties.[17] Ms Anderson provided Client F with a written confirmation that she would pay the more than $7,000 worth of imposed penalties.[18]

    [16] Exhibit 1, T documents, T4, page 130.

    [17] Exhibit 1, T documents, T4, page 130.

    [18] Exhibit 1, T documents, T4, page 131.

17. On 27 November 2019, the TPB wrote to YAA to advise that it would be investigating its conduct regarding the possible breaches of the TASA.[19]

    [19] Exhibit 1, T documents, T4, page 102-103.

18. Ms Anderson again responded to the TPB that:[20]

    [20] Exhibit 1, T documents, T4, pages 104-6; T5, pages 753-5.

    (a)Our office procedures for the processing of tax returns, relies on the honesty of the taxpayer to be telling us the truth.

    (b)We ask them to fill in an income declaration form and to sign a substantiation form that they are responsible for keeping all receipts for all work-related expenses claimed and that where necessary the claims need to apportion for personal usage.

    …

    (c)Taxpayers are asked if receipts have been kept.

    …

    (d)Once the return is completed with all given income and expenses the return is signed. When signing the return, the Substantiation and income declaration are signed as well.

    (e)Other advice we give are the ATO posters in all our offices and reception, and signs reminding clients the ATO data matches and the need to keep

    (f)[Mr and Mrs B]

    o… I prepared their returns in front of them and they keep all receipts and invoices. To prepare the returns they present figures and give them to me at the time we do the return. The returns are completed with the Taxpayers present in the office with duel screens so they can see what is entered at the time it is entered

    o[Mr and Mrs B] originally lived in Cairns and then moved to Townsville and would drive up each year to prepare and lodge their tax returns and then moved to Gleneagle and would then fly up each year to prepare their tax returns.

    oTo be accused of rounding off and putting in amounts that did not exist I am deeply hurt, as I always try to be an honest person. I have no answer for this.

    oThey flew up once a year to do their tax returns and had an itemised list of their expenses and all invoices and files were at home.

    oIf they had asked for my help with an audit it would be very difficult due to the distance between them and myself. They would have had to send me all their receipts etc and then I would have then had to send them to the ATO. Also, there is no record of a phone call or an email asking for help or an explanation.

    …

    oI have found email correspondence only relating to the 2018 tax return which I have attached along with copies of their signed tax returns and signed authorities.

19. On 24 January 2020 Ms Anderson submitted that:[21]

    [21] Exhibit 1, T documents, T4, pages 529-530.

    (a)if she had done anything wrong “it was unintentional” and she had “done [her] best to correct it”;

    (b)she “was unaware of what had been happening due to being ill (…diagnosed in May 2018 with lesions on [her] left lung”;

    (c)she has been undertaking medical treatment since May 2018 and had surgery in November 2018 and December 2019;

    (d)the staff who were working for her at the relevant time have all left and “measures have been tightened”;

    (e)a representative from the ATO advised her in November 2019 that he would recommend that monitoring of 2020 ITRs would not be necessary;

    (f)“[She did] not believe that [she] … breached the Tax Agents Services Act 2009. [She] [has] done [her] best as a human to follow the Code of Conduct core principals”

    (g)“[She has] done [her] best to comply and to fix matters.”

    (h)“[YAA does their] best to get information from the taxpayers and explain why they can and cannot claim for expenses. The Office has posters and notices everywhere that correct claims must be made and MO uses Data matching processes. The taxpayers are asked to sign a Statutory Declaration that they will be able to substantiate any expense claims made, as [YAA] do not keep any of their receipts.”

    (i)“… The case with Mr and Mrs B [she] know[s] that [she] personally would not have said something to the effect "you signed the return it is your responsibility" and not try help in anyway. [She] would have pointed out that all information was given to [her] by them and they had signed the Statutory Declaration that they would be able to Substantiate the claims that they had made.”

20. Following its investigation, the TPB advised YAA on 21 February 2020 that it had decided that YAA had failed to comply with subsections 30-10(1), 30-10(2), 30-10(7), 30-10(9) and 30-10(10) of the Code.[22] As a result of that decision the TPB decided to terminate YAA’s registration as a tax agent pursuant to section 40-15(1)(b) of the TASA (“YAA Decision”).[23] The termination was to take effect from 27 March 2020. The effect of the termination is that YAA must not provide any tax agent services or it may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA.

    [22] Exhibit 1, T documents, T1, pages 7-13.

    [23] Exhibit 1, T Documents, T1, pages 7.

21. In its reasons for decision against YAA the TPB advised that:[24]

    [24] Exhibit 1, T documents, T1, pages 7-13.

    (a)it was satisfied, on the balance of probabilities, that YAA had breached subsection 30‑10(1) of the Code by making a false statement to the TPB on 6 December 2019. YAA had told the TPB that it had not received a request from Client B to provide them with assistance in relation to an ATO audit. Evidence indicated that YAA had emailed Client B on 21 March 2019 attaching a spreadsheet to assist them;

    (b)it was satisfied, on the balance of probabilities, that YAA, as trustee of the Anderson Family Trust, had breached subsection 30‑10(2) of the Code in failing to:

    (i)ensure the Trust lodged its ITR for the financial years ending 30 June 2017;

    (ii)ensure the Trust lodged its monthly business activity statements (“BAS”) for the periods – February 2017, May 2017, July 2017, November 2017, August 2018 and February 2019;

    (c)it was satisfied, on the balance of probabilities, that YAA had breached subsection 30‑10(7) of the Code in failing to ensure that tax agent services that it provided, or that were provided on its behalf, were provided competently by failing to undertake sufficient enquiries of 19 clients to satisfy itself that there was sufficient nexus between the clients’ work related expense deductions when preparing their tax returns for the years ended 30 June 2017 and 30 June 2018;

    (d)it was satisfied, on the balance of probabilities, that YAA had breached subsection 30‑10(9) of the Code in that it did not take reasonable care in ascertaining the state of affairs of four of its clients in the preparation and lodgement of those clients’ ITRs, in relation to rental property income and deductions and work related expense deductions; and

    (e)it was satisfied, on the balance of probabilities, that YAA had breached subsection 30‑10(10) of the Code in that it did not take reasonable care to ensure taxation laws were complied with in providing advice to those four clients and failed to apply Taxation Ruling TR93/32 in respect of equally attributing rental property income and deductions for properties held in joint names.

22. The TPB also advised Ms Anderson on 21 February 2020 that it had decided that she had also failed to comply with subsections 30-10(1) and (2) of the Code and that she no longer met the tax practitioner requirements for registration as she was not a “fit and proper person” as required by section 20-5(1)(a) of the TASA.[25] As a result of that decision the TPB decided to terminate Ms Anderson’s registration as a tax agent pursuant to section 40-5(1)(b) of the TASA (“Anderson Decision”). The termination was to take effect from 27 March 2020. The effect of the termination is that Ms Anderson:

    (a)must not provide any tax agent services or she may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA; and

    (b)may not apply for registration under the TASA for a period of 12 months pursuant to subsection 40-25(1) of the TASA.

    [25] Exhibit 1, T documents, T2, pages 31-4.

23. In its reasons for decision against Ms Anderson the TPB advised that:[26]

    [26] Exhibit 1, T documents, T2, pages 31-4.

    (a)it was satisfied, on the balance of probabilities, that Ms Anderson had breached subsection 30‑10(1) of the Code by making a false statement to the TPB on 6 December 2019. YAA had told the TPB that it had not received a request from Client B, to provide them with assistance in relation to an ATO audit. Evidence indicated that YAA had emailed Client B on 21 March 2019 attaching a spreadsheet to assist them.

    (b)it was satisfied, on the balance of probabilities, that Ms Anderson, as trustee of the Anderson Family Trust, had breached subsection 30‑10(2) of the Code in failing to:

    oensure the Trust lodged its ITR for the financial years ending 30 June 2017;

    oensure the Trust lodged its monthly BAS for the periods – February 2017, May 2017, July 2017, November 2017, August 2018 and February 2019;

    (c)it was satisfied, on the balance of probabilities, that Ms Anderson was not a fit and proper person as required by paragraph 20-5(1)(a) of the TASA because she:

    ohad breached subsection 30‑10(1) and 30-10(2) of the Code;

    ocaused YAA to provide false information to the TPB;

    ofailed to ensure the tax services provided by YAA were provided competently in that YAA failed to undertake sufficient enquiries of 19 clients to satisfy itself that there was sufficient nexus between the clients’ work related expense deductions when preparing their tax returns for the years ended 30 June 2017 and 30 June 2018;

    ohad engaged in “gross incompetence…[which] raised real and significant doubt as to whether [Ms Anderson] could be trusted to handle the taxation affairs of members of the public (especially in circumstances where [her] own taxation affairs as a trustee were drawn into question)”

1. On 18 March 2020 Ms Anderson and YAA applied to this Tribunal for review of the Anderson Decision and YAA Decision.[27]

   [27] Exhibit 1, T documents, T1, pages 1-23; T2, pages 24-45.

2. The Tribunal has jurisdiction to review the YAA Decision and Anderson Decision pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”) and section 70-10(e) of the TASA.

3. Both applications were heard together.

   LEGISLATIVE BACKGROUND

4. The object of the TASA, as stated in section 2-5 is "to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct".

5. The TASA establishes the TPB and provides for the registration and regulation of tax agents. Part 3 of the TASA sets out the Code which applies to registered tax agents.  Pursuant to section 60-95, the TPB is authorised to investigate a registered tax agent’s conduct that may breach the TASA.

6. Section 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 TPB is satisfied that the individual is a fit and proper person.

7. In determining whether a person is a fit and proper person to be registered as a tax agent, the TPB must have regard to whether the individual “is of good fame, integrity and character”.[28]

   [28] TASA section 20-15(a).

8. Explanatory Paper TPB(EP) 02/2010: "Fit and proper person" (“Explanatory Paper 02/2010”) provides guidance to agents regarding the TPB’s interpretation of the fitness and propriety requirements of the TASA.

9. The Tribunal is not bound to apply the Explanatory Paper 02/2010, but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[29]

   [29] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 635, 645.

10. Brennan J explained the relevance of an adopted policy to decision-making in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640:

    Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.

11. The Tribunal is not aware of any cogent reason for not following the Explanatory Papers.

12. Paragraph 84 of Explanatory Paper 02/2010 explains that:

    A failure by a tax practitioner to discharge their responsibilities on behalf of clients could reflect adversely on the tax practitioner's fitness and propriety for registration where it amounts to unsatisfactory or unreasonable failure in the tax practitioner’s circumstances and all the surrounding circumstances of the case.

13. Paragraph 86 of Explanatory Paper 02/2010 sets out specific examples of a failure to properly maintain client relationships that may in the circumstances reflect adversely on fitness and propriety for registration. One of those examples is:

    ·     lacking the requisite knowledge and skills to provide services to a professional and competent standard

14. Section 30-10 of the TASA sets out the Code that registered tax agents must comply with to maintain their registration. The following subsections of section 30-10 are relevant here:

    (a)section 30-10(1) provides that a registered tax agent:

    “…must act honestly and with integrity”.

    (b)section 30-10(2) provides that a registered tax agent:

    “…must comply with the taxation laws in the conduct of your personal affairs”.

    (c)section 30-10(7) provides that a registered tax agent:

    “…must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.”

    (d)section 30-10(9) provides that a registered tax agent:

    “…must take reasonable care in ascertaining a client's state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client.”

    (e)section 30-10(10) provides that a registered tax agent:

    “…must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client.”

15. Explanatory Paper TPB(EP) 01/2010: "Code of Professional Conduct" (“Explanatory Paper 01/2010”) provides guidance in relation to general principles and matters relating to the Code that may be relevant to the professional practice of registered tax agents. It provides the following in relation to what is “reasonable care” in ascertaining a client’s affairs:

    What is ‘reasonable care in ascertaining a client’s state of affairs’?

    121.It is considered that ‘more is expected of a registered tax practitioner than a taxpayer completing his or her own return’. This higher standard of care is a reflection of a registered tax practitioner's knowledge, education, experience and skill.

    122.It should be noted at the outset that this requirement under the Code does not create a requirement that a registered tax practitioner effectively ‘audits’ all of the registered tax practitioner's clients before providing tax agent services to avoid breaching the Code.

    123.Rather, this requirement is a duty of registered tax practitioner to take care beyond placing complete reliance on the accounts prepared, or work done, by a person without considering their level of knowledge and/or understanding of the taxation laws and the correctness of their work to ensure that the information upon which the provision of the tax agent services is based is accurate.

    124.In most cases, this will require that a registered tax practitioner ask the client appropriate questions, based on the registered tax practitioner’s professional knowledge and experience, to ascertain the accurate factual basis upon which the tax agent services are provided and, where appropriate, to obtain supporting documents and records evidencing these facts.

    125.The requirement to take reasonable care relates to the services that are to be provided and is therefore subject to the agreed scope of the engagement with the client. A registered tax practitioner would not be required to make further enquiries and it would be reasonable to rely on information or advice, if the scope of the tax agent services excludes the examination of information provided by the client or requires the registered tax practitioner to rely on the information or advice of another expert. These observations must also be considered in light of other paragraphs in this section and with the obligations under the TASA, which must be complied with.

    126.Taking reasonable care will in many cases require that a registered tax practitioner ask questions based on their professional knowledge and experience in seeking information. Where there are grounds to doubt the information provided by a client, the registered tax practitioner must take positive steps and make reasonable enquiries to satisfy themselves as to the completeness and/or accuracy of that information.

    127.Where a statement provided by a client seems plausible and is consistent with previously established statements and the registered tax practitioner has no basis on which to doubt the client’s reliability or the veracity of the information supplied, the registered tax practitioner may discharge their responsibility by accepting the statement provided by the client without further checking.

    128.However, if the information supplied by a client seems implausible or inconsistent with a previous pattern of claim or statement, further enquiries would be required.

    129.Again, whilst there is no requirement to audit, examine or review books and records or other source documents supplied by a client, a registered tax practitioner does not discharge their responsibility in such a case by simply accepting what they have been told.

    (emphasis added)

16. If, having conducted an investigation of a registered tax agent, the TPB is satisfied that the tax agent has failed to comply with the Code, the TPB may terminate the registered tax agent’s registration pursuant to section 30-30 of the TASA. The termination of a registered tax agent’s registration takes effect on the day specified in the notice provided by TPB of the decision to terminate the registration.

    ISSUE FOR THE TRIBUNAL

17. The issue for the Tribunal is whether to affirm the YAA Decision and Anderson Decision to cancel the Applicants’ tax agent registrations.

18. This will involve consideration of whether:

    (a)the Applicants are fit and proper as required by section 20-5(1)(a) of the TASA;

    (b)the Applicants have made a false statement to the TPB on 6 December 2019 in breach of section 30 – 10(1) of the Code;

    (c)the Applicants breached section 30 – 10(2) of the Code in failing to comply with their own taxation obligations;

    (d)the Applicants failed to ensure they provide competent tax agent services in breach of section 30 – 10(7) of the Code;

    (e)the Applicants failed to take reasonable care in ascertaining the client’s financial affairs in breach of section 30 – 10(9) of the Code; and

    (f)the Applicants failed to take reasonable care to ensure taxation laws were complied with in breach of section 30 – 10(10) of the Code.

19. The Tribunal notes at the outset that Ms Anderson was causally related to all YAA’s actions as its controlling mind, director, and supervising tax agent of YAA’s employees.

20. The Tribunal will deal with each issue in turn.

    CONSIDERATION

    Conduct in relation to YAA’s tax affairs as trustee and tax agent for the Trust (section 30 – 10(2), Code)

21. The table below sets out the ITR and BAS statements that were not lodged by the Trustee by their due dates:[30]

    [30] Exhibit 1, T documents, T6, pages 1168-1169; T5, page 541. 

Lodgement Type	For period ending	Lodgement due date	Date lodged	No. of Days late
ITR	30 June 2017	15 May 2018	14 June 2018	30
BAS	February 2019	21 March 2019	3 April 2019	13
BAS	August 2018	21 September 2018	2 October 2018	11
BAS	November 2017	21 December 2017	28 February 2018	69
BAS	July 2017	21 August 2017	20 September 2017	30
BAS	May 2017	21 June 2017	11 July 2017	20
BAS	February 2017	21 March 2017	27 April 2017	37

1. It is not in dispute that the Applicants failed to lodge one ITR and 6 BAS by their due dates.

2. It was during a period of significant illness (see discussion below) that the Trust’s ITR was lodged late (by 30 days). When the ITR was due (on 15 May 2018), Ms Anderson had just been diagnosed and admitted to hospital. It was during the illness period that one of the six overdue BAS was lodged late by 11 days.[31]

   [31] Transcript dated 28 April 2020, pages 11-12.

3. In relation to the other 5 BAS Ms Anderson told the Tribunal she had “no excuse” for lodging the 5 BAS late.[32]

   [32] Transcript dated 3 June 2020, page 27.

4. A registered tax agent should know what his/her tax obligations are and comply with them.

5. The Tribunal finds that the Applicants were in breach of section 30-10(2) of the Code. This is not in dispute.

   Conduct in relation to the Clients’ Work Expenses Claims (section 30 – 10(7), section 30 – 10(9), section 30 – 10(10), Code)

6. In the financial years ended 30 June 2017 and 30 June 2018, YAA lodged 25 income tax returns for the Clients. After auditing those ITRs, the ATO concluded that they required amendment. The ITRs were then amended to reduce their claimed deductions by $135,089.51. The ATO also imposed penalties on some of the Clients totaling $52,694.55.[33]

   [33] Exhibit 1, T documents, T5, pages 545, 546 and 712.

7. The TPB contends that this indicates that the Applicants failed to comply with subsection 30-10(9) of the Code in that it did not take reasonable care in ascertaining the state of affairs of its Clients that were relevant to the preparation and lodgement of its Clients ITRs.[34]

   [34] Exhibit 1, T documents, T5, page 547.

8. There was no substantiation by the Clients of the claimed work expenses, and the Applicants conduct in not insisting on supporting documentation may, depending on the circumstances with those Clients, constitute a fundamental breach of its duties as a registered tax agent.

9. The Clients were entitled to rely on the Applicants for advice and guidance.

10. Evidence indicates that YAA had previously been reviewed in relation to some clients’ work related expense claims by the ATO in 2013.[35] In that instance the ATO advised that YAA implement improvements to verify and substantiate clients’ deduction claims to eliminate some errors that had been found. In 2017 YAA was contacted again by the ATO regarding some “unusually high” work related expense claims made by her Clients. The ATO informed YAA it would be monitoring any ITRs lodged and would consider further action if claims continued to be substantially higher than expected.[36]

    [35] Exhibit 1, T documents, T4, page 74.

    [36] Exhibit 1, T documents, T4, page 76.

11. Overall, the Clients were unable to provide the ATO with any records to substantiate the deductions claimed. Based on Ms Anderson’s responses to the TPB enquiries and her submissions, YAA may not have taken “reasonable care” to establish whether the work related expense and rental expense claims were deductible.

12. At the stay hearing Ms Anderson said she was ill at the time the ITRs of the Clients were prepared and that she employed a tax agent working to lodge all of the relevant ITRs.[37] Ms Anderson told the Tribunal that she had thought the chemotherapy treatment would not have affected her ability to work but that the reality is that she was not capable at that time. The chemotherapy treatment would “knock her out for a week” and then it would take a week to “come good” and then the next round of treatment would begin.[38] She undertook two lots of chemotherapy during July and August 2018.[39]

    [37] Transcript dated 28 April 2020, page 6.

    [38] Transcript dated 28 April 2020, page 13.

    [39] Transcript dated 28 April 2020, page 14.

13. When ITRs were being prepared, Ms Anderson attended work one day per week and she was away from work having treatment from May 2018 to January 2019.[40] Prior to surgery she had chemotherapy to reduce the lesions and then surgery to remove them once they were operable.[41]

    [40] Transcript dated 28 April 2020, page 6.

    [41] Transcript dated 28 April 2020, page 7.

14. In relation to the tax agent YAA employed during Ms Anderson’s illness, Ms Anderson said the agent was registered with TPB, and she had done some seminars with her, so Ms Anderson was confident in the agent’s abilities.[42]

    [42] Transcript dated 28 April 2020, pages 10-11.

15. When asked what control measures were put in place, Ms Anderson said she checked ITRs on the one day/week she went into the office.[43]

    [43] Transcript dated 28 April 2020, page 11.

16. Ms Anderson said all the returns the ATO audited were all prepared and lodged during the period she was ill and going through treatment.[44]

    [44] Transcript dated 28 April 2020, pages 11-12.

17. Ms Anderson does not dispute that errors were made. At the stay hearing Ms Anderson explained that she was “feeling upset … that I have to take the consequences from someone else’s work”. She continued, “It’s just really hard that I have to take the consequences from someone else’s actions”.[45] That person no longer works for YAA.[46] At the final hearing Ms Anderson acknowledged that she had in fact prepared some of the ITRs in question, and the blame for the errors made could not solely be placed on another tax agent.

    [45] Transcript dated 28 April 2020, pages 6-7.

    [46] Transcript dated 28 April 2020, pages 8 and 11.

18. Ms Anderson is mistaken when she says all the Clients’ ITRs were prepared when she was ill. Of the 25 Client ITRs, seven of those were lodged prior to Ms Anderson being diagnosed with her lung condition.[47] As noted in the stay decision, Ms Anderson’s medical condition does not explain or excuse the majority of the concerns the TPB has about her conduct.

    [47] Exhibit 2, Amended Supplementary T documents, ST2, 1362-1375.

19. The impact of Ms Anderson’s medical treatment was obviously serious and lengthy. The TPB said the evidence indicates the diagnosis was serious but there is no verification of the impact the condition had on Ms Anderson’s ability to operate in accordance with the Code obligations and to the standard the community would expect.[48] This is not entirely accurate.

    [48] Respondent’s Amended Stay Submissions dated 26 May 2020, pages 8-9.

20. Upon discovery of the lesion Ms Anderson was immediately admitted to hospital and she remained there for nine days. She then underwent chemotherapy treatment in July and August 2018 to reduce the lesions size for them to be surgically removed.[49] The Tribunal does not think expert evidence is required of the common impacts on persons receiving chemotherapy treatment. Ms Anderson has described how it affected her and there is no reason to doubt that evidence. Further, her general practitioner advised the Tribunal that the treatment “would have caused tiredness and drowsiness” to such an extent that she was not permitted to drive during that period.[50]

    [49] Report of Dr G. Sivasambu dated 29 April 2020.

    [50] Report of Dr G. Sivasambu dated 29 April 2020.

21. Once the lesion was reduced Ms Anderson then underwent two surgeries in November 2018 and December 2019 to remove the lesion. The operations were successful, and Ms Anderson was able to return to work in January 2019. The TPB has also not taken into account the inevitable stress a person in Ms Anderson’s position would have been under.

22. The TPB submits that Ms Anderson’s responsibility is “heightened” because YAA was on notice that the ATO were reviewing her clients’ deduction claims, and it therefore should have implemented appropriate measures.[51]

    [51] Respondent’s Amended Stay Submissions dated 26 May 2020, page 8.

23. The ATO refers to the fact that Ms Anderson was on notice of being monitored in 2013, but there was no wrongdoing found as a result of that monitoring.[52] Ms Anderson was also put on notice that YAA’s clients were being monitored in July 2018.[53] The Tribunal notes that this was when Ms Anderson had just been diagnosed with having lung lesions.[54]

    [52] Respondent’s Amended Stay Submissions dated 26 May 2020, page 8.

    [53] Exhibit 1, T documents, T5, page 573.

    [54] Exhibit 6, Radiology CT Scan Report of Dr A. Bila dated 10 October 2018.

24. The TPB submitted that it is concerned that Ms Anderson has a fundamental misunderstanding of basic tax matters such as work related expenses and how and when they can be claimed, and this arose prior to the onset of her medical condition.

25. In explaining the errors made, Ms Anderson said she did ask questions of the Clients, and “the explanations given to us weren’t the explanations people gave when they were audited to the ATO”.[55]

    [55] Transcript dated 3 June 2020, page 26.

26. Ms Anderson told the Tribunal that she tried to keep her knowledge base up to date by attending seminars and webinars, and, if she is unsure of something, she checks with other colleagues and calls the ATO. She said, “I do try to understand the law ... [people’s] perception of things can be different”.[56]

    [56] Transcript dated 3 June 2020, page 27.

27. Given that YAA is no longer being monitored by the ATO, the Tribunal asked Mr McKechnie what the current risk level was. Deregistration of tax agents is a step taken by the TPB to protect the public; it is not a punishment.[57] The TPB’s focus is on ensuring that taxpayers can have confidence that they are obtaining competent services. Mr McKechnie acknowledged that the fact that the ATO has decided to cease monitoring is something the Tribunal can take into account but said the TPB does not know why that decision to cease monitoring was made.[58]

    Ms Anderson’s Evidence at the Final Hearing

    [57] See Stasos v Tax Agents’ Board of New South Wales (1990) 21 ATR 974, at 978.

    [58] Transcript dated 3 June 2020, page 29.

1. Ms Anderson gave the following evidence:

2. Ms Anderson said she had previously relied on the honesty of the information her clients provided her to prepare their ITRs. She said that prior to being monitored by the ATO she did not require clients to sign declarations confirming their instructions.[59] Now, the Applicant says she will not rely on the honesty of the taxpayer and she says she made changes within her practice following the audit recommendations such as asking for verification documents from clients’ employers.

   [59] Transcript dated 26 August 2020, pages 37 – 38.

3. Ms Anderson said her initial training “did not make [her] aware of the correct policy and procedures need to be followed” and that she “started in a place of ignorance”.[60]

   [60] Exhibit 5, Applicant's submissions dated 19 August 2020.

4. The Tribunal appreciates the Applicants have now, by the time of the final hearing, conceded that their conduct, relied upon by the TPB in making its decision, was not of the appropriate standard. Despite this acknowledgement, the Applicants contend that “it is not fair and reasonable” to cancel their registration because of the measures put in place to ensure problems, such as those with the clients, do not recur. She says she has:[61]

   …acted on advice put all different measures in place so this will not happen again. These measure include training for both myself and the staff, (in house and structured), questioning the clients harder, putting more responsibility back on the clients and getting them to fill out declarations for claims and get more evidence, taking better notes and storing 0f data, being more competent with all the extra training and education.

   [61] Exhibit 5, Applicant's submissions dated 19 August 2020.

5. There is limited evidence to corroborate that these “new” measures were in fact implemented or what training she has undertaken. Ms Rosalind Phillips, now retired, worked for the Applicants for 10 years and provided a statutory declaration. Ms Phillips declared that after the ATO monitoring in 2018, procedures were “tightened”, and she was required to question clients’ deduction claims and have them sign declarations. She also stated that staff attended in-house training seminars provided by the ATO and in NTAA.[62]

   [62] Exhibit 5, Applicant’s submissions dated 19 August 2020 attaching statutory declaration of Rosalind Phillips dated 18 August 2020.

6. Ms Anderson was questioned about specific aspects of some of the Clients work expense claims (which relate to the subject of audits conducted by the ATO). It is not necessary to set out here all of Ms Anderson’s evidence regarding those clients, suffice it to say that Ms Anderson explained:

   ·     in relation to some of the work expense deductions claimed, such as for the repairs of a watch or the cost of prescription glasses, she did not know at the time that these expenses were not claimable, but she now knows they are generally not claimable as work-related expenses;[63]

   [63] Transcript dated 26 August 2020, pages 41 - 43.

   ·     she found the claim for home rental expenses “confusing”. She was ignorant of the correct method to calculate home office expenses at the time;

   ·     she did not prepare some of the audited ITRs .

   ·     she now acknowledges that YAA was responsible for the lodgement of the clients’ ITRs the subject of those orders;[64]

   ·     in relation to car expense and clothing expense claims, she relied on the clients and “didn’t ask… extra questions to prevent these things from happening”;[65]

   ·     she did not know at the time the ITRs were prepared that the cost of private conventional clothing such as Ralph Lauren polo shirts, were not claimable;[66]

   ·     she did not know at the time the ITRs were prepared that costs of obtaining or renewing a passport were not claimable as work-related expenses;[67]

   ·     she did not know at the time the ITRs were prepared that vaccination costs were not claimable as work-related expenses;[68]

   ·     she did not know at the time the ITRs were prepared that shaving and grooming costs were not claimable as work-related expenses;[69]

   ·     she is more educated now

   ·     she acknowledged that allowing the Clients to make those expense claims had nothing to do with the Clients’ honesty but with her ignorance of relevant taxation laws

   [64] Transcript dated 26 August 2020, page 39.

   [65] Transcript dated 26 August 2020, page 45.

   [66] Transcript dated 26 August 2020, page 46.

   [67] Transcript dated 26 August 2020, page 46.

   [68] Transcript dated 26 August 2020, page 46.

   [69] Transcript dated 26 August 2020, page 51.

7. At the final hearing Mr McKechnie, Counsel for the TPB, put to Ms Anderson she still did not have a proper understanding of how work-related expenses should be deducted in tax returns. Ms Anderson responded as follows:[70]

   ---Probably don’t - I don’t know if I’ll ever have a perfect understanding of all the different laws of - but I have a very good understanding of what can and can’t be claimed as work-related expenses now.  And I’ve tried to - and I - if I don’t understand I go and ask for help in some way.  Because I can’t know - I don’t know - I’m not the most perfect person in the world, but I just know that I can’t know everything.  So I’m not going to deny it.  But I just try - like, I know the majority of it now.

   (emphasis added)

   [70] Transcript dated 26 August 2020, page 55.

8. Ms Anderson’s response suggests that she acknowledges that she does not have a complete understanding of the tax laws concerning work related expense claims. Her response also indicates that she does not fully comprehend the seriousness of the situation.

9. The Tribunal asked Ms Anderson why the public should trust that she will provide them with competent tax advice now?  Ms Anderson responded:[71]

   Well, I’ve gone and got myself - (indistinct) - it doesn’t sound very - I’ve gone and revised everything that I could to - and done more proficient - and drilled down and found more of the tax determinations and tax - followed more - with the audits and everything else - and gone back and had a look at those tax laws.  And where if I couldn’t understand it, I’ve gone and asked someone to explain it to me, and their understanding as well.  Because sometimes my understanding is not always the understanding of the ATO and that, too, sort of thing.  Because law is such a grey area all the time.  So, it’s - so, I just go and - I’ve gone and got myself a better understanding and a deeper understanding.  And the thing is not to just believe people anymore and just to ask for more help and ask them more questions.  Yes, I just - I don’t know - I don’t know how many more courses I have to do, and everything else.  I just - I will just do everything I need to do.  Well, that’s not saying what you want to hear, but, like, I just keep trying hard.  And if I don’t know, I will ask someone and - but not just doing right there and then - just ask - leave things and come back to clients, and stuff.  Find out for them.

   (emphasis added)

   [71] Transcript dated 26 August 2020, page 56.

10. Ms Anderson attempted to downplay the importance of knowing and understanding relevant taxation laws by describing her errors as due to her having a different understanding of the law from the ATO. She says she does have a better understanding now, but the Tribunal is not persuaded. There is no evidence to corroborate that this is the case. Ms Anderson still places blame on the clients. It is the Applicants responsibility to know what is claimable and what is not and to advise its clients accordingly.

11. The Tribunal is concerned about the extent of Ms Anderson’s understanding of the required nexus for work related expense deductions and the lack of verification and quality control measures that have been implemented.

    Alleged Breach of section 30-10(1) of the Code

12. One of the grounds raised by the TPB concerns whether 30-10(1) of the Code to act honestly. This issue arose because of representations allegedly made by Ms Anderson to the TPB. At the stay hearing Ms Anderson said,[72]

    “I honestly can’t remember taking the call …. I’ve always tried to help everybody … I just don’t know why I would’ve just said … ‘you signed it and … its your responsibility’… I’ve prepared the tax return always in front of them and I have a dual screen so they see exactly what I’m entering at the time... I said to her ‘I got the figure [re rental property] from you’ … I asked about what causes the expenses to be what they were….I don’t understand why she is saying I didn’t try and help her … I can’t help if [that’s] the information they’ve given me and they’ve got the receipts [they did not give the receipts to Ms Anderson].

    [72] Transcript dated 28 April 2020, page 9.

13. Prior to the final hearing the TPB obtained a statement from Mrs B which attached a copy of an email and a spreadsheet sent to Mrs B by Ms Anderson. The statement was provided to Ms Anderson prior to the final hearing.

14. At the final hearing Ms Anderson acknowledged she emailed the blank spreadsheet to Mrs B to assist her with the audit, but she could not recall the telephone call.[73]

    [73] Transcript dated 26 August 2020, pages 54 – 55.

15. The Tribunal cannot decide the issue concerning the telephone call and the representations purportedly made. The evidence from Mrs B does not provide a sufficient basis to conclude that Ms Anderson acted dishonestly with the TPB. Ms Anderson says she simply does not recall the telephone call with Mrs B or what was discussed during the conversation.

    Findings re Code Breaches

16. As referred to above, Ms Anderson was the responsible agent for the majority of the Clients’ problematic ITRs and acknowledged that she had no excuse. There was a lack of reasonable care taken by the Applicants in providing tax agent services to the Clients and a failure to ensure that the relevant tax laws were complied with.

17. Ms Anderson provided no reasonable explanation for why the Trust’s BAS was lodged late.

18. Given the above, the Tribunal finds that the Applicants breached sections 30-10(2), 30-10(7), 30-10(9) and 30-10(10) of the code. The Applicants have admitted these breaches.

19. For the reasons already outlined, the Tribunal is not satisfied that there was any intention on the Applicant’s part to make a false statement and therefore finds the Applicants have not breached section 30 – 10(1) of the Code.

20. Given these findings the question is whether the Applicants are fit and proper and therefore eligible for registration. There is also the issue of whether the 12 months prohibition on registration imposed on the applicants by the TPB is an appropriate sanction in the circumstances.

    Are the Applicants “fit and proper”

21. Davies J in Re Su and Tax Agents’ Board of South Australia (1982) 61 FLR 1 set out what is required for a person to be considered fit and proper person to handle the income tax return affairs of a client:

    The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.[74]

    (emphasis added)

    [74] Re Su and Tax Agents’ Board of South Australia (1982) 61 FLR 1, 4-5.

22. Taxpayers have a right to expect that the advice they are receiving from the tax agents they engage is competent and that they are not being led into danger of breaching their tax obligations by claiming deductions which cannot be maintained.

23. The breaches of the Code by the Applicants raise significant and serious concerns about Ms Anderson’s fitness to practice as a registered tax agent. Ms Anderson’s technical knowledge prior to the termination of her registration clearly fell far below what is necessary and expected and justifies a finding that she was not fit and proper at that time.

24. In Stasos v Tax Agents Board of NSW (1990) 21 ATR 974 (“Stasos”) Hill J held (at 983) that in determining whether a person is fit and proper, it is also “relevant whether the person has understood the error of his ways”.

25. Further, Hill J found that a tax agent “must keep up to date” with income tax legislation, not merely “try” to keep up to date as Ms Anderson deposed.[75] Hill J explained that this obligation and responsibility “comes with the privileged position” of being entrusted to prepare tax returns in return for a fee.[76] Hill J went on (at 985):

    …a person who has been shown to be other than fit and proper to be registered must satisfy the tribunal considering his registration or cancellation of his registration as the case may be that he appreciates the significance of his wrongdoing and that he regrets it…and that it is truly unlikely that there will be any lapse in the future of the standards which are required of him

    (emphasis added)

    [75] Transcript dated 27 August 2020, pages 65 and 75.

    [76] Stasos, at 984.

26. Ms Anderson told the tribunal:[77]

    MS ANDERSON:  Okay.  Well, I started out in a place of ignorance and like when I sent in those first replies to everything I didn’t know what you were looking for and that you needed me to have changed my ways and everything else, so like when I finished uni I went to work for this one company from the start and that was the practices that I learned and that’s what I followed and there - and I just went on from that.  And then when I - I don’t remember having the ATO come in 2013 because I’ve tried to recollect everything else.  I know that there’s someone from the ATO has come several times to let us know about the portal and then the gentleman came and advised us about the deduction on travel with everything else, he did - from the ATO - did a big thing on travel allowances and then more people from the ATO have come and done more workshops on the portal to the office.

    Then I got the phone call in 2018 from Craig Freedman saying that I was being monitored and so I did everything I could to change practices and Craig called me every fortnight.  I kept trying to improve, putting more things into place while I was doing everything and more checks and balances, then in November 2018 after those fortnight of phone calls from Craig, Craig said that he wouldn’t be calling again because monitoring had stopped for the 2018 year and then in 2019 tax year he called again but he wasn’t doing a fortnightly phone monitoring and he just said that (indistinct ) and the deductions had improved but it wasn’t sufficient and then that the ATO would be monitoring and if they weren’t happy they would be - you know, he would be calling to try and implement more changes.

    So that November that year, in 2019 he called and said that they were quite happy - you know, that there would be no further monitoring.  And then I got the thing from the Tax Practitioners’ Board saying that I was going to be deregistered and so yes, I don’t - but during all this time I’ve tightened things - practices in the company and implemented all the - (indistinct) checks and balances, checking - more scrutinising and checking up the returns more tightly.  I implemented using stat declarations for clients to actually sign and declare that they were - for work purposes, the claims that they were claiming - especially if they were excessive, to get letters from employers.

    I not only continued doing my PD hours and everything else, but I started doing extra courses and everything else and then I also encouraged the staff members to do the Tax Practitioner Board webinar and the ATO webinars and I still keep doing those myself. 

    I have done everything I can to improve matters but as - it’s cost me personally and financially all this trouble, so - I don’t intend to ever let things slide like that again.  So I just - I just - I regret things had to come to this.  I’ve tried my best.  I don’t know - I just need to pay all the debts that I now have.

    (emphasis added)

    [77] Transcript dated 27 August 2020, pages, 74 – 75.

27. At no time during the final hearing did the Applicant ever express an understanding of how her conduct and failure to take reasonable care impacted her clients. Those Clients went through ATO audits all of which resulted in their having to pay additional tax (totalling three $342,134) and 12 of those Clients were also subject to penalties. No regret or remorse has been shown by the Applicant for those clients. Instead, the Applicant sought to blame the honesty of the clients, on another tax agent, and was only concerned with her own personal circumstances She now accepts that her ignorance, and incompetent internal processes caused the incorrect work-related expense claims to be made.

28. The Tribunal is unsatisfied with the lack of detail and evidence of the alleged further education and training purportedly undertaken by the Applicants and her staff following the monitoring by the ATO. Such education and training would be required to ensure there would be no further lapse in standards.

29. The Tribunal is also concerned with the fact that Ms Anderson still describes her mistaken advice as a “misinterpretations” of the law which appears to be an attempt to minimise her culpability.[78]

    [78] Transcript dated 27 August 2020, page 76.

30. The Tribunal finds that Ms Anderson is not a fit and proper person as required by section 20-5 of the TASA.

    Is the sanction imposed appropriate in the circumstances?

31. The Tribunal considers that the sanction imposed by the TPB is appropriate in the circumstances. No submissions were made by Ms Anderson to justify any adjustment to the 12 month period.

    CONCLUSION

32. Tax agents have a duty to take reasonable care in the provision of their services. Clients trust that their tax agent has the requisite level of training and knowledge to advise them appropriately. Ms Anderson does not demonstrate the requisite level of knowledge and competence that a member of the public would expect of a registered tax agent.

33. The Tribunal is not satisfied that the Applicants are fit and proper persons as required by section 20-5 of the TASA.

    DECISION

34. The decisions under review are affirmed.

I certify that the preceding 105 (one hundred and five) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

...............................[SGD]......................................

Associate

Dated: 13 October 2020

Date/s of hearing:

26-27 August 2020

Applicant

By videoconference

Counsel for the Respondent:

Mr M McKechnie, of Counsel (by videoconference)

Solicitors for the Respondent:

Mr J Lie, Lawyer

Tax Practitioners Board