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Board Conduct Committee decisions – January to May 2018

Board Conduct Committee decisions – January to May 2018

Between January and May 2018, the TPB’s Board Conduct Committee (BCC) imposed the following administrative sanctions:

Sanctions

Number of tax practitioners

Written caution

64

Order

61

Suspension

0

Termination of registration

6

The BCC also rejected four registration renewal applications because the practitioners did not meet the ‘fit and proper’ eligibility requirement for registration.

 

Written cautions and orders

Annual declaration matters

The BCC issued written cautions to 17 tax practitioners for failing to complete their annual declaration by its due date. In 16 of these cases an order was also issued to tax practitioners requiring them to lodge their annual declaration within 21 days from the date of the order.


Code breaches

The BCC issued 45 tax practitioners with a written caution and order(s), and two tax practitioners with a written caution only for various Code of Professional Conduct (Code) breaches. The BCC found in 43 of these cases that the tax practitioners had failed to comply with their personal tax obligations. Other breaches include failures by tax practitioners to:

  • make honest declarations in their annual declarations or registration renewal applications about their outstanding personal tax obligations
  • maintain professional indemnity (PI) insurance that meets the Board’s requirements for certain periods of time
  • respond to Board requests and directions in a timely, responsible and reasonable manner
  • follow client instructions in entering their bank account details in their return
  • have adequate arrangements to manage conflicts of interest when acting for clients going through marital separation
  • lodge client tax returns and/or statements in a timely manner
  • obtain required written declarations and authorities from clients prior to lodging returns on their behalf
  • make honest declarations about auditing of self-managed superannuation fund (SMSF) returns
  • ensure that client tax records were not misplaced or lost.

The order(s) imposed on the 45 tax practitioners required various actions to be undertaken according to the particular behaviour of these tax practitioners. The orders covered requirements such as to:

  • lodge their outstanding tax returns and/or business activity statements
  • address their outstanding tax debts to the Australian Taxation Office (ATO)
  • complete and pass course/s of education or training in various subjects including the Code, practice management, taxation and other compliance obligations of SMSFs
  • provide evidence of continuing professional education (CPE) activities completed
  • provide their PI insurance details
  • not prepare or lodge SMSF returns and statements until they completed a course or training.

 

Termination of registration

The BCC terminated the registration of six tax practitioners after finding that these practitioners had:

  • breached the Code and/or
  • ceased to meet the registration requirements.

The BCC also imposed a ban on three of these tax practitioners from reapplying for registration for a period of time ranging from 18 months to five years. 


Case study 1: A tax agent’s registration terminated for Code breaches

The BCC investigated a registered tax agent’s conduct and found that the agent had failed to:

  • lodge their personal income tax returns and business activity statements for certain periods by their respective due dates (Code item 2)
  • lodge their client income tax returns in a timely manner (Code item 7)
  • maintain PI insurance that met the Board’s requirements or provide PI insurance details to the Board despite repeated requests (Code item 13)
  • respond to Board’s requests and directions in a timely, responsible and reasonable manner (Code item 14).

As the agent had failed to provide their PI insurance details to the Board, the BCC determined that the agent also ceased to meet a tax agent registration requirement.

Considering the nature of breaches and that the agent had ceased to meet a registration requirement, the BCC decided to terminate the tax agent’s registration.


Case study 2: Serious taxation offences lead to a tax agent’s registration termination

The BCC investigated a registered tax agent’s conduct and found that the agent had ceased to meet the fit and proper person requirement because:

  • the agent had been convicted of a criminal offence for making false claims of PAYG withholding credits in their tax returns and sentenced to a term of imprisonment
  • the agent had failed to comply with their personal tax obligations by:
    • repeatedly failing to lodge their personal income tax returns for several years by their due dates
    • failing to pay significant outstanding tax liabilities when they fell due or demonstrate attempts to address these debts with the ATO
    • failing to comply with the tax obligations of a number of associated entities they were responsible for
  • the ATO had disqualified the agent from being a trustee or responsible officer of a corporate trustee of a superannuation entity due to their conduct.

The BCC also found that the agent had not provided the Board with evidence that they maintained PI insurance that met the Board’s requirements.

The BCC determined that the agent’s conduct that led to a criminal conviction and sentence to a term of imprisonment was particularly egregious as it involved deliberate making of false statements and attempts to mislead the ATO.

The BCC also noted the agent had demonstrated a blatant disregard for taxation laws and their obligations as a registered tax practitioner under the Code.

The BCC concluded that the agent’s conduct was inconsistent with the standards and expectations of registered tax practitioners and presented an unacceptable risk to the public. Therefore, the BCC decided to terminate the agent’s registration.

Due to the serious nature of the findings, to protect the public and maintain the standards of the tax practitioner profession, the BCC also prohibited the agent from applying for registration for a period of five years.


Rejection of renewal applications

The BCC rejected four registration renewal applications by tax practitioners for failing to meet registration requirements of:

  • being a fit and proper person
  • maintaining PI insurance that met the Board’s requirements. 

The BCC determined that the tax practitioners had failed to meet the fit and proper eligibility and adhere to the Code by displaying one or more of the following behaviours, including failing to:

  • comply with their personal tax obligations (Code item 2)
  • maintain PI insurance that met the Board’s requirements (Code item 13)
  • respond to Board directions and orders in a timely, responsible and reasonable manner (Code item 14)
  • account to clients and pass on their refunds from the ATO in a timely and reasonable manner (Code item 3)
  • have in place adequate trust account management arrangements (Code item 7)
  • act honestly and with integrity (Code item 1)
  • ensure tax agent services were provided competently (Code item 7):
    • they claimed significant travel and work-related expense deductions in their clients’ returns that were private expenses, did not satisfy ATO’s rules or were not substantiated by supported evidence
    • they did not exercise adequate supervision and control over the preparation and lodgement of returns
    • they failed to advise clients of audits conducted by the ATO of their taxation affairs
    • they provided incorrect advice to clients about their eligibility to claim deductions.

The BCC had previously issued a written caution or an order to two of these tax practitioners for similar conduct.


Last modified: 17 July 2018