Following investigations into both an individual tax agent and their company of which they were sole director, the Board Conduct Committee (BCC) found the individual and company tax agents had breached Code items 1, 2, 3, 7, 13 and 14. 

The breaches included the tax agent failing to:

•  act honestly and with integrity (Code item 1) by:
  • making false and misleading statements in their registration renewals regarding overdue taxation obligations
  • lodging a false Business Activity Statement (BAS) for the company for the purpose of receiving a refund that the Australian Taxation Office determined it was not entitled to
  • amending and/or lodging BAS statements for 2 clients without their knowledge or consent; and 
  • misappropriating substantial amounts of client’s refunds 
• comply with the taxation laws in the conduct of their own and their related entities' affairs (Code item 2), including the:
  • non-lodgement of a significant number of income tax returns and BAS statements
  • failure to pay outstanding tax debts by their due dates
  • failure to comply with a notice issued by the TPB 
  • failure to notify the TPB within 30 days that the company had entered into external administration
• account to their clients for a substantial sum of money received on trust into 2 separate bank accounts they controlled (Code item 3)
• ensure tax agent services were provided competently (Code item 7) by preparing and lodging BAS on behalf of its clients which were subsequently subject to ATO amendments, resulting in substantial shortfalls in tax payable
• maintain the required professional indemnity (PI) insurance (Code item 13)
• respond to TPB requests for information during its investigation (Code item 14).

Taking into account the above conduct, the BCC also determined the director was no longer a fit and proper person and no longer met the registration requirement that he hold PI insurance that meets the Board’s requirements.

Additionally, the BCC found the company tax agent no longer met the registration requirements as it did not hold PI insurance that met the Board’s requirements, was under external administration, and its sole director had ceased to be a fit and proper person.

Due to these findings, the BCC decided both the individual tax agent and the company should have their registration terminated with a 5 year ban from re-applying for registration.

This case highlights the critical importance of tax agents adhering to the Code of Professional Conduct and upholding the ethical and professional standards that are expected of registered tax practitioners, who hold positions of trust in our community. Failure to do so can result in serious consequences, including the termination of their registration and a period of exclusion from re-applying.