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Edition 3: November 2014

Summary of penalties, sanctions and terminations

Edition 3: November 2014

Contents

Foreword
How the TPB responds to complaints
The TPB's compliance model
Source of complaints 2013-14
Misconduct results in $70,000 penalty and termination of registration
$43,000 penalty for unregistered tax agent
Tax agent error - tax agent services not provided competently
AAT increases registered agent's suspension
AAT finds tax agent is not a fit and proper person to be registered
Serious breaches of the Code of Professional Conduct
Education for better compliance outcomes
Tax agent suspended for multiple Code breaches
Tax agent did not provide competent tax agent services
Failure to notify and respond to requests from the TPB
Registration terminated for failure to notify the TPB
Tax agent company's serious breaches of the Code
Not acting lawfully in the best interests of a client
Investigation continues despite company not renewing registration
TPB finds company director is not fit and proper
BAS agent fails to comply with personal tax obligations
No PI insurance cover
Registration terminated for providing tax agent services while suspended
Failure to account for tax refunds
TPB investigates failure to comply with personal tax obligations
Application to renew company registration rejected
False declaration and failure to take reasonable care
 

Foreword

This is the third edition of the summary of penalties, sanction and terminations. It outlines the most recent compliance outcomes and decisions by the TPB’s Conduct Committee, and cases that have been heard by the Administrative Appeals Tribunal (AAT) and the Federal Court.

The compliance case studies demonstrate how we respond to and investigate complaints. It shows how we consider which action to take in particular cases to ensure that penalties and sanctions are commensurate with the seriousness of the breach of the law.

The TPB strives to be fair, consistent and practical in the way we regulate tax practitioners and administer the Tax Agent Services Act 2009 (TASA), including the Code of Professional Conduct (Code). We want to protect the consumers of tax practitioner services by ensuring:

  • tax practitioners have the appropriate skills and knowledge to provide tax agent services competently
  • registered tax practitioners are aware of and understand their obligations
  • we address the actions and behaviour of unregistered agents who should be registered.

Education, communication and an effective complaints process strengthen the integrity of the tax practitioner profession.
 

How the TPB responds to complaints

The TPB's compliance work is managed by our Regulatory Assurance team, who respond to complaints from the public about the conduct of registered tax practitioner and unregistered entities. When a complaint is received, the level of risk is considered and the most appropriate compliance action is determined. We provide assistance and support to address compliance issues for low-risk matters and investigate and impose sanctions for high risk cases where the tax practitioner’s behaviour is seen as an unacceptable risk to the public.

Low-risk complaints are generally resolved at the risk and issues management (RIM) stage by talking to the complainant and the practitioner. If a complaint cannot be resolved at this stage it is referred to a case officer for a preliminary enquiry. For high risk cases, the TPB initiates a formal investigation. All formal investigations involve a rigorous process which include consideration by a Board delegate and, where appropriate, involvement of the TPB Legal Unit. All decisions and sanctions are determined by the Board Conduct Committee or appropriate delegate.

Consideration is given to the integrity and competence of the tax practitioner and whether their behaviour demonstrates a serious breach of the Code or other requirements of the TASA. We consider whether their conduct is consistent with the expectations and standards required of a registered agent as set out by the Code. The TPB must determine whether the Commissioner of Taxation, clients and public can have confidence that the agent will perform the services they are registered to provide with integrity or whether they pose an unacceptable risk to the public.

The TPB takes seriously any conduct that breaches the Code, particularly where the conduct calls into question a practitioner’s integrity and competence.

Imposing sanctions for non-compliance is done in a consistent manner with the aim of treating all tax practitioners fairly and with respect.

The TPB aims to modify undesirable behaviour. This is done through a number of ways, including by imposing orders to undertake further training (such as in the Code) and terminating or suspending a practitioner’s registration when there is a risk to the public and the tax system.
 

The TPB's compliance model

Source of complaints 2013-14
 

Source of complaints 2013-14

Source of complaints 2013-14

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Misconduct results in $70,000 penalty and termination of registration

The Federal Court ordered Mr Tsu Chien Su of Sydney to pay a $70,000 penalty for committing 50 breaches of the TASA by recklessly making false statements to the Commissioner of Taxation, and causing loss of revenue to the Commonwealth and personal gain to the agent.

Mr Su admitted to 50 contraventions of the TASA, with 25 of the 50 relating to false information in returns derived from false payment summaries, and the other 25 contraventions relating to the false tax agent certificate contained in each return.

This is the first time the Federal Court has imposed a pecuniary penalty on a registered agent for contraventions of the TASA. Among other considerations, in imposing the $70,000 penalty the Federal Court made allowances for the fact that Mr Su had admitted to the contraventions early in the process and had shown contrition.

Following a finding by the TPB that Mr Su had knowingly breached the Code, the TPB terminated his registration as a tax agent in August 2013, imposing a period of three years before he could re-apply for registration. Mr Su appealed this decision to the AAT. The AAT affirmed the TPB’s decision, outlining the main reasons why it was the appropriate decision:

  • Mr Su’s unsatisfactory understanding of the role of a tax agent – the AAT commented that ’The self-assessment tax system requires accurate information to be provided to the ATO. It requires tax agents to do all they can to ensure that the information their clients provide is accurate’
  • The perceived shortcoming in Mr Su’s integrity
  • Mr Su’s competence as a tax agent
  • Mr Su’s lack of insight into the seriousness of the shortcomings in his behaviour.

In upholding the TPB’s decision to impose a three year non-application period, the AAT confirmed ’the primary purpose of not allowing a person to apply for registration for a period to time is to protect the public and the integrity of the tax system’
 

$43,000 penalty for unregistered tax agent
 

The Federal Court ordered Ms Zada Dedic, from Melbourne, to pay a $43,000 penalty for providing tax agent services for a fee while not being a registered tax agent.

Ms Dedic, was registered with the TPB as a BAS agent but was not registered as a tax agent when she prepared and lodged tax returns for clients of her accounting business. The Court found Ms Dedic had contravened the TASA on 86 separate occasions, from July 2010 to October 2012, by preparing and lodging tax returns and charging a fee for these services. The Court found that the conduct was deliberate, as Ms Dedic was aware that she needed to be a registered tax agent in order to prepare the tax returns for a fee. Ms Dedic had previously applied for registration as a tax agent but the TPB refused her application because it was not satisfied that she met the relevant experience requirements for tax agent registration.

The Federal Court also imposed a three year injunction which requires Ms Dedic to tell people who request her to provide tax agent services that she is not a registered tax agent and cannot charge a fee for any tax work. Ms Dedic’s BAS agent registration was also terminated.

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Tax agent error - tax agent services not provided competently

The TPB received referrals from the Australian Taxation Office (ATO) which identified competency concerns of Ms Irene Rose Burnett of South Australia, a registered tax agent, following a site visit to the tax agent’s practice in 2009. ATO audits conducted in 2011 and 2013 resulted in adjustments totalling $119,408 and $391,466.

The ATO imposed penalties having found a ‘lack of reasonable care’, ‘recklessness’ and an ‘intentional disregard’, and that the errors were ‘attributable primarily to tax agent error’.

The TPB also received a complaint concerning Ms Burnett’s unauthorised access to records via the Tax Agent Portal (the Portal).

Following an investigation into the tax agent’s conduct, the TPB determined that Ms Burnett had failed to comply with the Code. The TPB decided to reject Ms Burnett’s application to renew her registration due to her conduct leading to breaches of the Code, and other conduct including her failure to deal appropriately with the Commissioner of Taxation. Ms Burnett appealed to the AAT to review the TPB’s decision.

On appeal, the AAT affirmed the TPB’s decision. The AAT considered the tax agent’s fitness and propriety and whether she was of ‘good fame, integrity and character’ as per section 20-15 of the TASA, and relevantly considered the tax agent’s competency, character and contrition. The AAT determined that ‘allowing the tax agent to continue would pose an unacceptable risk to the community’ and would carry a risk that she would:

  • engage in further rude, inappropriate and uncooperative behaviour with respect to ATO staff
  • make inappropriate and unfounded allegations in response to any criticism of her conduct
  • use the Portal in circumstances where the tax agent had no authority to do so
  • continue to prepare and submit returns for clients claiming inappropriate work related deductions.

In its reasons for decision, the AAT concluded:

  • the tax agent ‘does not possess the level of competence in the handling of her clients’ taxation affairs which would be necessary for her to be regarded as a ‘fit and proper’ person to be a tax agent’
  • the agent’s unauthorised use of the Portal together with her dealings with ATO officers show her not to be a person of ‘good fame, integrity and character such that she may confidently be entrusted with the taxation affairs of members of the community’
  • the tax agent showed little contrition and appreciation of the seriousness of her conduct and ‘there is no basis for confidence that, if given the opportunity, she would not repeat the same types of conduct in the future, both with respect to management of the taxation affairs of her clients and in her dealings with the ATO’.
     

AAT increases registered agent's suspension

The AAT imposed a 12-month suspension on a registered tax agent, increasing the original three-month suspension imposed by the TPB.

Mr John R Cleary, a registered tax agent of Richmond, Tasmania, was suspended for three months following breaches of the Code. Mr Cleary did not comply with the taxation laws in the conduct of his personal affairs when he failed to lodge (and/or pay) by the due dates:

  • his personal income taxation returns for the financial years 2009, 2010 and 2011
  • his business activity statements (BAS) for the period 1 July 2011 to 30 September 2012
  • partnership income tax returns for the 2009, 2010 and 2011 financial years
  • partnership BAS from July 2011 to September 2012 (inclusive)
  • his personal income tax debt of $17,447, his client account centre debt of $60,465.06, and the partnership client account centre debt of $716
  • employer contributions to his employee superannuation funds during the 2007, 2010 and 2012 financial years pursuant to the Superannuation Guarantee Charge Act 1992.

Mr Cleary appealed the TPB’s decision to suspend his registration for three months, stating that the suspension would harm his business and his ability to meet his taxation obligations.

The AAT considered Mr Cleary’s failures were extensive and had taken place over a lengthy period of time. He had failed to demonstrate any contrition for his conduct or appreciate the seriousness of breaching taxation laws.

The AAT concluded that ‘Mr Cleary’s failure to meet his obligations constitutes not only breaches of the law, but a failure to uphold the confidence and trust that the public are entitled to expect in the services offered by a registered tax agent.’

’The TPB aims to assure the public that registered tax practitioners are fit and proper persons, of good character and are qualified to provide tax agent services. If they fail to comply with the Code of Professional Conduct, we can apply a range of sanctions including suspending registration’ – Ian Taylor, Chair, Tax Practitioners Board

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AAT finds tax agent is not a fit and proper person to be registered

A TPB investigation into the conduct of a registered tax agent resulted in findings that the agent, Mr Johannes Grosfeld of Sydney had breached the Code by failing to:

  • respond to requests from the TPB
  • lodge personal income tax returns and BAS
  • provide clients with a means of contact
  • maintain PI insurance
  • provide tax agent services competently.

The TPB also became aware of findings in Supreme Court proceedings that the agent had breached his duty as executor of a deceased estate. The court found that he was not a fit and proper person to continue as an executor and the grant of probate to the agent was revoked.

The TPB rejected Mr Grosfeld’s application for renewal of registration. The TPB considered that the breaches of the Code were serious and combined with the findings of the Supreme Court regarding Mr Grosfeld’s conduct as executor of a deceased estate, the TPB was not satisfied that he was of good fame, integrity and character and therefore a fit and proper person.

Mr Grosfeld applied for a review of this decision with the AAT.

The AAT found that the Supreme Court proceedings were unrelated to registration as a tax agent but were relevant, particularly where a finding of misconduct demonstrated that the agent’s conduct was inconsistent with fitness and propriety to practice as a tax agent. ‘Mr Grosfeld’s conduct had not only fallen short of the Code but he had failed to appreciate the significance of his non-compliance or to provide adequate explanation or assurances he will not breach in the future.’ The AAT found that Mr Grosfeld was not a fit and proper person to continue as a registered agent and affirmed the TPB’s decision not to renew his registration.
 

Serious breaches of the Code of Professional Conduct

The TPB recently terminated a tax agent’s registration and their company’s registration for serious misconduct that compromised the tax affairs of a number of clients.

The TPB began an investigation after a number of complaints were received from clients of the company and ATO audits revealed serious errors.

  • The complaints from clients raised serious concerns about the conduct of the tax agent and their competence and integrity. ATO audits revealed a number of issues. The agent had lodged incorrect BAS and income tax returns on behalf of a client and did not provide complete records to the ATO and failed to keep several appointments with the ATO.
  • Notices of assessment for a client were not passed on to the client for over two years. As a result, the client had a tax debt of $65,000, including outstanding penalties and fines.
  • The tax agent included a capital gain on the sale of a property of a client. The client was in fact entitled to a capital gains tax exemption but the tax agent had failed to identify and inform the client of this. The tax agent claimed an education tax refund on behalf of another client even though the client was not entitled to, nor aware of the claim.

This conduct demonstrated serious breaches of the Code as the agent failed to maintain knowledge and skills relevant to the tax agent services that they provided and failed to provide tax agent services competently.

During the TPB’s investigation, the tax agent repeatedly failed to respond to TPB requests for information in a timely and reasonable manner. This demonstrated no appreciation for the significance of completely and promptly responding to requests from a regulatory authority, and demonstrated a disregard for their legal obligations as a registered tax agent.

The TPB also noted that the tax agent did not show remorse, contrition and awareness of the significance or consequences of the conduct, and the conduct on behalf of the company.

As a result of the investigation, the TPB determined that the agent had breached the Code. The TPB was not satisfied that they could be trusted with the taxation affairs of members of the public.

On the basis of their conduct, the registration of the tax agent and the registration of the company were terminated. The TPB determined that the tax agent posed an unacceptable risk to clients in the future and the tax agent was prohibited from applying for registration for a period of three years.
 

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Education for better compliance outcomes

The TPB investigated a registered tax agent who had represented to clients, and to the Commissioner of Taxation, that he held the necessary attributes and approval to audit self-managed superannuation funds when he did not. A TPB investigation determined that he had breached the Code.

The TPB sent the agent a written caution and ordered the agent to complete and pass a course of education or training in relation to the Code.
 

Tax agent suspended for multiple Code breaches

Following an investigation, the TPB found that a tax agent's conduct had breached the Code when he had failed to:

  • act honestly and with integrity
  • ensure that tax agent services he provided were provided competently
  • take reasonable care in ascertaining clients’ state of affairs, to the extent that ascertaining the state of those affairs was relevant to statements he made or things he did on behalf of those clients.

The TPB found the agent had failed to comply with the above provisions of the Code on the basis of the following considerations, for each of the above three breaches:

  • The agent lodged a Departing Australia Superannuation Payment claim with the ATO for a client without authority.
  • The agent lodged income tax returns with the ATO for another two clients without authority and without substantiating income tax details and claims. The agent also failed to promptly provide tax refunds and notice of assessments to these two clients.
  • In preparing and lodging documents with the ATO for three clients, the agent did not take reasonable care in ascertaining the state of affairs of those clients.

The TPB decided to suspend the tax agent's registration for a period if three months and made an order for the agent to complete and pass a course of eductation in relation to the Code.
 

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Tax agent did not provide competent tax agent services

The TPB found that a tax agent had failed to take reasonable care when completing a client’s BAS.

The TPB investigated breaches of the Code after the ATO audited the tax agent’s client and raised concerns about the conduct of the tax agent. When lodging BAS and payment summaries, the tax agent failed to make further enquiries about unrealistic remuneration and withheld tax figures.

The TPB noted that the tax agent failed to:

  • ensure that tax agent services were provided to the client competently, as the BAS and payment summaries for two financial years reported incorrect withholding amounts
  • take reasonable care in ascertaining the client’s state of affairs that were relevant to the BAS and payment summaries that the agent lodged on behalf of the client.

The tax agent was issued with a written caution and was ordered to complete and pass a course of education in relation to the Code and the exercise of reasonable care in relation to the provision of tax agent services.
 

Failure to notify and respond to requests from the TPB

A registered tax agent failed to notify the TPB that he had been declared an ‘undischarged bankrupt’. The TPB wrote to the tax agent asking for an explanation about the circumstances of his bankruptcy and reasons he failed to notify the TPB when he had an obligation to do so.

After many unsuccessful attempts to the contact the tax agent, the TPB determined that the tax agent had breached the Code by failing to:

  • respond to the TPB in a timely and reasonable way
  • notify that he was an undischarged bankrupt.

The TPB terminated the tax agent's registration as the agent was no longer considered a fit and proper person to be registered as a tax agent.
 

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Registration terminated for failure to notify the TPB

A registered tax agent did not notify the TPB that he had been convicted of an offence involving fraud or dishonesty, involving the falsification of a company’s books.

An investigation found that the agent had breached the Code by failing to notify the TPB in writing about his conviction, and by failing to respond to TPB correspondence. The agent’s conduct was inconsistent with the expectations and standards required of a registered tax agent and the agent was no longer considered to be a fit and proper person for registration as a tax agent. The TPB found that the Commissioner of Taxation, clients and public could not have confidence that the tax agent would perform his functions as a registered tax agent with integrity and that the tax agent presented an unacceptable risk to the public.

The TPB terminated the agent’s registration.
 

Tax agent company's serious breaches of the Code

The tax agent registration of a company and the company director was terminated for serious and extensive breaches of the Code.

Complaints from six separate clients stated that the company had failed to forward income tax return refunds in a timely manner and, in some cases, had not forwarded the refunds at all. The company had failed to communicate with the clients when they had complained about these issues.

Information from ATO records showed that the company also had outstanding superannuation guarantee charge debt and tax liabilities without any payment arrangement in place. The company had also failed to lodge a quarterly BAS and did not have appropriate professional indemnity (PI) insurance cover in place.

After several unsuccessful attempts to make contact, the TPB determined that the company had:

  • failed to act with honesty and integrity
  • breached the Code by failing to account for client’s income tax refunds
  • failed to ensure that tax agent services were provided competently
  • failed to provide evidence of PI insurance that met the TPB’s requirements.

An investigation also found that the company director:

  • was not fit and proper
  • had failed to ensure that the company complied with the standards of professional and ethical conduct
  • failed to provide evidence that he had PI insurance that met the TPB's requirements.

The TPB terminated his tax agent registration and that of the company.

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Not acting lawfully in the best interests of a client

The Australian Securities Investments Commission (ASIC) imposed a banning order on a financial adviser, prohibiting him from providing financial services for six years. The adviser had displayed dishonest and misleading conduct when he had promised to invest money on behalf of a client, but instead used the money to purchase property and pay off his own debts.

The financial adviser was also a registered tax agent but did not inform the TPB about the ASIC banning order. A TPB investigation found that the agent had breached the Code by failing to:

  • act with honesty and integrity
  • account to the clients for money that the agent held on trust for those clients
  • act lawfully in the best interests of his clients.

The TPB terminated the agent’s registration as it considered that the agent was no longer a fit and proper person and prohibited the agent from applying for registration for three years.
 

Investigation continues despite company not renewing registration

A tax agent company was referred to the TPB because it had outstanding debts with the ATO, including administrative penalties for intentional disregard of the law.

The TPB investigation found the company had breached the Code by failing to:

  • comply with the taxation laws in conduct of its affairs; the TPB noted the seriousness of the conduct that contributed to the debt
  • maintain PI insurance that met the TPB’s requirements
  • respond in a timely, responsible and reasonable manner to the TPB.

The company did not apply to renew its tax agent registration and the TPB could not take any further action. However, the findings of the investigation may be relevant when determining whether the company is eligible for registration if an application for registration by the company is received in the future.

The TPB also found that the registered tax agent and sole director of this company had a personal debt with the ATO and did not have appropriate professional indemnity (PI) insurance cover. The TPB received 14 complaints about the tax agent services provided by the agent. The TPB found the agent breached the Code by failing to:

  • comply with the taxation laws in the conduct of his affairs and had an accumulated debt with the ATO
  • account for income tax refund money owed to clients in a timely manner
  • ensure tax agent services were provided competently
  • forward refunds
  • provide clients with a means of contact
  • maintain PI insurance that met the TPB’s requirements
  • respond to the TPB in a timely, responsible and reasonable manner.

The company director was no longer considered a fit and proper person. The TPB terminated the tax agent’s registration as they presented an unacceptable risk to the public.
 

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TPB finds company director is not fit and proper

The TPB commenced an investigation after receiving a number of complaints from clients of a tax agent company. A referral from ATO showed that the company had:

  • claimed overpayment amounts for BAS that were paid into an account operated by the company
  • not lodged income tax returns for two years
  • not lodged BAS for two separate quarters
  • a debt to the ATO with no payment arrangement in place.

The company had also been convicted of an offence for failure to provide information to the Commissioner of Taxation and the company’s director was also convicted of an offence under the Tax Administration Act 1953.

The TPB found that the company had breached the Code by failing to:

  • act with honesty and integrity
  • account for clients’ monies held on trust
  • comply with the taxation laws in the conduct of its affairs
  • notify the TPB that they had been convicted of an offence
  • maintain PI insurance that met the TPB’s requirements.

The tax agent registration of the company was terminated due to the serious and extensive breaches of the Code. The TPB found that the company director was not a fit and proper person and terminated their registration.
 

BAS agent fails to comply with personal tax obligations

The TPB terminated the registration of a registered individual BAS agent and the company BAS agent for breaches of the Code. The company failed to lodge its BAS for three years and the company’s sole director failed to:

  • comply with their personal taxation obligations for a significant period
  • respond to the TPB in timely, reasonable and responsible way.

The agent was no longer a fit and proper person and ceased to meet the registration requirements.
 

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No PI insurance cover

A project was undertaken to ensure all registered tax practitioners had PI insurance that met the TPB’s requirements. It was found that several registered agents had breached the Code by not maintaining PI insurance cover. The agents were suspended for three months and instructed to provide written notification that they had PI insurance that met the TPB’s requirements. None of the agents notified the TPB of their PI insurance details. The TPB found that they were no longer fit and proper as they had failed to comply with the PI Insurance requirements, and their registrations were terminated.
 

Registration terminated for providing tax agent services while suspended for breaches of the Code

A registered tax agent was suspended for six months for breaches of the Code. The tax agent was prohibited from providing tax agent services during the six month suspension; however a data warehouse search from the ATO showed that the agent had lodged 25 income tax returns during this time. Statements from the agent’s clients confirmed that they had received tax agent services from the agent during the time of his suspension. The agent had not advised his clients that he was suspended and had charged the usual fee for tax agent services. The agent lodged the income tax returns by paper, as his portal access had been suspended.

The TPB sent a letter asking the agent to respond to allegations that he breached the TASA by providing tax agent services while suspended and that he did not maintain PI insurance that met the TPB’s requirements. No response was received.

The TPB determined the agent was no longer fit and proper, as his conduct was inconsistent with the expectations and standards required of a registered tax agent. The TPB terminated the tax agent’s registration and he was prohibited from applying for registration for a period of one year.
 

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Failure to account for tax refunds

The TPB received several client complaints in relation to a registered tax agent. The agent had failed to:

  • account for tax refunds received from the ATO on behalf of a client’s superannuation fund
  • lodge two years’ income tax returns for a client’s trust account
  • account for money that was given by a client to pay the ATO for the client’s tax liabilities
  • account for money that was to be invested on behalf of clients
  • provide clients with a means of contact.

The tax agent had also failed to lodge personal BAS and income tax returns and had incurred a large debt with the ATO.

The tax agent then did not renew his tax agent registration. Although the tax agent was no longer registered, the TPB still made a finding that the agent was no longer fit and proper. If the tax agent was to reapply for registration in the future, the TPB may take these findings into account to determine whether he is eligible for registration.
 

TPB investigates failure to comply with personal tax obligations

The TPB began an investigation into the conduct of a registered BAS agent for failing to lodge personal income tax returns. The BAS agent did not respond to the TPB’s request to lodge their income tax returns and the BAS agent’s income tax returns remained outstanding.

The TPB determined that the BAS agent had breached the Code by failing to:

  • lodge income tax returns
  • respond to the TPB in a timely manner.

The TPB terminated the BAS agent’s registration on the basis that she had ceased to meet the registration requirements to be a fit and proper person.
 

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Application to renew company registration rejected

A tax agent company and tax agent sole director applied for renewal of registration with the TPB.

Information from ATO records indicated that the registered tax agent company had a combined tax debt from Pay as you go (PAYG), GST, income tax and superannuation guarantee charge of almost $68,000. The company had defaulted on approved payment arrangements with the ATO and also failed to lodge further income tax and annual GST returns.

The TPB investigation also revealed that the company had been deregistered by ASIC in 2013.

The company had breached the Code when it failed to:

  • maintain PI insurance that met the TPB’s requirements
  • notify the TPB that the company had been deregistered
  • comply with personal taxation obligations.

The company’s registration renewal application was rejected. The registration of the sole director tax agent of the company was also terminated due to breaches of the Code.

The agent had failed to act with honesty and integrity as he had misled the TPB when he stated that he was taking action to pay the outstanding debts to the ATO but had not taken any action. He had also breached the Code by failing to account to a client for four years of income tax return refunds.

The TPB determined that the agent was not a fit and proper person due to his breaches of the Code and his failure, as director of the company, to ensure that the company complied with its taxation obligations. This demonstrated a lack of appreciation and regard for the taxation laws, particularly with regard to timely lodgement of Income tax returns and BAS and payment of debts. The TPB was of the view that the agent presented an unacceptable risk to the public in the role of a tax agent and should not be registered.
 

False declaration and failure to take reasonable care

The TPB began an investigation into breaches of the TASA after receiving complaints from several clients relating to tax returns prepared by a registered tax agent company. Ongoing compliance activities by the ATO identified a number of issues in relation to income tax returns prepared and lodged by the company.

The company was advised of these issues and the ATO made recommendations. However, the errors and issues that were identified continued into the next income year.

The company was found to have:

  • prepared and lodged 21 income tax returns (ITRs) on behalf of taxpayers which contained false declarations
  • allowed an employee to use the password and electronic signature of the company to lodge ITRs, but did not conduct checks or independent verification that the statements were accurate
  • included false tax offset claims without the clients’ knowledge or consent
  • included falsified signatures on the Electronic Lodgement Declarations, family assistance office consent forms and taxpayer declarations
  • not advised clients in a timely manner and in some cases did not advise them at all that the ATO required them to provide supporting documentation or that the ATO had amended their ITRs or imposed a penalty
  • not taken appropriate steps to ensure that the identified errors did not continue to occur and did not take steps to more strictly supervise and control the work of the two employees
  • did not advise its clients of their rights and obligations under the taxation laws that were related to the tax agent services provided.

The company breached the Code by failing to:

  • act with honesty and integrity
  • provide tax agent services competently
  • take reasonable care in ascertaining a client’s state of affairs
  • take reasonable care to ensure that the taxation laws were applied correctly to the circumstances.

The TPB terminated the company’s registration as a tax agent and imposed a period of one year within which the company cannot apply for registration.
 

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