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Edition 4: October 2015

Summary of penalties, sanctions and terminations

Edition 4: October 2015

This is the fourth edition of the summary of penalties, sanction and terminations, including some of 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).

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 services provided by tax agents, BAS agents and tax (financial) advisers (collectively referred to as tax practitioners). We do this 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 tax practitioners who should be registered.

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

Tax agent terminated for multiple code breaches

Following a referral from the Australian Taxation Office (ATO), the TPB investigated the behaviour of a registered tax agent and found that the agent (amongst other things) had:

  • prepared false business activity statement (BAS) and claimed goods and service tax and fuel tax credits from the ATO on behalf of clients without the clients’ knowledge and authorisation
  • received refunds from the ATO on behalf of clients that were not disclosed to the clients or passed onto them
  • failed to declare correct taxable income to the ATO for three financial years.

The TPB determined that the tax agent's conduct breached the Code of Professional Conduct as the agent had failed to:

  • act honestly and with integrity
  • pass on clients’ refunds received from the ATO
  • take reasonable care in ascertaining the state of affairs of clients that were relevant to the returns the agent prepared and lodged for them
  • take reasonable care to ensure that the taxation laws were applied correctly to the returns the agent prepared and lodged for clients.

The TPB terminated the tax agent’s registration and prohibited the agent from applying for registration for the maximum period of five years.

TPB takes seriously any conduct that contributes to taxpayers having their taxation affairs compromised and their dealings with the ATO disrupted.
 

Tax agent no longer a fit and proper person

The TPB investigated a registered tax agent in response to client complaints about failing to account for refund monies and allegations that the agent had failed to declare a conviction to the TPB.

The TPB found that the agent:

  • failed to notify the TPB as required that they had been convicted of an offence involving fraud or dishonesty
  • had deliberately misled the TPB on their application for renewal of registration as they did not declare that they had been convicted of an offence involving fraud or dishonesty in the last five years and had been disciplined by their professional association
  • failed to pass onto clients ATO refund monies that the agent received of five clients.

The TPB determined that the tax agent had ceased to meet the fit and proper person registration requirement as the agent had been convicted of an offence involving fraud or dishonesty in the last five years and was not of good fame, integrity and character.

The TPB terminated the agent’s registration and prohibited the agent from applying for registration for the maximum period of five years.
 

Tax agent fails to take reasonable care in ascertaining the state of affairs of taxpayers

A tax agent prepared and lodged a BAS on behalf of their client, claiming input tax credits that the client was not entitled to. The ATO disallowed the claims and imposed penalties for recklessness.

The TPB found that the tax agent had breached the Code of Professional Conduct by failing to:

  • take reasonable care in ascertaining their client’s state of affairs
  • maintain knowledge and skills relevant to the tax agent services they provided to the client
  • take reasonable care in applying the taxation laws correctly to the BAS prepared and lodged on behalf of the client.

The TPB suspended the tax agent for a period of six months and issued orders requiring the agent to complete and pass a course of education in relation to goods and services tax, trust law and property law.
 

AAT affirmed TPB’s termination decision

The AAT affirmed the TPB’s decision to terminate a tax agent’s registration on the grounds that they had ceased to meet the requirement to be a fit and proper person.

The TPB had found that the tax agent was not a fit and proper person due to their failure to comply with TPB orders to successfully complete a course of education/training on the Code of Professional Conduct and comply with their undertaking to bring their personal tax obligations up to date.

In affirming the TPB’s decision, the AAT:

  • rejected the agent’s claims that the failures to lodge returns on time were due to errors made by the ATO
  • found that the failures by the agent to lodge more than 40 tax returns on-time over a period of seven years and undertake the further education and training ordered by the TPB supports the conclusion that he is not a fit and proper person
  • held that the agent’s failure to comply with the TPB’s orders and lack of appreciation of the statutory obligations of a registered tax agent and the role of the TPB demonstrates that he is not a fit and proper person to be registered under the Tax Agent Services Act 2009 (TASA).
     

Other recent compliance cases