The Board Conduct Committee (BCC) has issued a written caution to a tax agent company and its sole director and supervising agent after they were both found to be in breach of Code item 7 of the Code of Professional Conduct (Code). Code item 7 states you must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.

After completing an investigation, the BCC found the tax agent company and sole director failed to take reasonable care in the preparation and lodgement of 217 income tax returns for clients which were subject to Australian Taxation Office (ATO) compliance activities. They were found to have included overclaimed or incorrect deductions that did not have a sufficient link to assessable income or could not be substantiated resulting in tax shortfalls and penalties for clients.

In response to the alleged breach of the Code, the individual tax agent and sole director advised they had lodged objections to some of the ATO audits. With subsequent objections resulting in favourable outcomes that have not been reflected in the figures provided to the BCC. 

The individual tax agent also advised the BCC that the company has various checks in place to ensure the validity of claims made, enabling it to verify as much information as possible.

The BCC considered all factors raised by the individual tax agent but determined an issue remained with supervision and control in the company. The BCC was of the view that a sole person being responsible for the affairs of 8,700 clients was not appropriate, especially given the recent audits. 

As a result, the company was issued a written caution and was ordered to report to the TPB the steps it will implement to improve supervision and control within the company, have at least 3 supervising agents working for the company on a full-time basis, and provide written confirmation that the company has implemented its new processes. The sole director has been ordered to complete a course in the Tax Agent Services Act 2009 including work-related expenses.