The Tax Practitioners Board (TPB) has terminated the registration of Xact Taxation Pty Ltd, previously trading as Tax Refund on Spot, after finding serious failures in its client identity verification and record keeping processes. The TPB found that the company had breached multiple items of the Code of Professional Conduct (Code) and no longer met the requirements for registration, prohibiting them from reapplying for a period of 3 years. 

The TPB found the company engaged in serious misconduct, including accessing clients' Australian Taxation Office (ATO) information without authorisation, creating and maintaining false Proof of Identity (POI) records, and falsely claiming identity verification checks had been completed. The company also offered payments to clients on the condition they did not make complaints and used terms and conditions that enabled the company to retain access to clients' accounts for extended periods and redirect refunds to the company's trust account.

The TPB also found the company failed to provide tax agent services competently by not undertaking adequate POI checks, maintaining poor client records, changing clients' bank account details without properly verifying their circumstances, and failing to implement appropriate supervision and quality assurance processes before lodging tax returns.

As a result of these failures, tax returns were lodged without client authorisation and client refunds were redirected, demonstrating a failure to exercise reasonable care and comply with key professional obligations.

TPB Chair Peter de Cure AM said the decision highlights the critical importance of strong client verification and governance processes in protecting taxpayers and maintaining confidence in the tax profession. ‘Tax practitioners play a trusted role in the tax system and are expected to meet high standards of competence, integrity and client care. Where those standards are not met, the TPB will take appropriate action to protect consumers and uphold confidence in the profession.’ 

‘This case involved serious failures in client identity verification, record keeping and practice governance. These failures enabled tax returns to be lodged without proper authorisation and exposed clients to significant risk.’ 

‘Identity verification is not simply an administrative step. It is a fundamental safeguard that helps protect clients from fraud, unauthorised access to their information and the misuse of their tax affairs. Tax practitioners should review their systems and processes regularly to ensure they have effective controls in place and are meeting their professional obligations.’

Client verification obligations

Registered tax practitioners are expected to verify the identity of new clients and check existing clients again where appropriate. They should also confirm that anyone acting on a client’s behalf is authorised to do so, look for signs of tampering or fraud in identification documents, and keep accurate records of the checks they undertake.

Tax practitioners who provide services through online platforms or websites should be particularly alert to the risk of identity fraud and unauthorised access to client information. 

Failing to take reasonable steps to verify a client’s identity can expose clients to privacy breaches, enable fraud and result in breaches of the Code. Tax practitioners who do not meet their obligations may face regulatory action. 

The TPB encourages tax practitioners to work with their clients on proactively protecting their ATO accounts by downloading the ATO app and registering their device. ATO app security features include real-time messages when key changes are made to their ATO account. If a change looks suspicious, clients can use the ATO app to lock their account.

More information about client verification requirements is available on the TPB website.

About the Tax Practitioners Board

The TPB regulates tax practitioners to protect consumers and ensure the integrity of the profession and the tax system. The TPB aims to assure the community that tax practitioners meet appropriate standards of professional and ethical conduct. Follow us on LinkedIn and Facebook.