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The Administrative Appeals Tribunal has affirmed a decision of the Tax Practitioners Board to terminate a tax practitioner’s registration as a tax agent, to disqualify him for reapplying for a period of three years and to reject his application to renew his registration.

The agent conducted business as a registered tax agent from November 2010 until his registration was terminated by the Board. The Board also disqualified the agent from re-applying for registration as a tax agent for a period of three years.

These decisions were made by the Board following an investigation into the agent’s apparently unwitting involvement in fraud by third parties, which resulted in the tax file numbers of over 450 taxpayers being compromised. The Board found that the agent had breached the Code of Professional Conduct for registered tax agents, was not of good fame, integrity and character and had failed to meet the registration requirements that he be a fit and proper person. The Board also found the agent had breached certain provisions of the relevant regulatory legislation by preparing and lodging tax returns for 370 taxpayers for the 2011 financial year in respect of which he was reckless as to whether the statements made in those tax returns were false, incorrect or misleading. The Board commenced proceedings in the Federal Court against the agent for pecuniary penalties in respect of these alleged breaches. These proceedings had not yet been determined and were not the subject of review by the Tribunal. The agent applied to the Tribunal for review of the Board's decisions about his registration.

The Tribunal found, on the evidence, that, although the agent may have been an unwitting participant in the fraud, he was not a fit and proper person to continue to be registered as a tax agent and his registration should be terminated. Further, the Tribunal was not persuaded that a proposed plan of supervision was an acceptable alternative to termination and disqualification for a period given the circumstances of the case.

The Tribunal said:

“In my view it is relevant to consider whether [the agent] is fit and proper having regard to the nature and extent of any breaches of the Code. The Code establishes professional standards for tax agents and, while a breach of the Code does not preclude eligibility, repeated or serious breach may demonstrate that the tax agent is not of good fame, integrity and character and thereby, not fit and proper.”

Re Li and Tax Practitioners Board [2014] AATA 299 (Senior Member J L Redfern, 14 May 2014).

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