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The Federal Court has held that, although the Tax Practitioners Board may not have legal personality, it is able to institute proceedings for pecuniary penalties under the Tax Agent Services Act 2009 (Cth) (TAS Act).

The Board had commenced proceedings in which it sought declarations that Mr Kim, a former registered tax agent, had made statements in connexion with the affairs of taxpayers which were false, misleading or incorrect. It also sought the imposition of a civil penalty upon Mr Kim.

Mr Kim applied to the court to dismiss the proceeding on three bases:

(a) the proceeding was a nullity because the Board had no legal personality and could not sue in its own name

(b) the statement of claim did not disclose a reasonable cause of action, and

(c) the originating application did not sufficiently state the relief claimed.

On the first point, the court acknowledged that Mr Kim’s submission that the Board has no legal personality separate from its members was likely to be correct. The Board is “established” by s 60-5 of the TAS Act and by s 60-10 is said to “consist” of its Chair and the other Board members. There is absent, therefore, any indication of the granting of legal personality to the Board by the express language of the statute. While it may occasionally be possible to infer that the legislature intended some form of corporate personality to be given to a body such as a committee even where there is no express grant of legal personality, this statute probably does not exhibit sufficient indicia of such an intention. In particular, it is of some significance that the Board does not employ its staff or own property.

However, that was beside the point. Section 50-35(1) of the TAS Act empowers the Federal Court to impose a pecuniary penalty for contravening a civil penalty provision, and enables the Board to apply to the court for an order imposing a pecuniary penalty. In the view of the court, this provision means what it says, namely, that the Board may institute proceedings of the present kind.

The court also dismissed Mr Kim’s claim that the Board’s statement of claim did not disclose a reasonable cause of action. The Board had alleged in its statement of claim that Mr Kim had prepared returns for taxpayers other than in accordance with information provided by them; that he did not receive a declaration from each taxpayer that the information provided to him was true and correct; and that Mr Kim was not authorized by the taxpayers to give information on their behalves to the Commissioner. By contrast, each time Mr Kim lodged a return electronically he certified that the return had been prepared in accordance with information provided by the taxpayer; that he had received a declaration from the taxpayer that the information provided was true and correct; and that he was authorized by the taxpayer to provide the information to the Commissioner. The Board alleged that Mr Kim was in breach of s 50-20 of the TAS Act.

The court accepted that the Board’s originating application was defective in that it cited an incorrect statutory provision. All that was required, however, to rectify the defect was for the Board to file an amended originating application adding a reference to the relief being claimed under s 50-35(2) of the TAS Act.

Tax Practitioners Board v Kim (No 1) [2014] FCA 434 (2 May 2014).

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