Re Crowley and Tax Agents' Board (N.S.W.)
Members:KL Beddoe SM
CJ Stevens M
TR Russell M
Tribunal:
Administrative Appeals Tribunal
K.L. Beddoe (Senior Member); C.J. Stevens and T.R. Russell (Members)
The decision for review is a decision of the respondent Board refusing the applicant registration as a tax agent and notified to the applicant by letter dated 28 April 1989. The reason for refusal was expressed in that letter as being that the applicant did not ``hold the practical work experience to meet the requirements of a total of twelve months of relevant employment pursuant to the provisions of Income Tax Regulation 58CA(1) at A of sub-paragraph (a)(ii)'' [sic]. It was conceded at the hearing by the respondent Board that the academic qualifications of the applicant were not in issue.
2. Section 251C of the Income Tax Assessment Act 1936 (``the Act'') provides that there shall be a Tax Agents' Board in each State. The Board is constituted by three members appointed by the Minister, one of whom, other than an officer of the Australian Taxation Office is to be the Chairman (sec. 251D). At all meetings of the Board any two members shall form a quorum, all questions shall be decided by a majority of the members present with the Chair having a deliberative but not a casting vote (sec. 251E). A Board or a member of a Board shall have such powers as are prescribed with respect to the taking of evidence, the administration of oaths or affirmations, the summoning of witnesses and the production of documents (sec. 251G). Regulation 58R prescribes wide powers as to the receiving of evidence including that the Board may take oral evidence on oath or affirmation, by affidavit and may receive documents, without formal proof, which in the opinion of the Board are relevant to the application or other matter under consideration, not being a document brought into existence solely for the purpose of the application.
3. A person desiring to be registered as a tax agent may make application to a Tax Agents' Board (``the Board'') for registration, such application to be in the approved form, accompanied by such information as is required by the form to be provided and also accompanied by a fee of $80 (sec. 251J).
4. The statutory reason for seeking to be registered as a tax agent is to be found primarily in sec. 251L of the Act. The section provides that a person shall not demand or receive any fee for or in relation to the preparation of any income tax return, or objection, or for or in relation to the transaction of any business on behalf of a taxpayer in income tax matters, unless the person is a registered tax agent. A second statutory reason is to be found in sec. 251O which has the effect of making it an offence for a person not registered as a tax agent to so present or advertise that income tax returns will be prepared or income tax matters will be attended to by that person.
5. Section 251JA provides in subsec. (1)(a) that the Board shall register the applicant who is a natural person as a tax agent if the applicant satisfies the Board that:
``(i) the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; and
(ii) the applicant is not an undischarged bankrupt;''
and shall refuse to register such an applicant in any other case (subsec. (2)). Where the Board refuses to so register an applicant the Board is required to notify the decision in writing giving the reasons for that decision.
6. [Section 251BC(1) of the Act provides:]
``a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters, as at a particular time, if:
- (a) the person is not a natural person;
- (b) both of the following conditions are satisfied:
- (i)...
- (ii) the person does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed;
- (c)...
- (d) the person is not of good fame, integrity and character;
- (e) the person has been convicted of a serious taxation offence during the previous 5 years; or
- (f) the person is under sentence of imprisonment for a serious taxation offence.''
ATC 2008
7. Regulation 58CA prescribes qualifications for the purposes of sec. 251BC(1)(b)(ii) set out above. In so far as it is relevant the regulation prescribes the qualifications required as follows:
``(a) the person:
- (i) shall have completed the academic requirements for the award of a degree, diploma or other qualification from an Australian university, college of advanced education or other tertiary institution of an equivalent standard, and have passed examinations in such subjects, under whatever name, which an appropriate authority of the university, college of advanced education or other tertiary institution certifies to the Board to represent a course of study in accountancy of not less than three years' duration and in commercial law of not less than 18 months' duration or shall possess such other qualifications as the Board regards as equivalent to those qualifications;
- (ii) shall have:
- (A) been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years;
- (B) otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or
- (C) been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A); and
- (iii) shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board;''
8. Regulation 58CA(2) defines ``relevant employment'' to mean:
``employment by a person or a partnership or as a member of a partnership in the course of which there has been substantial involvement in income tax matters including:
- (a) the preparation or examination of a broad range of income tax returns;
- (b) the preparation or examination of objections to assessments issued in respect of such returns; and
- (c) the provision of advice in relation to income tax returns, assessments or objections.''
9. Application may be made to this Tribunal for review of a decision of a Board refusing to register a person as a tax agent (sec. 251QA). For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions conferred by the Act on the Board (sec. 43(1) Administrative Appeals Tribunal Act 1975).
10. By application made on the approved form and dated 8 March 1989 the applicant applied for registration as a tax agent. The application disclosed that the applicant was born in 1956, that he followed the occupation of public accountant at Mosman and, inter alia, that he had previously been refused registration as a tax agent, directing the Board's attention to his previous application of 14 September 1987. He further stated in reply to a specific question that he had not been convicted of any offence against the law of Australia, a State or any other law and that he was not an undischarged bankrupt. The statutory fee of $80 accompanied the application.
11. Attachment 1 to the application stated that the applicant holds the following academic and professional qualifications:
- Bachelor of Commerce - University of Otago
- Master of Commerce - University of N.S.W.
- Associate - New Zealand Society of Accountants
- Certified Practising Accountant - Australian Society of Accountants.
A certificate from the University of New South Wales corroborated the claim that the applicant holds a Master of Commerce degree and also that he passed Taxation Law as part of that degree in 1984. Attachments 2 and 3 dealt in some detail with the applicant's experience in Australian taxation and commerce and accounting respectively. We will return to these
ATC 2009
matters shortly. Attachment 4 set out an explanation of the applicant's continuing professional development in relation to taxation law.12. Also attached to the application was a document headed ``Tax Agents' Board New South Wales'' but signed by the applicant (T13). Clearly the document is a pro forma document supplied by the respondent Board and to be filled in as to details by applicants. The document disclosed that the applicant has been a public accountant from 14 September 1987 to date of application, that his business is ``public accounting services'' of which he is the principal and that his previous employment details were as follows:
IBM Australia Ltd. 30.9.85 to 11.9.87
Amoco Australia Ltd. 20.6.82 to 7.7.84
Bank of New South Wales 1.3.81 to 17.6.82
The document then goes on to give quite extensive statistical information about the average time spent by the applicant on income tax matters vis-a-vis accounting matters and audit matters. The applicant claimed that in each of the five years to 30 June 1989 he had spent 40% of his time on income tax matters. He then set out the required analysis in respect of returns prepared. Those details are set out in full:
Expressed as a percentage, the distribution of tax work between the preparation of:
30 June 1985 1986 1987 1988 1989
S returns 20 20 15 15 15
AB returns 10 10 15 10 10
F returns 5 5 5 - 3
T returns 5 5 5 5 5
B returns 10 10 10 20 20
C returns 50 50 47 47 44
FBT returns - - 3 3 3
in each of the past five years.
The numbers of returns prepared in each of the above categories in each of the last five years:
30 June 1985 1986 1987 1988 1989
S returns 6 8 10 20 40
AB returns 4 4 5 16 30
F returns - 1 1 1 2
T returns 4 3 3 7 11
B returns 12 16 16 20 40
C returns 2 4 4 12 25
FBT returns - - 6 10 15
13. The document (T13) is inaccurate in that it apparently takes no account of the applicant's employment with a firm of chartered accountants for a period of seven weeks in 1988. It appears, from the evidence of the principal of that firm, that the applicant was not considered to have had sufficient experience of Australian income tax to satisfactorily perform the duties of manager of a taxation section of the firm.
14. The document is also inaccurate in the light of the applicant's evidence about his duties as an employee of IBM. While the applicant's oral evidence demonstrated some involvement in tax accounting in relation to leasing contracts, it did not establish actual involvement in the preparation of income tax returns of IBM or any other person.
15. We are unable to make findings of fact as to involvement by the applicant in Australian income tax matters up to 30 June 1987. While we have no doubt that since that time the applicant has had an involvement in income tax matters, on the applicant's own figures he cannot establish the equivalent of 12 months full-time experience given that he spent 40% of
ATC 2010
his time on income tax matters in the years ended 30 June 1988 and 30 June 1989. To the date of hearing the applicant had completed 24 months as a self-employed person (including for this purpose the seven weeks employed by the chartered accountant). As only 40% of that time has been spent on income tax matters, adopting the applicant's figures, we cannot be satisfied that he has been involved in income tax matters for an equivalent of 12 months full-time experience in the preceding five years.16. Both parties conducted their cases on the basis that the applicant failed to obtain registration by the respondent because the Board was not satisfied that he had completed the necessary relevant employment. As intimated earlier, the applicant gave quite a detailed written explanation of his experience on tax work (attachments 2 and 3). In reference to the taxation experience, the applicant did not distinguish between Australian income tax, Australian taxes generally and overseas taxes. In our view the definition of ``relevant employment'' in reg. 58CA(2) refers to substantial involvement in income tax matters under the Australian income tax legislation and not Australian taxation generally nor overseas taxation. We regard income tax matters as being matters related to income tax assessed under the Income Tax Assessment Act 1936. Matters involving other taxes such as the fringe benefits tax are not income tax matters for the purposes of the regulation.
17. The applicant's figure of 40% of his time involved in income tax matters includes, on his evidence, involvement in overseas taxation and also Australian taxes other than income tax. We have not therefore been satisfied that over the past two years the applicant has been involved as to 40% of his time on Australian income tax matters, including activities of the kind mentioned in para. (a), (b) and (c) of reg. 58CA(2).
18. The respondent went further: counsel contended that for an applicant to establish 12 months' relevant employment (as defined) on a full-time basis in the preceding five years it was generally necessary to establish three years' experience in the tax section of a firm of accountants. The rationale of the Board's submission, as we understand it, is that many things take place in an accountant's office from day to day, not all of which reflect a direct or exclusive involvement in income tax matters. Therefore, to establish the required 12 months' involvement, it is necessary to establish three years' actual employment in the taxation section of a public accountant's office.
19. While it is not necessary for the Tribunal to form a concluded view to decide this case, as the matter was argued before us we should indicate that we have considered the questions arising with the requirement that the employment must be in the taxation section of a public accountant's office and further that such employment must add up to three years.
20. The Board's submission raises a number of difficulties with the apparently plain words of reg. 58CA(1). Especially is this so when the requirements of para. (c) and (d) are considered. Using the same form of words para. (c) and (d) make it quite clear that the legislators did not intend that the words of para. (a) require any more than the total of 12 months' relevant experience or the equivalent thereof in the past five years. We are of the clear view that this applicant needs to establish 12 months' substantial involvement in income tax matters in the previous five years. No formula discounting such 12 months' experience is justified by the regulation.
21. In addition there is no requirement that the substantial experience must be gained in the taxation section of a public accountant's office. It is not difficult to envisage factual situations where such substantial experience would be gained outside such employment, for example, experience gained in the taxation section of a large corporation or a trust company. Furthermore, the Board has apparently failed to give any weight to reg. 58CA(1)(a)(ii)(C) which provides that the person shall have been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding five years. So far as we can see, the Board simply failed to consider this provision which is clearly relevant in the case of a self-employed applicant. The phrase ``engaged in such other employment'' in the said subpara. (ii)(C) refers to employment other than ``relevant employment'' as defined in reg. 58CA(2). In that sense, it must include a person engaged in a profession on his own account (i.e. self-employed) where such
ATC 2011
employment is equivalent to being engaged in ``relevant employment''. There is, therefore, in our view no basis for excluding an applicant simply on the ground that he is self-employed and is therefore not engaged in ``relevant employment''. To find otherwise would lead to an absurd result whereby a partner in a firm could be accepted under reg. 58CA(1)(a)(ii) but a self-employed person, not in a partnership, but with exactly the same experience would not be so accepted.22. We have considered whether the applicant has been engaged in such other employment (including self-employment) and for such time as the Tribunal could regard as equivalent to being engaged in ``relevant employment'' as referred to in reg. 59CA(1)(a)(ii)(A). We are unable to conclude, on the evidence before us, that the applicant has been so engaged. There is no basis, on the evidence before us, for finding that the applicant has had the necessary substantial involvement in employment equivalent to relevant employment on a full-time basis for not less than a total of 12 months in the past five years.
23. In so deciding, we have taken into account the applicant's evidence regarding his involvement in income tax matters. We have not discounted that involvement because of a suggestion that the applicant, through such involvement, may have breached a provision of the Act. The negative tests in sec. 251BC(1) of the Act refer to convictions for taxation offences but not to suspicion of offences committed. The evidence is that the applicant has not been convicted of any offence under the Act. In our view the Board went beyond its jurisdiction if it took into account suspicion of an offence as a ground for not registering the applicant.
24. To this point the Tribunal's findings justify only one result - the decision under review should be affirmed.
25. During the course of the hearing the applicant alleged that on three occasions he had requested and been refused the right to appear before the respondent Board so as to present his case in person to the Board. These specific requests were made in respect of the application dated 14 September 1987 and are not therefore relevant to the application before this Tribunal. The papers relating to the earlier application are before us as ex. 2 and we note that the applicant asked the respondent Board to refer to these papers when he made his current application (document T7). We have no reason to doubt that the applicant's allegations are true. Evidence that the Board did not grant these requests is to be found in a handwritten note by the Board's secretary dated 18 December 1987 (ex. 2 - A14) and the applicant's letter dated 15 April 1988 (ex. 2 - A19). It has not been established that the Board expressly refused to hear the applicant in respect of the present application. However, at p. 35 of the transcript, there is evidence to the effect that it is the practice of the respondent Board not to hear applicants. Therefore, although there was not an express refusal to hear the applicant in respect of the current application, there was scope for a perception on the part of the applicant of an established practice on the part of the Board not to hear applicants.
26. As the matter has not been argued before us it is inappropriate that we go further than to state that it is now well established that a statutory authority, such as the Board, with procedures for the taking of evidence, albeit there is a right of appeal vesting in the applicant, must observe the audi alteram partem rule. This means the Board should hear the applicant, if he so requests, unless there is clear statutory intent to the contrary. No such statutory intent can be gleaned from the legislation contained in Pt VIIA of the Act. It must be presumed, therefore, that the Parliament had no intention of denying natural justice to persons applying for registration as tax agents and there is no basis for the Board to refuse to hear the applicant in support of his application. There is nothing in the legislation to suggest that the Board should act ex parte.
27. If we had come to the conclusion that the Board breached the rules of procedural fairness in respect of the application before us we would have had to consider whether the decision under review should be affirmed.
28. We are of the view that an applicant seeking to be heard should be heard by the Board before it decides the application. It is not sufficient that the legislation has provided for review of the Board's decision and that review by this Tribunal is a hearing de novo. Unless there is a clear legislative intent to the contrary
ATC 2012
the Board is, in our view, obliged to observe procedural fairness. Failure to do so could result in the Board's decision being declared void (Ridge v. Baldwin (1964) A.C. 40).
29. In
Kioa & Ors v. Minister for Immigration and Ethnic Affairs (1985) 62 A.L.R. 321 at p. 347 Mason J. (as his Honour then was) expressed views which apply, mutatis mutandis, to the present context as follows:
``In this respect the expression `procedural fairness' more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, that is, in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations (cf Salemi (No 2) (CLR at p. 451, per Jacobs J).
When the doctrine of natural justice or the duty to act fairly in its application to administrative decision-making is so understood, the need for a strong manifestation of contrary statutory intention in order for it to be excluded becomes apparent. The critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? It will be convenient to consider at the outset whether the statute displaces the duty when the statute contains a specific provision to that effect, for then it will be pointless to inquire what the duty requires in the circumstances of the case, unless there are circumstances not contemplated by the statutory provision that may give rise to a legitimate expectation. However, in general, it will be a matter of determining what the duty to act fairly requires in the way of procedural fairness in the circumstances of the case. A resolution of that question calls for an examination of the statutory provisions and the interests which I have already mentioned.
Notwithstanding the characteristics of the power and the elements in the statutory framework which were thought in Salemi (No 2) and Ratu to indicate an intention to displace the principles of natural justice in relation to s 18, I do not think that it can now be said that the Migration Act as it has been amended wholly displaces the duty to act fairly in accordance with the doctrine of natural justice. In one very important respect there has been a radical legislative change. The exercise of the power is susceptible of judicial review and an element in that review is the obligation, on request, to furnish a statement setting out material findings of fact, referring to the evidence and other materials, and giving the reasons for the decision. In the light of this it can scarcely be suggested now that the existence of an obligation to comply with the requirements of procedural fairness is inconsistent with the statutory framework or that it will entail administrative inconvenience which is destructive of the statutory objects.''
We also adopt, with respect, the reasoning of Mason J. in
Twist v. Randwick Municipal Council (1976) 136 C.L.R. 106 at p. 116. Barwick C.J. expressed similar views at pp. 111-112.
30. There being no evidence of a breach of the audi alteram partem rule in respect of the present application and for the reasons given, the Tribunal will affirm the decision under review.
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