Re Culmer and Tax Agents' Board

Members:
KL Beddoe SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 21 June 1990.

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K.L. Beddoe (Senior Member)

By an application dated 28 February 1990 the applicant seeks review of the respondent Board's decision to refuse the applicant's application for registration as a tax agent under the Income Tax Assessment Act 1936 (``the

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Act''). The Board notified rejection of the application on 19 February 1990.

2. 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).

3. 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 represent or advertise that income tax returns will be prepared or income tax matters will be attended to by that person.

4. Section 251JA provides in para. (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.

5. 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 five years; or

(f)...''

7. Regulation 58CA prescribes qualification 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 3 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

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• (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 return; 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. No issue arose before the Tribunal as to the applicant's academic qualifications. He is a qualified accountant with a degree and holds the status of Certified Practising Accountant. He has passed an acceptable written examination in income tax law.

11. The applicant was previously registered as a tax agent from September 1971 to July 1986. He apparently gave up the licence at that time when he joined the staff of the Australian Taxation Office in 1986. In the years prior to his employment with the Taxation Office the applicant was employed in responsible accounting positions with large public companies. Those positions involved only limited exposure to preparation of income tax returns.

12. In the years ended 30 June 1985 and 1986 the applicant prepared income tax returns outside of his normal employment. According to the application lodged by the applicant with the respondent Board these amounted to 168 returns in each year being mostly S, A and B returns (T12). However, the records of the respondent, being annual notices filed with the Board by the applicant, show the number of returns lodged with the Australian Taxation Office were declared to be 30 returns for the year ended 30 June 1985 and 50 returns for the year ended 30 June 1986.

13. Upon joining the Australian Taxation Office the applicant attended an assessing school and then took up a position in the Appeals and Review Branch determining objections lodged by taxpayers of the categories who lodge S, A and B returns. He also undertook work in complex trust matters and workers compensation cases although at least some of this work was undertaken in conjunction with other officers. In the course of the next two years the applicant was promoted to higher positions in the Taxation Office continuing to work on objections of different categories of taxpayers. For reasons not explained to the Tribunal the applicant resigned from the Taxation Office in 1989 and has since been unemployed.

14. In the course of evidence the applicant claimed to have been involved in specialised work including the workers compensation cases, ``ministerial specials'' and business return objections. In performing this work he was not subject to supervision or checking by other officers so that the primary decisions taken by the applicant became, in effect, the decision on the objection.

15. An appeals officer with the Australian Taxation Office was called by the applicant to give evidence as to the work performed by the applicant in the Taxation Office. Generally that officer corroborated the applicant's evidence as to the applicant's duties in the Taxation Office including that the applicant was not subject to checking of his work.

16. Mr O'Connor for the applicant submitted that the Tribunal should take into account the applicant's experience for the five years back from 30 June 1989. He also submitted that the experience in the Australian Taxation Office well met the requirement of reg. 58CA(2) as to relevant employment. In particular he submitted that the definition of relevant employment must be read as including substantial involvement in income tax matters otherwise than as a tax agent and that in this regard the applicant's experience in the Australian Taxation Office was invaluable.

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17. Mr Williams for the respondent Board argued with some force that employment in the Australian Taxation Office is not relevant employment as defined. He then went further and submitted that in the light of the decision in
The Tax Agents' Board of Queensland v. Seymour 90 ATC 4262 it would not be correct to say that such employment is equivalent to ``relevant employment''. As I understood the Board's argument it is based upon the fact that persons working in the Australian Taxation Office are not supervised in their work. Such unsupervised work is therefore not equivalent to supervised employment falling within the definition of relevant employment. In Seymour Pincus J. based his decision on a notion of supervision and control in ``relevant employment'' or employment equivalent to being engaged in relevant employment.

18. No argument was put to me as to whether previous experience as a tax agent can be employment equivalent to being engaged in relevant employment. In my view it cannot, for the reasons given by Pincus J. in Seymour. In any event I need not decide that matter because I am unable to be satisfied that the applicant had experience as a tax agent in the five years to 30 June 1989. The reason for this is the serious and unexplained conflict in the number of returns prepared in the 1985 and 1986 years. To seek to make any finding of fact on such conflicting evidence would be to speculate as to the facts. I do not propose to so speculate.

19. I agree that the respondent Board's submission that the experience in the Australian Taxation Office cannot be regarded as substantial involvement in income tax matters as required by reg. 58CA(2). My reasons for so deciding are:

• (a) the applicant's experience was confined to attending an assessing school and determining objections against assessments made in respect of a limited range of categories of taxpayers;
• (b) the applicant has not been involved in the preparation or examination of a broad range of income tax returns;
• (c) the applicant has not been involved in the provision of advice in relation to income tax returns, assessments or objections - an officer who has the task of deciding objections does not provide advice; and
• (d) the applicant's work in the Australian Taxation Office was unsupervised and therefore not relevant employment or its equivalent (Seymour's case).

It will be apparent from the respondent's submissions and the Tribunal's reasons that officers of the Australian Taxation Office are unlikely to be able to establish the necessary relevant employment or employment equivalent to relevant employment within the terms of reg. 58CA. They join the ranks of the self-employed as persons who are unlikely to meet the new and more stringent tests for registration as tax agents.

20. The decision of the Board under review will be affirmed.