RE WEBB AND TAX AGENTS' BOARD OF QUEENSLAND

Members:
SA Forgie DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 28 September 1992

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SA Forgie (Deputy President)

On 20 June, 1991, the Tax Agents' Board of Queensland (``the Board'') decided to refuse the registration of the applicant, Mrs Betty Lorraine Webb, as a tax agent. The time within which Mrs Webb was allowed to lodge an application for review of this decision was extended pursuant to sub- section 29(7) of the Administrative Appeals Tribunal Act 1975 (``the AAT Act'') and, on 21 August, 1991 she lodged that application.

2. At the hearing, Mrs Webb represented herself and Mrs Patsy Wolfe, of Counsel, represented the Board. The documents lodged pursuant to section 37 of the AAT Act were admitted in evidence together with a letter dated 28 May, 1992 from the Concord Group and a letter dated 24 August, 1992 from E. Mary

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Gibson, both of which related to Mrs Webb's work. Oral evidence was given by Mr Barry James Rienecker, Secretary of the Board.

LEGISLATION

3. Paragraph 251JA(1)(a) of the Income Tax Assessment Act 1936 (``the Act'') provides that:

``The Board shall register the applicant as a tax agent if the applicant satisfies the Board that:

• (a)...
  • (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;''

What is meant by the expression, ``a fit and proper person'' is dealt with in sub-section 251BC(1). In so far as it is relevant, it provides:

``251BC(1) Without limiting the generality of an expression used in this Part, but subject to this section, 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)...
• (b) both of the following conditions are satisfied:
  • (i) the person was not registered as a tax agent, or as a nominee, for the purposes of this Part immediately before the commencement of section 39 of the Taxation Laws Amendment Act (No. 2) 1988;
  • (ii) the person does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed;
• (c) the person has not attained the age of 18 years;
• (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.''

4. Regulation 156 of the Income Tax Regulations (``the Regulations'') prescribes the qualifications for the purposes of sub-paragraph 251BC(1)(b)(ii) of the Act. Various academic qualifications, together with qualifications by way of experience or otherwise, are prescribed in that regulation. There was no dispute between the parties as to the academic qualifications which Mrs Webb holds. On that basis and on the basis of the evidence before me, I find that Mrs Webb has academic qualifications which satisfy the provisions of regulation 156(1)(d)(ii)(B) in that she has successfully completed a course of study in both the accounting principles and Australian Income Tax Law at the Townsville College of Advanced Education. It follows that Mrs Webb must also satisfy the requirements of regulation 156(1)(d)(i). That regulation provides:

• ``(d) the person:
  • (i) shall have:
    • (A) been engaged in relevant employment on a full-time basis for not less than a total of 8 years in the preceding 10 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).''

5. Sub-regulation 156(2) provides that:

``In this regulation `relevant employment' means 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.''

CONSIDERATION

Is the ten year period reckoned from the date of Mrs Webb's application?

6. Each of the requirements within the three paragraphs of regulation 156(1)(d)(i) expressed

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in the alternative and so Mrs Webb need satisfy only one of them. Both of the parties, however, concentrated upon the requirements of paragraph 156(1)(d)(i)(A) and so I will consider that first. In considering that paragraph, the first question is whether I should look only to Mrs Webb's employment during the ten years preceding the date of her application or whether I may consider the ten years prior to either the date of the hearing or the date of this decision. In my decision in the case of
Re Ellis and Tax Agents' Board of Queensland (92 ATC 2001, 10 December, 1991), I concluded in relation to paragraph 156(1)(c) that I was able to have regard to the period prior to the date of hearing and was not confined to a consideration of the period of time before the date of his application to the Board. For the purposes of considering this point, there are no substantive differences between paragraph 156(1)(c) and paragraph 156(1)(d).

7. A few days earlier, Deputy President McMahon had handed down a decision in a matter of
Re Egulian and Tax Agents' Board of New South Wales (91 ATC 2060, 2 December, 1991), in which he had considered the same point. He had decided that the words ``preceding five years'' in paragraph 156(1)(c) meant the five years preceding the date of the application. His reasons were set out in the following passage at page 2064:

``15. The first question to be determined is the meaning of the phrase `in the preceding 5 years' referred to in the regulation. It was submitted on behalf of the applicant that the appropriate period should be an interval of five years concluding on the date of the hearing, namely 4 November 1991. The original application to the Board was made on 1 November 1990. The decision of the Board was given on 19 February 1991, and the application to this Tribunal was made on 3 April 1991. The applicant's circumstances have changed in the past 12 months. It was submitted on his behalf that the breadth of his experience had been considerably widened through his association with the two firms of accountants to which I have referred. It was submitted that the Tribunal should take into account this additional experience and that as the Tribunal stood in the shoes of the decision-maker, the preceding five years referred to in the regulation should mean the five years preceding the date of hearing. I cannot accept this submission.

16. It is true that the administrative decision- making process should be regarded as a continuum (as Davies J put it in
Jebb v Repatriation Commission (1988) 80 ALR 329). This does not however have the effect of moving the relevant date in all circumstances. In
Freeman v Secretary, Department of Social Security (1988) 15 ALD 671 at 674 the same judge observed that although the Tribunal was entitled to take into account facts subsequent to the date of the relevant application, the issue remained whether, having regard to those facts, the decision made as a result of the original application was the correct or preferable decision, not whether the applicant, in that case, had an entitlement as at the date of the Tribunal's decision. His Honour acknowledged that regard must always be had to the nature of the decision which is under review. In my view, the decision in the present case is analogous in its effect to the decision considered in Freeman, in that it does not have an ongoing effect but resolves an issue with a degree of finality.

17. It follows that the relevant period for consideration is the five years from 1 November 1985 to 1 November 1990.''

8. I have given careful consideration to whether I am incorrect in the view I expressed in Re Ellis. Although, in the interests of a consistency of interpretation within the Tribunal, I would like to find myself in agreement with Deputy President McMahon, regretfully, I find that I am unable to do so. I am still of the same view and for the same reasons as I set out in Ellis at pages 2003-2004 of the Report. I should, however, make one or two additional comments.

9. While I agree with Deputy President McMahon that the effect of the authorities to which we both referred is that regard must be had to the particular decision under review, I do not agree with what I understand to be Deputy President McMahon's determining considera- tion. That is, that whether or not the issue of entitlement is to be considered at the date of application or at some later date, is whether the decision resolves an issue with a degree of finality. Every decision does, to some extent,

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resolve an issue with a degree of finality. The extent to which it does so necessarily depends upon whether it is subject to review or appeal. In that regard, a decision to cancel a pension, as was the decision considered by Davies J in Freeman's case, and a decision whether or not to grant a pension, as was considered in Jebb's case, both have the same degree of finality as both are decisions subject to review.

10. From my reading of Freeman's case and Jebb's case as well as the authorities referred to in those cases, it seems to me that the determining consideration in each was whether the decision amounted to the cancellation of an entitlement which a person had been receiving, as in Freeman's case, or a decision that a person was not qualified to receive an entitlement, as in Jebb's case. In the first case, the effect of the decision is to terminate an entitlement from a particular time. In deciding whether that is the correct or preferable decision with regard to the particular date of cancellation, it matters not whether the person might, or might not have, an entitlement at a later date. In the second case there is a decision that there is no entitlement at the outset and the issue is whether there should be an entitlement. It was in relation to such cases that, it seems to me, Davies J said in Jebb's case:

``However, the general approach of the tribunal has been to regard the administrative decision making process as a continuum so that, within the limits of a reconsideration of the decision under review, the tribunal considers the applicant's entitlement from the date of application, or other proper commencing date, to the date of the tribunal's decision. That function was enunciated in
Re Tiknaz and Director- General of Social Services (1981) 4 ALN No 44.''

(page 333)

11. There is nothing in either the Act or the Regulations which leads me to conclude that I should find that the general principles enunciated by Davies J are inapplicable in this case. The decision under review is one of entitlement and not one of cancellation of an entitlement. It follows that I should believe that I consider not only Mrs Webb's entitlement to be registered at the date of her application to the Board but also whether she satisfied the requirements to be registered at some date between the date of her claim and some later date prior to my handing down my decision.

Does the employment upon which Mrs Webb relies total 8 years in the preceding 10 years?

12. In essence, there was no dispute between the parties as to Mrs Webb's experience but only whether that was experience which could be regarded as relevant employment for the purposes of regulation 156. In light of that and on the basis of the evidence, I will now set out the facts which I have found regarding Mrs Webb's employment history before considering whether or not it is relevant employment for the purposes of the regulation.

13. Mrs Webb was first employed by H & R Block from 1 July, 1982 until 30 September, 1982 and 1 July, 1983 to 30 September, 1983. She was then employed by Northstate Tax and Business Services Pty Ltd, trading as H & R Block, Townsville, from 1 July, 1984 until 31 March, 1990. When she made her application for registration as a tax agent on 3 April, 1991, she was employed by Velarose Pty Ltd and had been since 1 April, 1990. In all, this was a total of 7 years and three months in the ten year period from April, 1981 and nine months short of the eight years required by regulation 156. At the hearing, Mrs Webb made a passing reference to a further period of six months in 1981 when she worked for H & R Block. She did not expand upon this as she seemed to assume that it was outside the ten year period. I am not entirely satisfied that it was outside the period but have not asked for further evidence for it would not assist her case. Even if it were employment after 3 April, 1981, her total employment in the ten year period would total 7 years and 9 months and so still be three months short of the required eight years. It follows that, as at the date of her application to the Board, the employment upon which Mrs Webb relies does not total at least eight years in the previous ten years.

14. Following the lodgement of her application on 3 April, 1991, Mrs Webb worked for the Concord Group from 17 June, 1991 until 31 October, 1991 as Office Manager and then generally until 17 December, 1991. In the following January, Mrs Webb was again employed by the Concord Group until approximately the end of February, 1992 (Exhibit A). There then followed an eight week period of work for E. Mary Gibson immediately preceding the date of the hearing (Exhibit B). On my calculations, Mrs Webb's work after the date of her application and prior to the hearing

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on 25 August, 1992 represented an additional nine and a half months of employment. In total, therefore, the period of employment upon which Mrs Webb relies totals at least eight years.

15. Although I have decided that, in considering Mrs Webb's entitlement to be registered as a tax agent, I may take into account her employment after the date of her original application for registration, I am still bound by the terms of the Regulations. Those Regulations prescribe that Mrs Webb must have been engaged in that employment for a period of at least eight years in the preceding ten years. It must follow that if I am considering her employment up to the date of the hearing, I must also calculate the ten year period back from that same date. That would mean that the ten year period would be calculated from 25 August, 1982. It follows that I would have to disregard the first one and a half to one and three quarter months of her employment with H & R Block referred to in paragraph 13 above. That would mean that she would be at least a month short of the eight years' experience required.

16. Were my decision to turn solely upon the calculations I have made, I would have referred it back to the parties to check them and to make any submissions they wished. As it does not turn upon them and in view of the very small margin by which Mrs Webb would seem to be outside the eight year minimum standard, I have not done so and have proceeded to consider whether Mrs Webb's employment could be regarded as relevant employment.

Is Mrs Webb' s employment ``relevant employment''?

17. Up until 31 March, 1991, Mrs Webb was employed by H & R Block and her work was, in the main, in connection with salary and wage earners, small businesses and partnerships. Their affairs required the lodgement of an R Form or the former S and AB forms. In broad terms, Mrs Webb's experience to the date of her application to the Board may be summarised in the following table. The reference to a year refers to the financial year ending 30 June except for the 1991 year when the figures are to 31 March, 1991:

-----------------------------------------------------------------------
RETURN                                              YEAR
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                           84    85    86    87    88    89    90    91

INDIVIDUALS              2471  2841  2976  3200  3315  3396  3634  3166

PARTNERSHIPS               30    50    55    46    60    65    97    95

COMPANIES                   0     1     2     3     3     3     2     2

TRUSTS                      0     1     1     1     1     1     0     0

SUPERANNUATION              0     0     0     2     0     0     2     0
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18. The three returns prepared on behalf of companies in 1987 concerned two building contractors and the company for which Mrs Webb worked. The two superannuation returns concerned employees of the two building contractors. Each of the contractors employed, at the most, six employees. Returns were again lodged on behalf of those two superannuation funds in 1990. Neither the companies or the superannuation funds involved foreign source income. She had lodged one franking return but that return indicated no franking at all. Mrs Webb gave the companies advice as to the amount of taxation they would pay and said that she would have given them advice as to how they could improve their tax position within the law.

19. Between the years 1985 and 1989, Mrs Webb prepared returns for two trusts. Each was a family trust and the first came to an end in approximately 1988. Since 1989, she has not had any involvement with trust returns either in their preparation or in the preparation of objections or the provision of advice in relation to them.

20. In so far as the preparation of objections and amended assessments are concerned, Mrs Webb has prepared and lodged them on behalf of individuals and partnerships but not on behalf of companies, trusts and the like. Before lodging an objection, she would negotiate with

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the Australian Tax Office. She would lodge objections upon that Office's advice and was successful in each. She has also lodged three objections when she had not been advised by the Australian Tax Office that an objection would be appropriate.

21. With regard to the individual and partnership returns which she has prepared, Mrs Webb has not prepared agent's returns but has had occasion to prepare a return involving capital gains tax. On several occasions, she has prepared a rollover payment notification form but has not had to deal with non-residents who have been receiving interest. She has sought three or four rulings under section 169A of the Act.

22. What amounts to ``relevant employment'' has been considered by this Tribunal in several cases. The principles have been conveniently summarised by Deputy President McMahon in
Re Chenouda and Tax Agents' Board of NSW 91 ATC 2027 and I am in agreement with his views. At pages 2030 to 2031, he said:

``17. The applicant referred to a passage in Crowley [Re Crowley and Tax Agents' Board (N.S.W.) 90 ATC 2005] at page 2010. The Tribunal there said-

`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.'

18. I respectfully agree with the observations of the Tribunal and agree that there is no requirement in the regulations that relevant employment should be confined to the practice of a public accountant. Nevertheless, the employment gained in companies must be `relevant' as defined.

19. The general considerations to be addressed in applications of this nature were set out by Deputy President Forrest in
Re Civiti and Tax Agents' Board of Victoria 90 ATC 2039 at page 2042-

`The substantial amendments to the Act introduced by the Taxation Laws Amendment Act (No. 2) No. 78 of 1988, which came into force from 1 November 1988, reflect the objective that persons who prepare income tax returns or transact business in income matters for reward have appropriate knowledge of income tax law and practice. The respondent has the responsibility of assuring that objective. In the present circumstances it must be satisfied that the applicant has had substantial involvement in income tax matters, including the preparation or examination of a broad range of returns. That necessarily involves an objective assessment of the applicant's experience.'

20. The regulation requires `substantial involvement' in `the preparation or examination of a broad range of income tax returns'. It does not refer to income tax returns with a broad range. The adjective `broad' governs the noun `range' rather than `returns'. The returns prepared by the applicant may have been the result of a broad range of enquiries and research. A few specialised returns resulting from such a broad range of enquiries does not, however, constitute a broad range of returns. What is contemplated by the phrase is a range of income tax returns, spreading over the spectrum of potential taxpayers. A large group of taxpayers consists of small businesses, individual traders and partnerships. If, as the evidence showed, the applicant has not been involved in the preparation or examination of tax returns for any of these classes of taxpayers, then he cannot be said to have had a substantial involvement in the preparation or examination of a broad range of income tax returns.

21. In Civiti, Deputy President Forrest said at page 2043-

`... The word "broad" is not one of similar meaning to "substantial". In the context in which they are used, both terms are used as qualifying adjectives. "Broad range" does not mean the same thing as " substantial involvement" and vice versa. There may be one without the other. The respondent has to be satisfied the applicant has acquired both in order to have been engaged in relevant employ- ment within the meaning of reg. 156.

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Subregulation 156(2) cannot, in my opinion, be construed as applying to a particular category of returns. It is not the experience within a category of returns but rather the scope of the returns which is the test to be applied.

It is not a relevant consideration that reg. 156 does not specify the categories of returns in defining "relevant employment". It is explicit in the language used, that wide-ranging experience is required. A lack of experience in the areas of returns referred to, in my opinion, precludes satisfaction of the test of relevant employment.'''

23. Certainly, Mrs Webb has been involved with a large group of taxpayers but, apart from a handful each year, they have all required the preparation of either an individual or a partnership return. There has been a substantial number of those returns and there can be no doubt that Mrs Webb has gained a considerable amount of experience in tax over the years and has considerable expertise in the areas in which she has worked. I am not satisfied, however, that her work, concentrated as it is upon certain types of returns, can be described as amounting to substantial involvement in a broad range of income tax returns as required by regulation 156(2). In the eight taxation years set out in paragraph 17 above, she has averaged each year only three returns which were not either individual or partnership returns. The maximum number was six in 1987. The range of those returns was companies, trusts and superannuation. Taking into account Mrs Webb's description of those returns, I do not consider that, even when taken with the individual and partnership returns, they reflect a broad range of returns. In reaching that conclusion, I have noted Mr Rienecker's evidence that in 1983/1984, company and trust returns represented approximately 5.8% of the total returns lodged in Townsville. The number of those returns lodged in Queensland, as compared with the rest of Australia, is 4.6%. The evidence of Mrs Webb's work in the months since she lodged her application does not alter my view. Her work has continued to be of the same type as in the past.

24. Mrs Webb has had experience in negotiating disputed assessments with the Australian Tax Office but her experience with the preparation of objections, other than those which the negotiations have led her to believe would be successful, has been limited to three. Although it may be said that she had substantial involvement in the preparation of each of those objections, regulation 156(2) requires that the preparation of the objections must be in respect of ``such returns'' i.e. the broad range of income tax returns referred to in paragraph (a) of regulation 156(2). It follows that she does not have the experience required by regulation 156(2).

25. Mrs Webb readily agrees that she does not have a great deal of experience in the preparation of returns other than those for individuals and partnerships, which also include those for small businesses. She submitted that, were she to be registered as a tax agent, there is no way she would undertake the preparation of returns for public companies and corporations or companies operating in specialist areas.

26. I have no doubt that Mrs Webb would confine herself to the preparation of returns with which she is experienced. The problem is that the Act and Regulations do not limit registration as a tax agent to a particular range of returns just as they do not limit the experience which is required to a particular range. As Deputy President Forrest observed in
Re Civiti and Tax Agents' Board of Victoria 90 ATC 2039 at 2043:

``Once registration is granted, the agent is not limited in the taxation work he or she may undertake. With the best of intentions it is not an easy thing, more so when establishing a practice, to decline a potential client outside one's sphere of experience. The respondent has to ensure as best it can, that the person entrusted with any type of return or income tax business is fit to undertake the work.''

27. Although it is not difficult to understand Mrs Webb's frustrations at not being able to act independently in the field in which she has gained her expertise, I must, for the reasons I have given, affirm the decision under review.