Forbes-Perera and Tax Agents' Board of Victoria [2009] AATA 119; (2009) 75 ATR 134 (23 February 2009)

Last Updated: 12 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 119

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/2155

GENERAL ADMINISTRATIVE DIVISION		)
	Re		WENDY FORBES-PERERA

Applicant

And

TAX AGENTS’ BOARD OF VICTORIA

Respondent

DECISION

Tribunal

Mr G L McDonald, Deputy President

Date 23 February 2009

Place Melbourne

Decision

The decision under review is affirmed.

.....................................
Deputy President

CATCHWORDS

INCOME TAX ASSESSMENT ACT 1936 – whether applicant was a fit and proper person to prepare income tax returns – whether the applicant has had not less than 12 months relevant employment on a full time basis in the preceding five years – whether the applicant has been engaged in relevant employment – date of commencement of five year period – decision under review affirmed.
Administrative Appeals Tribunal Act 1975 s 37
Income Tax Assessment Act 1936 ss 251BC, 251J and 251JA

Income Tax Regulations 1936 reg 156
Egulian and Tax Agents’ Board of New South Wales (1992) 91 ATC 2060
Re Mondini and Tax Agents’ Board of Queensland [2007] AATA 1921
Re Webb and Tax Agents’ Board of Queensland [1992] AATA 292; (1992) 28 ALD 464

Tax Agents’ Board of Queensland v Seymour (1990) 21 FCR 357

REASONS FOR DECISION

23 February 2009

Mr G L McDonald, Deputy President

1. The applicant is applying for a review of a decision of the respondent refusing to register her as a tax agent.
2. At the hearing Ms Forbes-Perera was self-represented. The Board was represented by Mr Linden from the Australian Government Solicitor. The Tribunal had before it the documents filed for the purposes of satisfying s 37 of the Administrative Appeals Tribunal Act 1975 (T documents).
3. Part VIIA of the Income Tax Assessment Act 1936 (ITAA 1936) addresses the registration of tax agents. Section 251J provides that a person seeking to be a tax agent is to apply to the Tax Agents’ Board for registration. Section 251JA sets out the prerequisites which must be fulfilled before a person can be granted registration. In the case of the applicant s 251JA(1)(a) is relevant:

(1) The Board shall register the applicant as a tax agent if the applicant satisfies the Board that:
(a) if the applicant is a natural person:
(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;

4. The term ‘fit and proper to prepare income tax returns’ is addressed in s 251BC of the ITAA 1936 and reg 156 of the Income Tax Regulations 1936. There are four criteria addressed in reg 156 which cover the following:

(i) academic qualifications;

(ii) the person has at least three years study in accountancy;

(iii) the person has had not less than 12 months relevant employment on a full time basis in the preceding five years; and

(iv) the person has successfully undertaken a course in Australian income tax law.

5. In this case the respondent accepts that the applicant meets all of the prerequisites other than criterion (iii). From the information before it the Tribunal is satisfied that the only issue to be addressed is whether the applicant meets the requirement of criterion (iii). In her written submission to the Tribunal dated 5 February 2009 Ms Forbes-Perera submits the Tribunal should waive the so called five year rule. This may seem to carry with it an admission or at least acknowledgement that she is unable to satisfy the requirement. However, at the hearing the applicant argued that reg 156(2)(c)(ii) and/or (iii) applied to her circumstances.
6. Regulation 156(2)(c) provides:

(2) A qualification is that a person:
(c) has:
(i) been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years; or
(ii) otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to the employment mentioned in subparagraph (i); or
(iii) been engaged in such other employment, and for such time, as the Board regards as equivalent to being engaged in the relevant employment mentioned in subparagraph (i);

7. The term ‘relevant employment’ is defined in reg 156(6) as follows:

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; and
(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.

8. An issue in this case, and one which has arisen in previous cases, is when the five year period is to commence, that is at the date of application to the board or the date on which the Tribunal commences to hear any application for review. The Tribunal notes that there are differing decisions within the Tribunal on this question. Deputy President McMahon in Egulian and Tax Agents’ Board of New South Wales[1] determined the date should be the date the applicant applied to the board for registration. Deputy President Hack followed Egulian in Re Mondini and Tax Agents’ Board of Queensland[2] on the basis that if he did not adopt that approach then the applicant would be unable to meet the necessary employment period requirement. On the other hand, Deputy President Forgie determined in Re Webb and Tax Agents’ Board of Queensland[3] the relevant date was the date the Tribunal hears the application. There are strong arguments set out in Egulian and Webb in support of the determinations reached in those cases. In the end it is not necessary for the Tribunal to decide the issue in this case because which ever approach is taken to the commencement of the five year period the Tribunal is satisfied that the applicant is unable to reach the standard.
9. The Tribunal will now examine Ms Forbes-Perera’s work history.

OCTOBER 2000 TO JULY 2002 – RASO & CO PTY LTD

10. Raso & Co Pty Ltd is a firm of chartered accountants and business advisors where the applicant was employed full-time as an accountant.
11. In a form issued by the Board the employer described the applicant’s work as follows:

... required to meet with clients & obtain information
... to attend to ATO queries
... provided general advice to individuals & assisted with the preparation of detailed tax advice
... assisted with the preparation of objections and was required to research tax issues.[4]

AUGUST 2002 TO MARCH 2003 – ANZ TRUSTEES LTD

12. The applicant was a full-time employee at ANZ Trustees Ltd. A representative described the applicant’s work as follows:

Interviewed clients in order to obtain income tax information for the Income tax returns both face to face interviews and on the phone.
Yes liaised with tax office for clients for tax queries in relation to ITR issues as well as prepared amendments to assessments.
Prepared some objections to assessments and [illegible] with ATO on behalf of clients. Following up issues with ATO.[5]

13. The employer confirmed that the applicant spent 95% of her time undertaking income tax matters.
14. The applicant told the Tribunal that she prepared tax returns for trusts as part of her work.

AUGUST 2003 TO OCTOBER 2004 – WH MARKS SATTIN

15. WH Marks Sattin is a recruitment agency. The employer described the applicant’s employment as “salaried employee on contract basis.”[6] The applicant, in describing her work, stated that she was contracted to the National Private Super’s Trustees Wealth Management Division where she completed fund accounts and was responsible for superannuation tax returns. The applicant describes her work at WH Marks Sattin as:
    • Analysing and reconciliation of fund expenses and revenue, reviewing and analysing investments and assets of the fund.
    • Analyzing sale and purchase of fund assets and computation of CGT and deferred income tax.
    • Preparation of the statement of financial performance and statement of financial position for the funds.
    • Reviewing and computing the tax for the funds and the preparation of tax returns for the fund.
    • Other routine and administration issues in relation of the funds.
    • Reviewing APRA returns.[7]
      
16. The applicant told the Tribunal that having prepared the tax returns they were then forwarded to KPMG where they were checked by the audit team before being authorised by that firm for lodgement with the ATO. The details of the procedures undertaken were not known and the respondent accepted that no adverse implication could be drawn that the provisions of the ITAA 1936 requiring tax returns to be prepared and lodged by a tax agent were not being complied with. The Tribunal has proceeded on that basis.

NOVEMBER 2004 TO PRESENT – AUSTRALIA AND NEW ZEALAND BANKING GROUP PTY LTD

17. The applicant is a full-time employee at ANZ Bank. The applicant told the Tribunal that she had responsibility for preparing information relating to the tax returns for approximately 40 managed investment funds for the first two years and for superannuation funds in last two years to the present.

TRIBUNAL’S CONSIDERATION

18. The earliest date the five year period could begin is 24 October 2002 because the application was lodged with the Board on 24 October 2007. This post dates the cessation of the applicant’s employment with Raso & Co Pty Ltd. It follows that the experiences of the applicant with that firm cannot be taken into account in determining her ‘relevant employment.’ The applicant claims her employment with ANZ Trustees involved her preparing over 100 tax returns for individuals and 100 for charitable trusts and superannuation funds.[8] The respondent did not challenge this but pointed out that for calculation of time purposes it was a five month period.
19. The period with National Private Super cannot be taken into account as the applicant was not an employee but an independent contractor. In Tax Agents’ Board of Queensland v Seymour[9] Pincus J held that the term did not extend to independent contractors. The employer was strictly WH Marks Sattin and not National Private Super. WH Marks Sattin is a recruitment firm and has no ostensible connection to undertaking income tax work. The applicant also stated that she helped prepare income tax returns for members of her family and neighbours. For the reasons expressed in Seymour this activity cannot be considered when determining a person’s engagement in undertaking income tax related work.
20. The applicant’s work with her current employer, ANZ Bank, is stated to engage her in undertaking income tax matters for about 10% of her time.[10] At the time of the hearing, she had been working there for about four years from November 2004. Therefore, if the date for determining the five year period is 24 October 2007 only (almost) three of the four years is to be included. The applicant told the Tribunal that in the first two years she was involved in preparing accounts including some income tax returns for managed funds until she moved to a different area.
21. The Tribunal accepts that the five month period with ANZ Trustees provides the strongest evidence of her being engaged in as ‘equivalent employment‘ to ‘relevant employment.’ She was employed and reported to the taxation manager of the division and undertook income tax matters on a reasonably broad scope covering returns for individuals, trusts and superannuation funds.
22. The employment with the ANZ Bank is however more limited in that in the first two years she dealt specifically with tax matters relating to managed funds and the applicant’s involvement with income tax aspects occupied only 10% of her total time. It is true that other aspects of taxation law other than income tax were covered, for example capital gains tax and deferred tax. However, the latter are not what is required by the regulation which is limited to a consideration of income tax related issues. While the Tribunal accepts that the applicant is a qualified and competent accountant, the evidence does not disclose her as having a sufficient connection to income tax matters on a sufficiently broad basis nor for a sufficient time which could result in her being considered to have been in equivalent employment for at least one year out of the five year period.
23. If the five year period commences in the period preceding the Tribunal’s hearing the applicant’s position is weaker. This is because the time she worked with ANZ Trustees would be excluded from consideration. The only relevant employment which could be considered would be with the ANZ Bank where she undertook tax returns for managed funds and in the last period for superannuation companies. As earlier noted only a total of 10% of her time was devoted to income tax aspects in this work. For the same reasons as expressed above she could not qualify.
24. The applicant is therefore not a fit and proper person as that term is defined in the context the tax agents’ registration provisions of the ITAA 1936.
25. It follows that the decision under review is affirmed.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of

Mr G L McDonald, Deputy President

Signed: ..........................................................

Grace Horzitski Associate

Date of Hearing 5 February 2009

Date of Decision 23 February 2009

Solicitor for the Applicant Self-represented

Solicitor for the Respondent Mr S Linden,

Australian Government Solicitor

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[1] (1992) 91 ATC 2060.
[2] [2007] AATA 1921.
[3] (1992) 28 ALD 464.
[4] T documents, T7, page 50.
[5] T documents, T5, page 38.
[6] Exhibit A2.
[7] T documents, T2, page 7.
[8] T documents, T2, page 8.
[9] (1990) 21 FCR 357.
[10] Exhibit A1.