Arogun and Tax Practitioners Board [2011] AATA 729 (20 October 2011)

Last Updated: 20 October 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 729

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2011/0781

GENERAL ADMINISTRATIVE DIVISION		)
	Re		ADEGBOYEGA AROGUN

Applicant

And

TAX PRACTITIONERS BOARD

Respondent

DECISION

Tribunal

Dr. G Hughes, Member

Date 20 October 2011

Place Melbourne

Decision

The Tribunal affirms the decision under review.

[sgd] Gordon Hughes
Member

TAX AGENTS – Registration as tax agent – conditions imposed by respondent due to lack of agent's experience – application to vary conditions

Tax Agent Services Act 2009 s 2-5, s 20-5, s 20-25, s 20-40, s 90-5

Tax Agent Services Regulations 2009 Schedule 2, item 205, item 207

Stasos v Tax Agents’ Board [1990] FCA 379; (1990) 21 ALD 437

REASONS FOR DECISION

20 October 2011

Dr. G Hughes, Member

1. This application arose out of the respondent’s refusal in June 2011 to vary conditions attached to the applicant's registration as a tax agent.
2. The applicant sought registration as a tax agent on 1 June 2010. The respondent accepted the application on 7 October 2010, subject to the conditions that the applicant could only provide tax agent services that were related to BAS services and the preparation and lodgement of individual tax returns. The respondent imposed the conditions because it had concluded, based on material submitted by the applicant, that the applicant's experience was limited to BAS services and the preparation of individual returns.
3. On 19 November 2010 the applicant sought a variation of the conditions. After considering further information provided by the applicant, the respondent rejected the application on 14 December 2010.
4. On 2 March 2011 the applicant lodged an application for review with the Tribunal. On 25 May 2011, by consent, the Tribunal remitted the matter to the respondent for further consideration.
5. On 13 June 2011 the applicant provided additional information for the respondent’s consideration. On 16 June 2011 the respondent reviewed the application for a variation and refused it.

LEGISLATION

6. The respondent considered the application for registration, and imposed conditions, pursuant to section 20-25 of the Tax Agent Services Act 2009 (the Act). Section 20-25 provides:

Registration
Grant of application for registration

(1) If you have applied to the Board for a type of registration, the Board must grant your application if you are eligible for registration of that type. Otherwise, the Board must reject your application.
(2) The Board must decide your application within 6 months of receiving it.
(3) If the Board does not decide your application within 6 months of receiving it, the Board is taken to have rejected your application. However, this does not apply if your application is for renewal of your registration.

Note: For renewals of registration, see section 20-50.

Period of registration

(4) If the Board grants your application, the Board must also determine the period for which you are registered. The period must be for at least 3 years.

Conditions of registration

(5) If the Board considers it appropriate to do so, the Board may impose one or more conditions to which your registration is subject.
(6) If a condition is imposed, it must relate to the subject area in respect of which you may provide * tax agent services.
(7) In deciding whether to impose a condition, the Board must have regard to the requirements prescribed by regulations under paragraph
20-5(1)(b) in relation to:

• (a) if you are an individual--your registration as a * registered tax agent or BAS agent; and
• (b) if you are a partnership or company--the registration of individuals who will provide * tax agent services for you.

7. The applicant sought a variation of the conditions pursuant to section 20-40 of the Act. Section 20-40 provides:

Variation of conditions of registration

(1) The Board may vary a condition to which your registration as a *registered tax agent or BAS agent is subject if:

• (a) you make an application for variation of the condition; and
• (b) the Board is satisfied that it is appropriate to vary the condition.

(2) Your application must be:

• (a) in a form approved by the Board; and
• (b) accompanied by any information or documents that are required by the Board.

8. Tax agent service is defined in section 90-5 of the Act. Section 90-5 provides:

Meaning of tax agent service

(1) A tax agent service is any service:

• (a) that relates to:
  • (i) ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a * taxation law; or
  • (ii) advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or
  • (iii) representing an entity in their dealings with the Commissioner; and
• (b) that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:
  • (i) to satisfy liabilities or obligations that arise, or could arise, under a taxation law;
  • (ii) to claim entitlements that arise, or could arise, under a taxation law.

(2) A service specified in the regulations for the purposes of this subsection is not a tax agent service.

Note: For specification by class, see subsection 13(3) of the Legislative Instruments Act 2003.

9. It is relevant to consider the objects of the legislation. Section 2-5 of the Act provides:

The object of this Act is to ensure that * tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. This is to be achieved by (among other things):

(a) establishing a national Board to register tax agents and BAS agents; and
(b) introducing a * Code of Professional Conduct for * registered tax agents and BAS agents; and
(c) providing for sanctions to discipline registered tax agents and BAS agents.

10. Schedule 2 to the Tax Agent Services Regulations 2009 (the Regulations) sets out the issues to be considered by the board in determining whether to register a tax agent. Items 205 and 207 are of specific relevance. Item 205 states:

A requirement is that:

(a) the individual has successfully completed:

• (i) a course in basic accountancy principles that is approved by the Board; and
• (ii) a course in Australian taxation law that is approved by the Board; and
• (iii) for an application made 3 years or later after the day on which Part 2 of the Tax agent (sic) Services Act 2009 commences -- a course in commercial law that is approved by the Board; and

(b) the individual has been engaged in the equivalent of 8 years of full-time, relevant experience in the past 10 years.

11. Item 207 states:

For Division 1, relevant experience means work by an individual:

(a) as a tax agent registered under the Act; or
(b) as a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936; or
(c) under the supervision and control of a tax agent registered under the Act; or
(d) under the supervision and control of a tax agent registered under the previous regulatory regime contained in Part VIIA of the Income Tax Assessment Act 1936; or
(e) as an Australian legal practitioner; or
(f) of another kind approved by the Board;

in the course of which the individual's work has included substantial involvement in 1 or more of the types of tax agent services described in section 90-5 of the Act, or substantial involvement in a particular area of taxation law to which 1 or more of those types of tax agent services relate.

DISCUSSION

12. The applicant did not provide any new material to the Tribunal. The essence of his submission was that the material previously provided to the respondent was adequate; and that, on the basis of that material, the respondent had erred in refusing his application for a variation of the conditions imposed upon him pursuant to section 20-25(5) of the Act.
13. The key materials placed before the respondent, and hence the Tribunal in these proceedings, were:
    • (a) an email from the applicant to the respondent dated 28 September 2010 in which he outlined the tax agent services he had previously provided in his capacity as an employee;
    • (b) a letter from the applicant to the respondent dated 19 November 2010 in which he formally requested a variation of the conditions; and
    • (c) a letter of support dated 2 February 2011 from a registered tax agent, Mr Boniface Anyadoro.
14. The applicant's email dated 28 September 2010 provided an overview of services he had performed as an employee for the Redeemed Christian Church of God (2004-2009), Triveni Infotech (2005), Close the Loop Pty Ltd (2005-2006), Blind Citizens Australia (2006-2008) and Dixon Appointments (2008-2010).
15. In his letter dated 19 November 2010, the applicant emphasised that he had been working in accounting since 2003 and had worked on different forms of accounting structures, including trust accounting, partnership, company and sole trading, on which he had competently ascertained liabilities on each of the structures and prepared the accounts that led to the preparation and lodgement of income tax. He said he had experience in preparing company and partnership accounts for income tax lodgement and he had many years of experience of providing tax related services. He also referred to various leadership and management roles he had held during his employment with different companies, noting that these had included providing advice on income tax matters. He had also had various dealings with the Australian Taxation Office regarding clients' affairs.
16. The applicant's letter to the respondent dated 19 November 2010 referred to his experience under the supervision of Mr Boniface Anyadoro, a registered tax agent. He also referred to supervision by another registered tax agent, Brent Murphy, during his employment with Blind Citizens Australia. In addition, the letter nominated Mr Steven Hogan of the Victorian Auditor-General's Office as a person who could attest to the suitability of the applicant’s experience.
17. The respondent did not contact Mr Hogan as he was clearly an auditor, not a tax agent, and therefore not relevant to the respondent’s assessment. However, the respondent did telephone Mr Murphy on 30 November 2010 and Mr Anyadoro on 1 December 2010.
18. Mr Murphy advised the respondent that the applicant's work with Blind Citizens Australia did not involve tax agent services. Mr Anyadoro confirmed, on the other hand, that the applicant's preparation of two tax returns which Mr Anyadoro had supervised had proved satisfactory.
19. The applicant provided Mr Anyadoro's letter of 2 February 2011 in response to a subsequent invitation from the respondent on 11 January 2011 to provide any further evidence as to his experience. The letter from Mr Anyadoro, who is now deceased, stated:

I have been made aware that the Tax Practitioners Board wants written evidence from a tax agent regarding Mr Adegboyega Augustine Arogun and his competencies on provision of tax agent services.
I certify that I have had working relationship with Mr Adegboyega Augustine Arogun on the provision of tax agent services including preparation of tax agent services other than individual tax services.
that I am satisfied with his level of professionalism, competency and experience in those tax agent services.
I stated that my relationship with Mr Adegboyega Augustine Arogun regarding tax agent services is still ongoing.
Upon my working relationship with him, I recommend his full registration as a tax agent without imposing any conditions.

20. The respondent made further telephone enquiries of Mr Anyadoro on 31 May and 1 June 2011. According to the respondent's file note, Mr Anyadoro indicated on the first occasion that he was unsure whether he could add anything more to what he had previously written, and on the second occasion he expressly declined to provide further information.
21. It appears that the respondent went to considerable lengths to ensure that it was fully informed when making its decision to refuse the request for variation. In addition to contacting referees, it invited the applicant to present additional supporting material on several occasions.
22. In particular, the respondent contacted the applicant by telephone on 1 June 2011 and by letter on 6 June 2011, informing him that he should consider providing further information to verify his experience. The applicant responded by letter dated 13 June 2011, effectively reiterating his work history but not providing additional information.
23. While the applicant had provided evidence of experience in providing BAS services and preparing individual tax returns, the only evidence of experience in the provision of tax agent services for business entities was that the late Mr Anyadoro had supervised the preparation by the applicant of one partnership tax return and one company tax return. It is necessary to assess the application on that basis.
24. Section 20-25(5) of the Act provides that the respondent may impose conditions if it considers it appropriate to do so. The legislation does not define the term appropriate.
25. It is therefore relevant to consider the object of the legislation, as set out in section 2-5 of the Act, although this is in itself is not particularly helpful. The object of the act is, in essence, to ensure tax agent services are provided with appropriate standards of professional ethical conduct. It is relevant to observe that the Oxford Dictionary defines appropriate as meaning suitable or proper in the circumstances [emphasis added]. It follows that the relevant standard must be determined by reference to the specific circumstances surrounding each individual.
26. Section 20-5(1)(b) of the Act provides that the respondent must be satisfied that an individual meets the requirements prescribed by the Regulations.
    Item 205 of the Regulations stipulates a requirement for full-time relevant experience in eight of the ten years preceding the application. Item 207 provides that relevant experience for these purposes must include substantial involvement in 1 or more of the types of tax agent services described in section 90-5 of the Act, or substantial involvement in a particular area of taxation law to which 1 or more of those types of tax agent services relate. Item 207(c) further requires that, for the present purposes, the relevant experience must have been obtained under the supervision and control of a tax agent registered under the Act.
27. The Act and Regulations are not particularly prescriptive as to the criteria the respondent should consider in making a determination to impose conditions. The question of when it may be appropriate to impose conditions is left very much to the discretion of the respondent, based on its assessment of an applicant's experience and capabilities and, in turn, its assessment of what is ultimately in the public interest.
28. In this regard, it is helpful to note the observations of Hill J in Stasos v Tax Agents’ Board [1990] FCA 379; (1990) 21 ALD 437 at 443:

The conferral of this privilege [that is, registration] upon registered tax agents carries with it a consequent set of obligations and responsibilities. A person is required, before being registered as a tax agent to demonstrate that he is a fit and proper person to prepare income tax returns and transact business on behalf of clients in tax matters and, inter alia, that as at the date of application he is of good fame, integrity and character. Accordingly, it is necessary that he demonstrate that he has the necessary knowledge and experience to equip himself to perform these tasks.

DECISION

29. The respondent was justified in placing conditions on the applicant's registration as a tax agent.
30. The effect of registration as a tax agent is to provide the public and potential clients with independent verification as to an individual's relevant experience and skills.
31. There is no evidence that the applicant lacks experience in accounting and there is no suggestion that he is not a person of good character. The shortcoming in his application is that he has been unable to demonstrate adequate experience in providing tax agent services for business entities, as opposed to individuals.
32. Unconditional registration would entitle the applicant to hold himself out as having satisfied the requirement to demonstrate adequate experience in all aspects of tax agent services. To the extent that that the applicant lacks such experience, the respondent is entitled to impose conditions which prevent the applicant providing such services in an unsupervised capacity. It is clearly the responsibility of the respondent, in the public interest, to impose such conditions if it is not satisfied as to an applicant's expertise and experience in a particular area.
33. The respondent appears to have provided the applicant with every opportunity to present additional material in support of his application. The applicant insists he has provided adequate supporting material. It can be assumed that if there had been additional material in support of the application, the applicant would have provided it to the respondent or to the Tribunal.
34. The Tribunal considers that the material provided by the applicant in support of his request for a variation of the conditions adds little, if anything, to the material upon which the respondent's initial decision to impose the conditions was based. The Tribunal further considers that the original decision by the respondent reflected a proper exercise of the power under section
    20-25(5) to impose conditions on the applicant's registration.
35. For the above reasons, the Tribunal affirms the decision under review.

I certify that the thirty-five [35] preceding paragraphs are a true copy of the reasons for the decision herein of:
Dr. G Hughes, Member

Signed: ......Dianne Eva .............................

Clerk

Date of Hearing 19 September 2011

Date of Decision 20 October 2011

Advocate for the Applicant Self-represented

Counsel for the Respondent Mr G. Hill

Solicitor for the Respondent Mr D. Brown, Australian Government Solicitor