A tax agent and a company registered tax agent that they were the sole director of, breached the following items of the Code of Professional Conduct (Code):

• 7 – you must ensure a tax agent service you provide or that is provided on your behalf, is provided competently

• 9 – you must take reasonable care to ascertain your client’s state of affairs

• 10 – you must take reasonable care to ensure taxation laws are applied correctly.

The Board Conduct Committee (BCC) found the individual and company tax agents failed to take reasonable care and have adequate processes in place to ensure that 6 clients were carrying on an enterprise before preparing and lodging business activity statements (BAS) that claimed GST credits on their behalf. This resulted in ATO audits and significant tax shortfalls for these clients. In particular, the BCC found the tax practitioners failed to ensure that:

• sufficient enquiries were made to correctly ascertain these clients’ state of affairs;

• taxation laws were applied correctly to these clients’ circumstances;

• statements made to the Commissioner of Taxation on behalf of these clients were true and correct

• reasonable care was taken.

The individual tax agent was also found by the BCC to have breached Code item 1 (you must act honestly and with integrity), when they failed to declare in a registration renewal application a sanction imposed by the Australian Securities and Investments Commission in relation to the termination of their self-managed superannuation fund auditor license.

In determining the appropriate sanctions, the BCC considered that the individual tax agent’s breaches of the Code demonstrated a significant lack of competence and a failure to act appropriately when put on notice by the ATO of the issues regarding the tax affairs of these clients. However, the BCC also noted the individual tax agent had shown remorse, was willing to learn and that there was insufficient evidence that they had acted deliberately in their conduct.

The BCC decided to issue both the individual and company tax agents with a written caution. In addition, the individual tax agent was ordered to complete courses in the Tax Agent Services Act 2009 (including the Code), ethics and practice management and to provide written evidence of successful completion of each course within 6 months.

Registered tax practitioners play a significant role in influencing and supporting the tax system. Importantly, in the case of a company or partnership registration, the company or partnership must ensure that it maintains these values as well.