An Australian Taxation Office (ATO) referral prompted an investigation into the affairs of a registered tax agent company. The company’s sole director was also the company’s only supervising registered tax agent.

Failing to act honestly and with integrity

The company was found to have lodged an income tax return of a client without their knowledge or consent. In response to our enquiries, the company denied lodging client’s tax return without authority but later admitted to the conduct.

For another client, the agent had overclaimed deductions in their tax return, contradictory to what the client had advised.

Failing to comply with personal tax affairs

The ATO audit showed that the company had:

• failed to correctly report income, deductions and loans paid to the director of the company in 2016

• understated sales and overstated deductions, thus failing to correctly report GST in its quarterly business activity statements (BAS) from 1 July 2014 to 30 June 2016

• failed to register for and report pay as you go withholding (PAYGW) for the periods from 1 April 2012 to 30 June 2015

• failed to lodge 14 quarterly BAS on time for the periods 1 January 2012 to 30 June 2015.

A combined income tax and GST shortfall of over $100,000 was raised from amended assessments and penalties of over $50,000 were applied for recklessness.

Reporting incorrect income and work-related expense claims

It was further found from the ATO audits that the company had incorrectly claimed work-related car expenses and other deductions in several clients’ tax returns. The clients were either reimbursed the incurred expenses by their employers or they were not entitled to these deductions.

In the case of another client, the company had failed to report Fringe Benefits Tax and bank interest in their 2016 tax return.

It was noted that the company had failed to apply tax laws correctly and undertake appropriate checks to determine eligibility for particular expense claims.

Termination of registration

The BCC terminated the company’s tax agent registration on the basis that its conduct demonstrated significant and systemic failures to comply with the Code of Professional Conduct.