After receiving a referral from the Australian Taxation Office (ATO), we launched an investigation into the conduct of a tax agent. The ATO assisted with our investigation by providing information and evidence in response to our formal requests. The Board Conduct Committee (BCC) noted the findings from the ATO’s compliance action.

Our investigation found the agent breached 6 items of the Code of Professional Conduct (Code) and ceased to meet the tax agent registration requirement that they be a fit and proper person.

The agent was found to have breached Code item 1 (you must act honestly and with integrity) by, among other things, making false statements to the Board in their renewal applications and annual declarations. The agent stated that they did not have any outstanding lodgements, when at the time of making the statements, they did in fact have multiple outstanding income tax returns (ITR).

It was also found that the agent had breached Code item 1 and Code item 2 (you must comply with the tax laws in the conduct of your personal affairs) when they failed to declare over $16 million in assessable income in personal ITRs lodged with the Australian Taxation Office (ATO). This resulted in a tax shortfall of over $7 million and penalties of over $6 million being imposed. They also failed to lodge 54 business activity statements and 23 ITRs by their due date for themselves and their related entities.

The agent was also found to have acted without honesty and integrity by relying on false or misleading ITRs they had lodged, and the Notices of Assessment issued by the ATO to reduce their child support obligations.

The BCC found the agent had breached Code item 1 and the following Code items for lodging ITRs on behalf of a client which incorrectly declared their income, despite the agent being the director of the corporate trustee of the company employing the client:

• Code item 4 – you must act lawfully in the best interests of your client.

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

• Code item 9 – you must take reasonable care in ascertaining a client’s state of affairs.

In addition, the BCC found the agent had breached Code item 11 (you must not knowingly obstruct the proper administration of the taxation laws) for preparing multiple versions of ITRs for themself and their related entities and maintaining 2 or more sets of financial records. The ITRs contained different amounts of assessable income, with different versions provided to the ATO and to financial institutions.

Based on this egregious behaviour the BCC terminated the tax agent’s registration and imposed a 5-year ban on them reapplying for registration.

The agent’s company was also terminated with a 5-year ban as the agent was the sole director and the company had therefore ceased to meet an ongoing registration requirement.