We investigated a registered tax agent company based on the conduct of one of its directors, who was not a registered tax practitioner.

Based on the actions of this director, the company was found to have breached Code items 1 and 4, by:

• failing to act lawfully and honestly by using clients’ information on their system to create 51 false entities without their knowledge and authorisation
• lodging over 70 fraudulent business activity statements (BAS) to obtain GST refunds totalling $279,878.50 which was deposited into bank accounts which they controlled
• lodging a further 36 BAS resulting in GST refunds totalling $559,052 being stopped by the ATO. 

The company’s co-director – a registered tax agent, was found to have breached Code item 7 by failing to:

• have adequate structures, processes and supervision and control arrangements in place to ensure accurate and competent tax services were provided; and
• supervise or conduct due diligence on services provided by a director.

The significance of this misconduct required both general and specific deterrence, therefore the company had their registration terminated with the maximum 5-year ban applied. While the tax agent was not involved with the fraud, they should have taken steps to ensure the services provided by the co-director of their company had been provided competently. We remind all tax practitioners that failures of judgement will be met by appropriate sanctions to protect the integrity of the tax profession and tax system. In this case, wilful blindness to fraudulent activity has not gone unpunished and the tax agent was sanctioned with an order to complete a course of education within 3 months.