Following a referral from the Australian Taxation Office (ATO), we conducted an investigation into the conduct of a company which revealed they had breached multiple requirements of the Code of Professional Conduct (Code). 

The company was found by the Tax Practitioners Board (TPB) to have breached:

• Code item 1 when it:

  • failed to declare that a related entity had multiple outstanding income tax returns (ITRs) and Business Activity Statements (BAS) and an outstanding tax debt on its tax agent registration renewal application

  • transferred clients’ ATO refunds to bank accounts controlled by the company’s director without the knowledge or authority of the clients

  • accepted ATO refunds on behalf of clients for returns it did not lodge and failed to return the refunds to the ATO or pass them onto the relevant clients. In addition, they used the funds to pay private expenses

  • advised the TPB that it had made a payment to refund one affected client but the payment had bounced back, when a copy of the relevant bank statement showed that was not the case.

• Code item 2 by failing to cause a related entity to:

  • lodge 3 ITRs and 5 BAS on time

  • pay, or make arrangements to pay a tax debt. 

• Code item 3 when on multiple occasions it did not account to clients for money it received from the ATO on their behalf. 

• Code item 14 when it did not respond in a timely, responsible and reasonable manner to enquiries by the TPB on numerous occasions.

Outcome

The Board Conduct Committee (BCC) considered the serious, deliberate and repeated nature of the company’s conduct and concluded this demonstrated a lack of integrity and disregard for its professional and ethical obligations under the Code and other tax laws. The BCC found the company’s sole director was no longer a fit and proper person, as he was responsible for the company’s misconduct, and the company’s tax agent registration was terminated. This case highlights how we are ensuring the tax profession meets the expectations of the government, and consumers of tax practitioner services.