A tax agent admitted to the Board that his practice failed in some key aspects of practice management when he relied upon third party information for preparing and lodging tax returns, including information provided by a previously terminated agent.

We investigated the conduct of the agent following two complaints from taxpayers. Investigations revealed that the taxpayers were dealing with unregistered third parties who had used the registered tax agent to lodge the taxpayers’ tax returns, for which the registered tax agent received a fee.

The series of failures on the part of the registered tax agent included:

• failure to obtain authorisations directly from the taxpayers to lodge their income tax returns

• failure to confirm taxpayers’ details, including their bank account details, with the taxpayers, leading to the taxpayers not receiving their tax refunds in full (It was found that the bank account number did not belong to the taxpayers or the registered agent.)

• failure to ask sufficient and pertinent questions to prepare tax returns and instead merely relying on information provided by third parties

• failure to take reasonable care to confirm that work-related expense (WRE) claims were genuine and substantiated before lodging the returns. This resulted in the Australian Taxation Office disallowing the WRE claims following audit and imposing penalties for tax shortfall.

The Board Conduct Committee found that the agent’s conduct breached the Code of Professional Conduct (Code) and decided to impose the following sanctions on the tax agent:

• a written caution 

• an order requiring the agent to complete a course of education on the Code and provide the Board with evidence of completion within the required date.