In preparing income tax returns for its clients, a registered company tax agent was found to have failed to provide competent services and take reasonable care. A summary of failures found is highlighted below.

Incorrect work-related expense claims and tax offsets

The tax agent had claimed tax-free overtime allowance as a work-related expense for a large number of taxpayers belonging to a particular occupation. It was also found that the tax agent had claimed motor vehicle expenses for some clients when they were not entitled to.

The tax agent also failed to advise these clients about their right to lodge objections to assessments issued by the Australian Taxation Office (ATO) following a review. 

In the case of another individual taxpayer, the tax agent had claimed deductions for relocation costs including accommodation, rentals, internet, storage and meals when the relocation was voluntary.

In other cases, the tax agent had failed to properly apply zone tax offset when the taxpayers did not have a residence within the zone.

The Board Conduct Committee (BCC) determined that the tax agent had breached Code of Professional Conduct (Code) items 7, 9, 10 and 12 by the above acts.

Failure to comply with and disclose personal tax obligations 

As a corporate trustee for a trust, the tax agent had:

• made a false and misleading statement in the trust’s tax return, leading to the ATO imposing penalties for recklessness

• failed to lodge five quarterly business activity statements by the due dates

• failed to pay GST and Pay As You Go Withholding (PAYGW) amounts due from some quarterly periods between 2016 and 2019 years by the due dates

• failed to make arrangements to pay or default on payment arrangements with the ATO.

The agent had failed to disclose its overdue personal tax obligations in two annual declarations and a renewal application. The agent also dishonestly advised the Board that it had an arrangement to pay the debts.

The BCC determined that the company tax agent had breached Code items 1 and 2 due to the above findings.

Failure to maintain professional indemnity (PI) insurance

The BCC found that the agent had breached Code item 13 by failing to maintain PI insurance that met its requirements since March 2019.

Director not fit and proper

The sole director of the tax agent company was found to be not fit and proper as he was responsible for the company tax agent breaching the various Code items as summarised above.

Decision

Considering the above matters, the BCC terminated the tax agent’s registration and prohibited the company from applying for registration for four years.