We investigated the conduct of an individual tax agent and found that they had breached multiple requirements of the Code of Professional Conduct (Code). 

The tax agent was found to have breached the following Code items:

• Code item 1 when they did not act honestly and with integrity in their capacity as a director and sole supervising agent of a company. The tax agent lodged income tax returns (ITR) and business activity statements (BAS) for a client receiving the refunds from the Australian Taxation Office (ATO) into their own bank account, without the client’s knowledge or authority. They also deliberately withheld and failed to take appropriate steps to rectify the receipt of the refunds

• Code item 2 when they failed, in their capacity as a director of two other companies, to pay outstanding tax debts

• Code item 7 by failing to competently provide tax agent services to numerous clients of the company for 3 financial years. This included failing to make adequate enquiries to ensure that amounts, including work-related expense and rental property deductions, were correct and properly substantiated. This conduct resulted in ATO audit activity and decisions to amend incorrect claims in clients’ ITRs.

This case was considered in relation to the conduct of the company that the tax agent was the sole director and supervising tax agent. The Board Conduct Committee (BCC) found that the company had also breached Code items 1 and 7 for the reasons detailed above. The BCC also found that the company breached Code item 9 when it failed to take reasonable care to ascertain its clients’ state of affairs to ensure that they were eligible to claim deductions and other amounts in ITRs that it lodged on their behalf. 

Outcome

The BCC determined that the tax agent ceased to meet the registration requirement that they are a fit and proper person. Due to the serious nature of the conduct, the BCC decided to terminate the tax agent registrations of both the individual and the company and to prohibit them from reapplying for registration for a period of 3 years.