The Board Conduct Committee (BCC) determined that a partnership tax agent had committed various Code of Professional Conduct (Code) breaches. A summary of Code breaches is provided below.

Code breaches

Code item 1 – Failure to act honestly and with integrity

The partnership tax agent had misused funds belonging to a client and their related entities, including a superannuation fund. The misuse involved the partnership making payments:

• to its own ATO accounts

• for personal and business expenses of the individual partners

• for expenses of other businesses of the partnership

• for loans to the partnership, individual partners and third parties.

The BCC found that the partnership breached this Code item and these payments were ultimately detrimental to the client’s overall financial position. 

Code item 2 – Failure to comply with personal tax affairs

The partnership had outstanding tax lodgements and debts with no active payment arrangements.

Code item 5 – Failure to manage conflicts of interest

The partnership did not have loan or written agreements in place for payments made from the client’s accounts. It used client’s accounts for making personal transactions and failed to maintain appropriate records.

Code item 7 – Failure to provide competent service

The partnership led the client and associated entities to default on 23 income tax returns and 53 business activity statements. It also failed to ensure the client’s tax debts were paid or payment arrangements adhered to, resulting in the Australian Taxation Office commencing legal action against the client.

Code item 14 – Failure to respond to Board’s requests in a timely, responsible and reasonable manner

The partnership failed to provide evidence supporting its request for an extension of time to respond to the Board by the date required.  It also failed to provide a substantive response to the Board’s please explain letter.

Partners found not fit and proper

The BCC further determined that both partners were not fit and proper as a result of the partnership’s conduct that breached the Code. The partnership therefore ceased to meet a registration requirement.

Decision

Due to the above findings, the BCC terminated the partnership’s registration as a tax agent and prohibited them from applying for registration for five years.