A tax agent failed to obtain a client’s written authority to use his practice trust account to receive their tax refunds and then used the client’s refunds to offset his fees.

Issues found

Investigations, following a complaint from the client, identified several practice management issues in the agent’s practice. The agent, as the sole supervising tax agent of a registered company practice, failed to:

• have in place a written agreement (such as a letter of engagement) or obtain a written authority from clients to deduct fees for services from tax refunds

• document client instructions and interactions 

• ensure the taxpayer’s declarations were signed by clients prior to lodgement

• issue invoices for services rendered promptly

• duly pass on finalised copies of returns and notices of assessments to clients

• account to clients for refunds received on their behalf.

The Board Conduct Committee (BCC) determined that the agent had failed to act honestly and with integrity, and failed to provide tax agent services competently. 

It was also found that two of the agent’s associated superannuation fund entities had several outstanding tax returns and tax debts.

Sanctions imposed

The BCC imposed the following sanctions on the agent for the Code of Professional Conduct (Code) breaches found:

• a written caution for Code breaches, reminding him of his obligations regarding competency, practice management and supervision and control

• an order requiring the agent to:

  • lodge the outstanding tax returns for the associated superannuation fund entities within three months

  • pay or provide evidence of a payment arrangement for the tax debts of the above entities within three months

  • complete and pass a course of education or training relating to practice management within six months and provide evidence of completion.

The company tax agent was also sanctioned with a written caution reminding the company of its obligations regarding competency, practice management and supervision and control.