Clients of tax practitioners need to be advised when their agent is subject to sanctions and deregistration. The Administrative Appeals Tribunal (AAT) has supported the Tax Practitioner Board’s (TPB) role in protecting the public, especially clients of tax practitioners who are found to lack fitness and propriety. 

The TPB terminated the tax agent registration of Terry Borella, prohibiting Mr Borella from reapplying for registration for 2 years. Over several years Mr Borella showed repeated disregard and an unwillingness to comply with personal tax obligations and defaulted on payment arrangements with the Australian Taxation Office (ATO).

Mr Borella has had numerous interactions with the TPB in relation to outstanding tax obligations. Most recently, the TPB found Mr Borella ceased to be a fit and proper person, by failing to lodge and pay tax debts and comply with 2 TPB orders. At the time of the TPB’s decision, Mr Borella had in excess of $110,000 owing to the ATO and had failed to lodge 3 business activity statements.

Mr Borella applied to the AAT for a review and stay of the TPB’s decision. The TPB requested that any stay order should be subject to conditions, including that Mr Borella does not take on new clients and informs existing clients of the action taken by the TPB and the proceedings currently underway in the AAT. 

Mr Borella opposed the TPB’s client notification condition by submitting the conduct was not dishonest and did not involve wrongdoing relating to clients. Mr Borella argued the condition would likely cause substantial and lasting financial damage, as it would erode the confidence of clients, resulting in them moving their work elsewhere. 

The AAT granted the stay with the client notification condition sought by the TPB, with Senior Member Gina Lazanas stating ‘…the public interest in the integrity of the tax agent registration regime would also not be served by granting a stay that did not involve the Client Notification Condition.’

Senior Member Lazanas commented ‘…the reality is that, even if the Tribunal were to accept the substance of his case at the final hearing – which was that he had not engaged in any dishonesty or done any wrongdoing vis-a-vis his clients – the prospect that the Tribunal would ignore his personal tax shortcomings and conclude that Mr Borella should be immediately returned to the Register of tax agents is, at best, doubtful.’ 

Senior Member Lazanas continued ‘…the likely consequences of a conditional stay, including that Mr Borella’s clients may choose another tax agent, are due to Mr Borella’s own failures to adhere to the high standards of professionalism which the community is entitled to expect from a registered tax agent and which the Board is responsible for regulating.’ 

Chair of the TPB Mr Ian Klug AM said ‘The condition to notify clients is appropriate – there is a public interest in ensuring clients are aware of the regulatory action so they can make an informed decision on whether they wish to remain a client of Mr Borella.’

‘Mr Borella’s view of competence as a tax agent is too narrow and unacceptable. Compliance with tax obligations is a fundamental component of the requisite standards of professional and ethical conduct required of registered tax practitioners. We take our mandate to support the integrity of the tax profession very seriously and will continue to protect the public from this type of behaviour. The effective functioning of the tax profession is in the public interest.’ 

About the Tax Practitioners Board

The Tax Practitioners Board regulates tax practitioners in order to protect consumers. The TPB aims to assure the community that tax practitioners meet appropriate standards of professional and ethical conduct. Follow us on Twitter, Facebook and LinkedIn.