The alternative sanctions ground
81 The applicant submits that the Tribunal was required to reach the correct or preferable decision, exercising all of the powers and discretions of the original decision-maker. In the circumstances of the present case, the applicant submits that this required the Tribunal to consider whether the decision to terminate the applicant's registration was preferable to other decisions that it had the power to make.
82 Notwithstanding that an individual must be a fit and proper person in order to obtain registration, the applicant submits that "a finding that a tax agent is not or [is] no longer a fit and proper person does not automatically lead to that person's registration being terminated". Rather, the Board has a discretion whether or not to terminate registration under s 40-5(1) of the TAS Act. Similarly, if the Board determines that a registered tax agent has failed to comply with the Code, the applicant submits that there is no obligation to impose any sanction and, if the Board decides to do so, the available sanctions include giving a written caution or ordering the tax agent to take specified actions (such as undergoing education or being subjected to supervision or limiting the tax agent services that may be provided).
83 In this regard, the applicant submits that there were reasons for exercising the discretion not to terminate her registration under ss 30-15(2)(d) and 30-30 or under s 40-5(1). In particular, the applicant submits that that termination of the registration of a registered tax agent might cause harm to his or her existing clients, and that the objects of the TAS Act include protecting those clients from "the prejudice and inconvenience of having to change tax agents".
84 Accordingly, the applicant submits that the Tribunal "proceeded on the erroneous basis that it must either affirm the Board's decision to terminate the Applicant's registration, or do nothing at all". While acknowledging that the Tribunal might have been "led into" this error by the positions that had been adopted by the parties before the Tribunal, the applicant submits that this did not relieve the Tribunal of the obligation to consider whether there was some other decision that was correct or preferable in all of the circumstances, referring to Transport Accident Commission v Bausch [1998] 4 VR 249 at 263 and Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 186 at 194.
85 The applicant accepts that termination of registration is the only sanction that may be imposed under s 40-5(1) of the TAS Act when a registered tax agent ceases to meet one of the tax practitioner registration requirements, including the requirement that the agent must be a fit and proper person. However, the applicant submits that the decision whether or not to terminate registration remains discretionary, and that "where the circumstances that render a person not fit and proper also constitute a breach of the Code, the Board is able to impose a lesser sanction for breach of the Code and then take that lesser sanction into account in deciding that it is not also necessary to terminate the agent's registration for failure to be a fit and proper person". On the applicant's argument, where it is appropriate to impose a sanction other than termination under s 30-15(2), this might provide a reason to exercise the discretion not to terminate the registration of a tax agent under s 40-5(1) notwithstanding a finding that the agent is not a fit and proper person within the meaning of ss 20-5(1)(a) and 20-15.
86 The applicant contends that the Tribunal failed to consider whether it was appropriate to adopt such a course in the present case, by first considering whether or not it was appropriate and sufficient to impose a lesser sanction under s 30-15(2) of the TAS Act in respect of the applicant's breaches of the Code, before considering whether or not it was appropriate to exercise the discretion under s 40-5(1) to terminate the applicant's registration.
87 The Tribunal's failure to consider alternative sanctions is said by the applicant to be apparent from its failure expressly to refer to the provisions conferring power to impose a lesser sanction than termination, and the fact that the Tribunal "moved immediately to the conclusion that [the applicant's] registration should be terminated" after having concluded that she had breached the Code and was not a fit and proper person. The applicant submits that, when read in context, the Tribunal's reference to "the appropriate sanction" in its reasons (extracted at paragraph 61 above) was only to a choice whether or not to terminate the applicant's registration, as opposed to any consideration of the range of sanctions available under s 30-15 of the TAS Act. The applicant contrasted the manner in which the Tribunal had dealt with the determination of the length of the period during which the applicant may not apply for registration, in respect of which the Tribunal had expressly considered a number of matters and made a different decision to that made by the Board.
88 It may be noted that the applicant does not challenge the Tribunal's finding of fact that she was not a fit and proper person within the meaning of s 20-5(1)(a) and 20-15 of the TAS Act.
89 I reject the alternative sanctions ground for the following reasons.
90 In my view, Subdiv 40-A of Pt 4 of the TAS Act confers a separate power to terminate the registration of a registered tax agent that is independent of the power to impose administrative sanctions under Subdiv 30-B of Pt 3. This is consistent with the Note to s 40-5(1), which indicates that "[t]he Board may also terminate your registration for breach of the Code" (emphasis added), referring to Subdiv 30-B. The termination power conferred by s 40-5(1) covers the occurrence of certain events that affect the agent's continued registration (including conviction of a serious taxation offence or an offence involving fraud or dishonesty, or bankruptcy), ceasing to meet the tax practitioner registration requirements, or breach of a condition of the agent's registration. The termination power conferred by s 30-30, on the other hand, is one of a range of administrative sanctions that may be imposed for a failure to comply with the Code under s 30-15.
91 There may be cases in which a tax agent has failed to comply with the Code but none of the grounds for termination under s 40-5 have arisen. In such cases, the Board may impose one or more of the sanctions under s 30-15 including, if warranted by the circumstances, termination of the agent's registration. However, if there are also grounds for termination of the agent's registration under Subdiv 40-A, the Board may proceed to exercise the power conferred by s 40-5(1). The circumstances giving rise to a ground for termination under s 40-5(1) will not infrequently involve a failure by the agent to comply with the Code. For example, conviction of an offence involving fraud or dishonesty would often involve a failure by the agent to act honestly and with integrity as required by s 30-10(1). Similarly, one or more failures by the agent to comply with the Code could be sufficiently serious as to raise concerns that the agent was no longer a fit and proper person and had ceased to meet the tax practitioner registration requirements for the purposes of s 40-5(1). However, the Board is not required to consider whether any, and if so what, sanction should be imposed under Subdiv 30-B for the agent's failure to comply with the Code before addressing the exercise of power to terminate the agent's registration under Subdiv 40-A.
92 The structure of the TAS Act separates the powers conferred by Pt 3 in relation to the Code and the powers conferred by Pt 4 in relation to termination of registration. There is a degree of overlap between Pts 3 and 4, in so far as the provisions in Subdiv 40-B dealing with "Notice and effect of termination" are applicable to a termination of an agent's registration under ss 30-15 and 30-30 as a sanction for failing to comply with the Code. But this does not detract from the structural separation of the provisions for enforcement of the Code under Subdiv 30-B and the grounds for terminating registration under Subdiv 40-A.
93 Powers of the kind currently contained in Subdiv 40-A were a feature of the previous legislative regime for the regulation of tax agents in former Part VIIA of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). The Tax Agents' Board constituted in each State had power to suspend or cancel the registration of a tax agent on grounds including that the agent was "not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters": see former s 251K(2) of the ITAA 1936. For such purposes, a person was not a fit and proper person if, among other things, the person was "not of good fame, integrity and character" or had been convicted of, or was under sentence of imprisonment for, a serious taxation offence: former s 251BC of the ITAA 1936. The Tax Agents' Board was required to cancel an agent's registration upon bankruptcy and to suspend or cancel an agent's registration upon conviction of certain taxation offences: former s 251K(1), (3C) of the ITAA 1936.
94 The TAS Act introduced a national regulatory scheme for the registration of tax practitioners, and established the Board to administer the registration system. One aspect of the new scheme was the introduction of the Code, which was intended to prescribe standards of professional conduct applicable to registered tax agents and registered BAS agents. The functions of the Board under s 60-15 expressly include the imposition of sanctions for non-compliance with the Code: s 60-15(c). However, there is nothing to suggest that the Board's functions in relation to the Code should be taken to limit its powers in relation to the termination of the registration of a tax agent who ceases to meet the tax practitioner registration requirements, including the "fit and proper person" requirement.
95 The Explanatory Memorandum for the Tax Agent Services Bill 2008 (Cth), which preceded the enactment of the TAS Act, referred to the introduction of the Code, and the range of sanctions that could be imposed by the Board for breaches of the Code:
1.21 Under the new arrangements, if a tax agent or BAS agent has breached the Code, the Board has a range of options. The Board may caution the agent, require the agent to complete a course of training, subject the agent to practising restrictions, require the agent to practise under supervision, or suspend or terminate the agent's registration. (Currently, the state Boards are only able to suspend or terminate registration.)
1.22 The Board may also apply to the Federal Court of Australia (Federal Court) for an order to pay a pecuniary penalty for certain serious misconduct, or seek an injunction to prevent an entity from engaging in, or compel an entity to undertake, certain conduct.
1.23 Such a wide range of sanctions allows the Board to tailor its response according to the severity of the misconduct.
96 Further, in explaining the context of the amendments to introduce the Code, the Explanatory Memorandum at [3.5] referred to the limited administrative sanctions that were available to the Tax Agents' Boards, namely suspension or cancellation of registration, and noted that "[t]his can leave the state Boards without an effective response to conduct that is not desirable, but does not warrant depriving a person of their livelihood". Accordingly, the amendments provided the Board with "access to a graduated range of administrative sanctions for breaches of the Code, so that the Board is able to respond to breaches appropriately": Explanatory Memorandum at [3.11], and see also [3.17], [3.71], [3.73], [6.36].
97 Nevertheless, the references to the Board's ability to "tailor its response" to misconduct by a registered tax agent and to impose a "graduated range" of sanctions are to be understood as primarily referring to the powers conferred on the Board by Pt 3 of the TAS Act in relation to the enforcement of the Code. The separate grounds for termination under Pt 4 of the TAS Act have been maintained. As stated in the Explanatory Memorandum:
Termination of registration
2.13 For clarity, the Bill separates the grounds for termination of registration into:
• ceasing to meet the registration requirements, breaching registration conditions or surrendering registration (which are dealt with under Part 4); and
• breaching a provision of the Code of Professional Conduct (Code) (which is dealt with under Part 3 - refer to Chapter 3 of this explanatory memorandum).
98 The different powers conferred on the Board by Pts 3 and 4 of the TAS Act respectively are also reflected in s 60-125, which deals with the outcome of investigations conducted by the Board. In particular, s 60-125(2) contemplates that the Board may either impose an administrative sanction under Subdiv 30-B (which includes termination) or terminate the tax agent's registration under Subdiv 40-A:
Investigation relating to whether conduct breaches this Act
(2) If the Board investigates conduct under section 60-95 and finds that the conduct breaches this Act, the Board must either:
(a) make a decision that no further action will be taken; or
(b) do one or more of the following:
(i) impose one or more sanctions under Subdivision 30-B;
(ii) terminate an entity's registration under Subdivision 40-A;
(iii) apply to the *Federal Court for an order for payment of a pecuniary penalty under Subdivision 50-C;
(iv) apply to the Federal Court for an injunction under section 70-5.
Note: The Board may terminate an entity's registration under Subdivision 40-A without investigating conduct under section 60-95.
99 Accordingly, the introduction of the Code and the powers conferred on the Board by Subdiv 30-B to impose a range of administrative sanctions for breaches of the Code do not operate as a qualification or limit on the powers of the Board to terminate the registration of a tax agent pursuant to Subdiv 40-A in circumstances where a ground for termination is established.
100 In the present case, the Tribunal made findings that the applicant breached several provisions of the Code: Tribunal's reasons at [14]-[24]; see paragraphs 55 to 58 above. However, the Tribunal proceeded to make a finding that the applicant was not a fit and proper person to be registered as a tax agent: Tribunal's reasons at [25]. That finding enlivened the discretion to terminate the applicant's registration under s 40-5(1) of the TAS Act. The Tribunal considered a range of matters going to the exercise of that discretion, and concluded that "the appropriate sanction is that the applicant's registration be terminated": Tribunal's reasons at [32].
101 It is clear that the power that was exercised both by the Board, and by the Tribunal on review, was under Subdiv 40-A and s 40-5(1) of the TAS Act, rather than under Subdiv 30-B. When giving notice to the applicant of the outcome of its investigation, the Board informed the applicant that it was satisfied that she had ceased to meet the tax practitioner registration requirement under s 20-5(1)(a) of the TAS Act (the "fit and proper person" requirement) and that it had decided to terminate her registration in accordance with s 60-125(2)(b)(ii) and s 40-5(1)(b) of the TAS Act. That decision was affirmed by the Tribunal on review.
102 While the exercise of the power to terminate the applicant's registration under s 40-5(1) was discretionary, the Tribunal was not required to have regard to the availability of lesser alternative sanctions under Subdiv 30-B as a mandatory relevant consideration in exercising the power to terminate under Subdiv 40-A. Nor was it prevented from considering the exercise of its powers under Subdiv 40-A until it had first addressed the imposition of sanctions for breaches of the Code under Subdiv 30-B. Having found that the applicant was not a fit and proper person to be registered as a tax agent, the Tribunal was entitled to consider the exercise of the power to terminate the applicant's registration under s 40-5(1). If the Tribunal were to have declined to exercise its discretion to terminate the applicant's registration, it would have been appropriate to consider the imposition of other sanctions under s 30-15 in respect of the applicant's failures to comply with the Code. But the Tribunal was not required to decide on a sanction under s 30-15, or otherwise to take into account the possibility of lesser alternative sanctions under Subdiv 30-B, before it considered whether or not it was appropriate to terminate the applicant's registration under s 40-5(1).
103 Further, and in any event, it is clear that the Tribunal was conscious that it had a discretion whether or not to terminate the applicant's registration under s 40-5(1), and was aware of the range of other sanctions that were available under Subdiv 30-B in respect of the applicant's failures to comply with the Code. The Tribunal's reasons must be read fairly and as a whole: see Logic Accountants & Tax Professionals Pty Ltd v Tax Practitioners Board [2022] FCA 830 at [38] (Abraham J), referring to Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272. Here, the Tribunal expressly referred to the powers conferred by s 30-15, including the power to terminate registration under s 30-30 "amongst other sanctions": Tribunal's reasons at [11]. The Tribunal's ultimate finding was expressed in terms that termination of the applicant's registration was "the appropriate sanction" (at [32]), having regard to the seriousness of her conduct, including deliberate dishonesty and a lack of candour to the Tribunal, and the risk that such conduct may be repeated or prolonged if the applicant's registration was not terminated. To put this in negative terms, the Tribunal did not treat termination of registration as an automatic consequence of its finding that the applicant was not a fit and proper person and did not fail to appreciate the range of sanctions available in respect of breaches of the Code. It was open to the Tribunal to conclude that this was not an appropriate case in which to exercise its discretion not to terminate the registration of a person whom it had found was not a fit and proper person to be registered as a tax agent.
104 It may also be noted that the applicant did not explicitly contend before the Tribunal for the imposition of any lesser sanction under s 30-15 in respect of her failures to comply with the Code. The Board's contentions and written submissions separately identified the issues relating to the breaches of the Code and the fit and proper person requirement, and framed the question as whether the applicant's registration should be terminated pursuant to either s 30-30 or s 40-5(1)(b). The applicant submitted that her registration should not be terminated, disputing that she was not a fit and proper person to be registered, and contending that she should not be deregistered "at all". It can be accepted that the applicant's position did not constrain the powers of the Tribunal to make the correct or preferable decision in all of the circumstances, which might include the imposition of a sanction other than termination under s 30-15. Nevertheless, the Tribunal's reasons for decision may be understood in the context of the issues as presented by the parties, which focused on the question whether or not it was appropriate for the applicant's registration to be terminated.
105 Accordingly, I do not consider that the Tribunal failed to consider the availability of alternative lesser sanctions under Subdiv 30-B nor that, by failing to consider the availability of such lesser sanctions, the Tribunal erred in the exercise of its discretion to affirm the termination of the applicant's registration under s 40-5(1).