Australia Taxation Office Audit and Referral to the TPB

1. In February 2017 the Australia Taxation Office ("ATO") met with Mr Norman to discuss high risk deduction claims being made in paramedics' income tax returns ("ITR") in the 2016 financial year.[6] Mr Norman told the Tribunal that he personally reviewed every ITR that was filed in the 2016 and 2017 financial years.[7]
2. On 24 July 2017 Mr Norman was advised by letter that a representative of the ATO would be meeting with him to discuss deductions claimed by the Company's paramedic clients ("Paramedic Clients"), as a result of information the ATO had received from the Queensland Ambulance Service ("QAS"). The ATO advised the Company that the information from the QAS provides that paramedics:[8]

(a) are not entitled to deduct expenses for overnight travel or rental subsidies if they are based in a remote location; and

(b) can claim meal expenses in limited circumstances only (those circumstances are explained in the letter).

1. Mr Norman was advised to not make any deduction claims for overnight travel or rental subsidies in any further ITRs lodged on behalf of paramedics and to only lodge claims for meal expenses if there is an entitlement to a deduction.
2. On 24 July 2017 the Australian Taxation Office ("ATO") informed Mr Norman that it would be conducting an audit of the Company in relation to the 2016 financial year.[9] Following the audit the ATO found that:[10]

(a) the Trustee had claimed deductible expenses in its ITR which were of a private nature contrary to section 8-1(2)(b) of the Income Tax Assessment Act 1997 (Cth) ("ITAA 1997");

(b) the Trustee had claimed deductions for fringe benefits which are not permitted by a family trust and, further, that FBT did not apply because the expenditure (which consisted of entertainment expenses) met the minor benefit exemption. As a result, a tax deduction was not allowable (as claimed) pursuant to section 32-5 of the ITAA 1997; and

(c) the Trust had claimed expenses for a motor vehicle; however, it had not accounted for the fact that the vehicle was partially used for private purposes.

1. In November 2017 the ATO advised Mr Norman that the Paramedic Clients could, if they chose to, amend their returns (in light of the QAS information).
2. The ATO noted that the Company had lodged a large number of amended ITRs in response to the ATO's letters, but that some Paramedic Clients still appeared to be claiming deductions for which they were not entitled. The ATO provided the Company with a list of the relevant Paramedic Clients under review and requested the Company provide a WRE schedule for each of the listed clients so that their WRE claims could be further assessed.[11]
3. The Company provided the ATO with some, but not all, of the WRE claim schedules on 15 December 2017. The ATO advised that 10 of the Paramedic Clients would be audited.[12]
4. Following the audit of the 10 clients the ATO advised that it had identified "significant errors" in the ITRs lodged by the Company on behalf of those clients concerning the WRE claimed. The ATO advised that errors included:[13]
   • Claiming amounts for motor vehicle expenses where the amount could not be substantiated.
   • Claims were made where the client did not hold a valid logbook when claiming using the logbook method or your client could not explain how the kilometres were calculated when claiming using the cents per kilometre method.
   • Claiming amounts for travel expenses at Label D 2, uniforms at Label D 3 and other work - related expenses at Label D 5 that could not be substantiated.
   • Expenses for uniforms claimed at Label D 3 that were private expenses. The cost of purchasing or cleaning conventional clothing such as a suit is a private expense.
   • Phone and internet expenses claimed at Label D5 which could not be substantiated and the apportionment for private use could not be explained.
   • Claiming private rental expenses at Label D5. Any expenses for rent even if a client relocates for work is a private expense and therefore a deduction cannot be claimed.
   • Gifts and donations claimed at Label D 9 that were not made to a deductible gift recipient.
   • Claiming rental income and expenses which could not be substantiated
5. 100% of the audited ITRs had to be adjusted.
6. In the ATO's view, these errors were attributable to the Company and resulted from:[14]
   • the application of an incorrect understanding of the relevant tax law;
   • not asking clients sufficient and pertinent questions to correctly assess their deductions when returns were prepared; and/or
   • not adequately testing or assessing what evidence clients have to support claims
7. On 30 August 2019 the TPB sent the Company an official notice pursuant to section 60-100 of the Act requiring the Company to ("August 2019 Notice"):[15]

(a) inform the TPB of the enquires it made of certain taxpayers with respect to some of the deductions claimed in their 2015/16 ITRs;

(b) provide documentary evidence that certain clients had authorised the Company to lodge amendments to their ITRs for the 2015/16 year;

(c) provide copies of the signed taxpayer declarations of certain clients for ITRs lodged on their behalf by the Company for the 2015/16 year; and

(d) provide a copy of working papers completed by the Company with respect to a client's claim for living away from home allowance.

1. On 15 November 2018 the TPB received a referral from the ATO regarding the conduct of the Company.[16] The ATO advised that following its audit:[17]

Audit findings demonstrate a pattern of behaviour by Mr Norman whereby he has grossly misapplied the taxation laws and/or displayed indifference as to whether statements made to the Commissioner on behalf of his client are true and correct. The audit findings set out in this referral reveal a high number of instances where Mr Norman, acting on behalf of A G Norman & Associates has failed to:

• take reasonable care in ascertaining his clients' state of affairs

• take reasonable care to ensure that taxation laws are applied correctly to his clients' circumstances

• ensure that tax agent services are provided competently

Systemic issues were identified during the course of the review with a large number of paramedic returns. Mr Norman was provided with a list of over 300 lodgments to review and amend if required. The referral outlines the large number of amendments made which while not made under audit where prompted by the Tax Office. Further amendments are outlined in this referral were made when the clients were contacted directly if their claims remained high after Mr Norman's opportunity to review. The amount of amendments made further support the concerns regarding the competency of the tax agent. Mr Norman's actions during the course of reviewing his practice and his own personal affairs have also not supported the administration of the tax laws. Mr Norman became disengaged during the course of the review and failed to return messages towards the end to discuss either his own personal affairs or those of his clients

1. On 30 August 2019 the TPB commenced an investigation under section 60-E of the TASA as to whether Mr Norman's conduct (outlined in paragraphs 4 and 5 above) had breached sections 30-10(1) and 30-10(2) and 30-10(13) of the Code.[18]
2. On 17 October 2019 Mr Norman submitted to the TPB that:[19]

(a) he wished to apply to for special consideration on the following medical grounds :

a. In 2017 I was officially diagnosed with Parkinson's disease. I was suffering from the severe and debilitating symptoms associated with this disease on an on-going basis. I was regularly consulting with my Neurologist (Dr Maxwell) to assist me with these symptoms. During several months between 12/01/2017 to 01/06/2018 there was some major adjustments to my medication to help me cope and live with these symptoms. The medication adjustments finally appeared to have some positive impact on my life from approximately 01/06/2018.

b. On 09/01/2018, during some routine tests ordered by my Neurologist, my Cardiologist, Professor Jonathan Chan advised me that one of the main arteries to my heart was more than 90% blocked and that I required immediate heart surgery to correct this major heart artery. This surgery was performed on 12/01/2018.

c. During the period of my worsening Parkinson disease symptoms and then the on-set of the required heart surgery, I was also hit with a substantial amount of tax audits in relation to many of my Paramedic clients. As you can no doubt imagine, the combination of my life-threatening health issues, at this time, together with the ATO audit activity for several of my clients, was a very stressful period for me. I was forced to have extended periods out of the office whilst doing my utmost to improve my debilitating health issues in accordance with my specialist doctors' advices.

(b) In relation to the work-related expense ("WRE") claims made by his paramedic clients for car expenses, meal expenses and fitness expenses:

a. I was advised by the majority of my Paramedic clients during the tax interview process, that the allowances paid to them by QAS for overtime meals and broken meals were included in the gross salary as shown on the Annual PAYG Summary as issued by QAS. Each of them had individual pay-slips to support the fact that these allowances were included in their gross income. At that point, I had no reason to doubt the validity of these claims. It wasn't until , I received official notification from the ATO, where I was advised that, in fact, QAS had not included these allowances in the Gross Salary amounts on the Annual PAYG Summaries. The ATO advised me in this letter that the allowances were tax-free allowances and as such, the claim for the tax deduction for all overtime and broken meals was invalid. After this was officially advised to me by the ATO, no additional claims were then made for overtime or broken meals unless an individual client was able to substantiate these claims by way of tax invoices.

b. The ATO also advised me in writing in this letter that the claims for car expenses for travel between stations and to different stations were also invalid, as QAS had advised the ATO that all Paramedics were given their rosters at least a month in advance, so they all knew exactly where they were required to be on a particular shift. Once again, during the tax interview process with these Paramedics, I was unaware of this fact and as all of them were also advising that they were carting bulky equipment to these different stations, I had no reason to doubt the validity of these claims. I advise that once the ATO advised me of these facts, that the claims for any car expenses were then reduced to only include the use of their own vehicle to attend training days or student training days at universities etc.

c. There were some other common claims with the Paramedics such as fitness expenses and ipad expenses that, to the best of my knowledge, whilst preparing their tax returns were also valid work-related expenses. Many of the female Paramedics are only approximately 50kg's in weight and they were arguing that to enable them to carry out their duties, in being able to pick up many patients, cart them down stairs and into the ambulance and then to offload them at the hospital, when a lot of these patients weighed in excess of 100 kg's, that they were required to maintain a minimum level of fitness to enable them to perform their work duties on behalf of QAS. Once again, it wasn't until I received this letter from the ATO where they advised that in order for them to be able to make this claim, that they had to be a specialty Paramedic, as the ATO didn't consider a normal Paramedic to have a specialty role. This claim is still a very sore point with many of the Paramedic taxpayers and I understand that many of them intend to apply for a personal ruling on this expense.

Upon receipt of this letter, it was clear to me that there were several expense items that had potentially been incorrectly claimed through many of the Paramedics individual income tax returns. The ATO implied in their correspondence that, if the Paramedics self-amend these returns, to remove these claims, that the normal tax penalties that would apply would be waived. At this point in time, I made the decision to remove these expenses and lodge amended tax returns on behalf of these clients. Many of the clients are not local clients and as such are not easily contactable - many of them never even read their emails or return their calls. As their tax agent, I made the decision to remove these expenses, in accordance with the ATO offer to reduce penalty imposition by lodging amended income tax returns. As the amended assessments started to flow in, I had my administration staff email or phone every client to explain what the adjustments were and why they had been put through. At this point, we also attempted to arrange suitable payment arrangements to enable the Paramedics to be able to pay the adjusted amounts to the ATO by way of instalments. Many of the Paramedics completely ignored all our attempts to contact them to explain the adjustments.

(c) In relation to the Company's professional indemnity insurance ("PII") coverage:

4. In your letter of 3 October, 2019, it was indicated that I was in possible breach of the code because it could not be verified by your office that my Professional Indemnity. I advise that this is not true and that my PI cover has always remained current since I was first registered as a Tax Agent back in 2007. I attach to this email a copy of the current PI Cover for your records

1. The TPB considered the matter and found that ("TPB Decision"):[20]

(a) Mr Norman failed to comply with section 30-10(1) of the Code by:

a. Failing to disclose overdue personal tax obligations in the following documents lodged with the Board:

i. Annual Declaration ("AD") for A G Norman & Associates Pty Ltd (the Company), dated 18 April 2017;

iv. Application for renewal of his personal registration, dated 5 February 2019;

v. Application for renewal of the Company's registration, dated 5 March 2019.

b. providing false or misleading information to a Board officer in response to enquiries about the Trust's overdue tax obligations, by claiming the Trust had a "programmed final payment of $5,000" for the week ending 19 April 2019, when it did not do so and made no further payments of the debt until 26 July 2019

(b) Mr Norman failed to comply with section 30-10(2) of the Code as follows:

a. As sole director of the corporate trustee for the Trust, causing the Trust to make a false and misleading statement in the ITR for the Trust for the 2015/16 financial year, leading to the imposition of a 50% penalty for recklessness

b. Failing, as sole director of the corporate trustee for the Trust, to cause the Trust to lodge the business activity statements (BAS) for the following quarters by their legislative due dates:

c**. Failing, as sole director of the corporate trustee for the Trust, to cause the Trust to pay its self-assessed amounts of GST and PAYGW** for the following quarters by their legislative due dates:

d. As sole director of the corporate trustee for the Trust, causing the Trust to default on arrangements to pay the activity statement debts of the Trust made on 10 January 2017

e. Failing, as sole director of the corporate trustee for the Trust, to cause the Trust to make arrangements to pay the activity statement debts of the Trust by the following due dates when demanded to do so by the ATO:

f. Failing, as sole director of the corporate trustee for the Trust, to cause the Trust to make arrangements to pay the activity statement debt of the Trust, which was $12,584 as at 30 August 2019

(c) Mr Norman failed to comply with section 30-10(13) of the Code by failing to maintain professional indemnity insurance from 23 March 2019;

(d) Mr Norman had ceased to meet the tax practitioner registration requirement under paragraph 20-5(1)(a) of the TASA, in that Mr Norman is not a fit and proper person as he is not a person of good fame, integrity and character as a result of the following:

a. His conduct which resulted in the alleged Code breaches; which included providing false or misleading information to officers of the Board

b. Mr Norman has engaged with clients in a manner which was deemed to be an inappropriate interpretation of the taxation laws by the ATO; and

c. Mr Norman's own taxation affairs were subject to audit and subsequent amendment.

1. As a result of its findings, the TPB advised Mr Norman that it had decided to terminate his registration as a tax agent pursuant to section 40-5(1)(b) of the TASA on the grounds that he no longer met the tax practitioner requirements for registration as he was not a "fit and proper person" as required by section 20-5(1)(a) of the TASA.[21] The termination was to take effect from 2 December 2019. The effect of the termination is that Mr Norman:

(a) must not provide any tax agent services or he may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA; and

(b) may not apply for registration under the TASA for a period of 4 years pursuant to subsection 40-25(1) of the TASA.

1. A similar decision, to that concerning Mr Norman, was made by the TPB against the Company.[22] The Company originally applied to the Tribunal for a review of the decision, however on the day of the hearing the Company and the TPB had come to terms. The Company and TPB agreed that, subject to the Company providing a written undertaking to the TPB that its newly appointed sole director would familiarise herself with the TPB's policy and guidance on the meaning of "fit and proper person" and the "Code of Professional Conduct, the TPB would take no further action and the original decision was set aside.
2. On 26 November 2019 Mr Norman applied to this Tribunal for a review of the Decision.[23] Prior to the final hearing Mr Norman applied for a stay of the TPB's decisions pending the Tribunal's final determination. On 20 March 2020, the Tribunal ordered a stay of the TPB Decision.
3. The Tribunal has jurisdiction to review the TPB Decision pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") and section 70-10(e) of the TASA.

1. The object of the TASA, as stated in section 2-5 is "to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct".
2. The TASA establishes the TPB and provides for the registration and regulation of tax agents. Part 3 of the TASA sets out the Code which applies to registered tax agents. Pursuant to section 60-95 of the TASA, the TPB is authorised to investigate a registered tax agent's conduct that may breach the TASA.
3. Section 30-10 of the TASA sets out the Code that registered tax agents must comply with to maintain their registration. The following subsections of section 30-10 of the TASA are relevant here:

(a) Section 30-10(1) provides that a registered tax agent:

(b) section 30-10(2) provides that a registered tax agent:

"...must comply with the taxation laws in the conduct of your personal affairs".

(c) section 30-10(7) provides that a registered tax agent:

"...must ensure that a *tax agent service that you provide, or that is provided on your behalf, is provided competently".

(d) section 30-10(9) provides that a registered tax agent:

"...must take reasonable care in ascertaining a client's state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client."

(e) section 30-10(10) provides that a registered tax agent:

"...must take reasonable care to ensure that * taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client."

(f) section 30-10(12) provides that a registered tax agent:

"...must advise your client of the client's rights and obligations under the *taxation laws that are materially related to the *tax agent services you provide".

(g) section 30-10(13) provides that a registered tax agent:

"...must maintain professional indemnity insurance that meets the Board's requirements"

1. Section 20-5(1)(a) of the TASA provides that an individual is eligible for registration as a registered tax agent, BAS agent or tax (financial) adviser if the TPB is satisfied that the individual is a "fit and proper person". Being a "fit and proper person" is a requirement of registration and is what is referred to in the legislation as a "tax practitioner registration requirement". The term "tax practitioner registration requirements" is defined in the dictionary in s 90-1 of the TASA and means "the matters about which the Board must, under Subdivision 20-A, be satisfied before the Board is obliged to grant an application for registration under this Act". One of the matters that the TPB must be satisfied about is of the fit and proper person requirement in section 20-5 of the TASA.
2. In determining whether a person is a fit and proper person to be registered as a tax agent, the TPB must, pursuant to section 20-15(a) of the TASA, have regard to whether the individual "is of good fame, integrity and character".
3. Pursuant to section 40-5 of the TASA a practitioner may have their registration terminated if they fail to meet a tax practitioner requirement.
4. Explanatory Paper TPB(EP) 02/2010: "Fit and proper person" ("Explanatory Paper 02/2010") provides guidance to agents regarding the TPB's interpretation of the fitness and proprietary requirements of the TASA. It provides relevantly that:

Management of personal income tax obligations

1. As a tax practitioner is responsible for providing tax agent services (including BAS services and tax (financial) advice services) on behalf of other entities, non-compliance by a tax practitioner with their personal taxation obligations may be considered relevant in determining whether the tax practitioner is a fit and proper person.
2. The personal taxation obligations of a tax practitioner include, but are not limited to, the tax practitioner's timely lodgment of personal income tax returns and activity statements, payment of superannuation guarantee contributions and PAYG withholding and instalment payments.
3. In considering a tax practitioner's management of his or her personal income tax obligations, individual circumstances will need to be considered. A pattern of behaviour or conduct in this regard may be relevant.
4. A failure to accurately complete tax returns and notices and to comply with other requirements of the Commissioner or the TPB may indicate a lack of competence, good fame, integrity and character, such that the individual concerned cannot be relied upon to adequately provide tax agent services.
5. Subsequent (and belated) compliance with tax laws, when faced with adverse administrative and legal action, does not necessarily demonstrate fitness and propriety in the face of past misconduct.
6. A tax practitioners inability to comply with the practitioner's own taxation affairs could subsequently cast doubt over the competence with which the practitioner provides tax agent services to clients.
7. On the basis of the above, a tax practitioner who fails to comply with the practitioner's own taxation obligations will not be considered a person of sufficient competence, good fame, integrity and character or sufficiently fit and proper to be registered as a tax practitioner.

1. In general, a lack of cooperation with the TPB and failure to deal with the TPB appropriately may also reflect adversely on a tax practitioner's fitness and propriety for registration. This is because it could demonstrate a lack of appreciation of the significance of completely and promptly responding to requests from regulatory authorities, and noting also that there is a legal obligation on registered tax practitioners in the Code to respond to requests and directions from the TPB in a timely, responsible and reasonable manner.

1. The Tribunal is not bound to apply the Explanatory Paper 02/2010, but it may, and it should, apply it in exercising its discretion unless it is unlawful or "tends to produce an unjust decision".[24]
2. Brennan J explained the relevance of an adopted policy to decision-making in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 ("Drake") at 640:

Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.

1. The Tribunal is not aware of any cogent reason for not following the Explanatory Papers.
2. Explanatory Paper TPB(EP) 01/2010: "Code of Professional Conduct" ("Explanatory Paper 01/2010") also provides guidance in relation to general principles and matters relating to the Code that may be relevant to the professional practice of registered tax agents.
3. TPB Information Sheet TPB(1) 34/2018, "Code of Professional Conduct complying with taxation laws in the conduct of the personal affairs" ("Information Sheet 34/2018") also provides guidance in relation to general principles and matters relating to the Code that may be relevant to the professional practice of registered tax agents.
4. Information Sheet 34/2018 provides relevantly:

• refers to a registered tax practitioner's personal taxation obligations, including the accurate and timely lodgement of personal income tax returns, activity statements, instalment payments and employer obligations, such as payment of superannuation guarantee contributions and PAYG withholding; and
• includes a tax practitioner's practice, the affairs of all associated entities of a registered tax practitioner and any entity that the registered tax practitioner has direct or indirect control over.
• This includes associated companies, trusts (including corporate trustees of the trusts), a self-managed superannuation fund that the tax practitioner is trustee of and/or partnerships.

8. In the case of a company or partnership registered tax practitioner (including a company as trustee of a trust), the taxation obligations of the company or partnership mean the tax affairs of the company or partnership registered tax practitioner.

9. Registered tax practitioners play a crucial intermediary role between taxpayers and the Australian Taxation Office (ATO). Registered tax practitioners offer a wide range of services on behalf of taxpayers and are therefore critical in facilitating a more efficient administration of the tax system for all parties.

10. Recognising that registered tax practitioners are taxpayers themselves, it is important that registered tax practitioners, who are entrusted to manage the tax affairs of their clients lead by example by ensuring that they themselves comply with their personal tax obligations.

11. A registered tax practitioner will have complied with the taxation laws in the conduct of their personal affairs, and therefore Code item 2, if they have:

• complied with their personal taxation obligations, including the lodgement of their personal income tax returns and activity statements by their due date
• complied with the taxation obligations of the registered tax practitioner practice_, including meeting their employer obligations such as superannuation guarantee and PAYG withholding_
• paid their tax debts by the due date or have entered into, and are complying with a formal payment arrangement with the ATO to pay their tax debt by instalments
• complied with the tax obligations of associated entities
• provided a full and complete disclosure of outstanding personal tax obligations to the TPB (including in any application for registration or renewal or as part of the TPB's annual declaration requirement)
• notified the TPB of any changes in circumstances, including that they no longer meet a registration requirement or there is a change in the composition of their tax practice, within a certain period of time.

12. In determining whether a registered tax practitioner is complying with the taxation laws in the conduct of their personal affairs, the TPB will also consider whether any monies owed relate to a liability to the Commonwealth of Australia or to public monies, such as a liability arising from employer obligations. The TPB recognises that failing to meet these employer obligations will have a direct impact on taxpayers' retirement and other benefits. While the TPB is concerned about all outstanding personal tax obligations, failure to meet obligations that relate to public monies will be viewed by the TPB more seriously.

Consequences for failing to comply with Code Item 2

13. If a registered tax practitioner fails to comply with taxation laws in the conduct of their personal affairs, the TPB will find that the registered tax practitioner has breached the Code and may impose sanctions for that breach. The TPB will then take into account the nature of the outstanding taxation obligations in determining what sanction, if any, to impose on a registered tax practitioner who has found to be in breach of Code Item 2.Such considerations include, but are not limited to:

• the number of outstanding lodgements
• how outstanding or late the lodgements are/were
• the amount of the tax debt
• the period of time over which the tax debt arose
• the circumstances in which the outstanding personal tax obligations arose
• what steps have been taken by the tax practitioner to resolve the outstanding personal tax obligations
• the tax practitioner's compliance with any payment arrangements
• any other mitigating circumstances raised by the tax practitioner.

14. Ultimately, whether a registered tax practitioner has complied with their obligations under Code Item 2 is a question of fact. This means that each situation will need to be considered on a case-by-case basis having regard to the particular facts and circumstances of that case.

1. If, having investigated a registered tax agent, the TPB is satisfied that the tax agent has failed to comply with the Code, the TPB may terminate the registered tax agent's registration pursuant to section 30-30 of the TASA. The termination of a registered tax agent's registration takes effect on the day specified in the notice provided by TPB of the decision to terminate the registration.

1. The issue for the Tribunal is whether to terminate Mr Norman's tax agent registration.
2. This will involve a consideration of whether Mr Norman:

(a) breached section 30-10(1) of the Code by failing to act honestly and with integrity;

(b) breached section 30-10(2) of the Code in failing to comply with taxation laws in the conduct of his personal affairs;

(c) breached section 30-10(7) of the Code in failing to provide competent tax agent services;

(d) breached section 30-10(9) of the Code in failing to take reasonable care in ascertaining a client's state of affairs;

(e) breached section 30-10(10) of the Code in failing to take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which he was providing advice to a client.

(f) breached section 30-10(12) of the Code in failing to advise a client of their rights and obligations under the taxation laws related to the services he provided that client.

(g) breached section 30-10(13) of the Code by failing to maintain professional indemnity insurance that met the TPB's requirements; and

(h) is a "fit and proper person" as required by section 20-5(1)(a) of the TASA.

1. The TPB decision only addressed breaches of sections 30-10(1), 30-10(2) and 30-10(13) of the Code. The TPB contends that Mr Norman has also breached sections 30-10(7), 30-10(9), 30-10(10) and 30-10(12) of the Code. These additional breaches, particularly section 30-10(7) did not form part of the reviewable decision about Mr Norman but they did form part of the original decision against the Company. As Mr Norman was the sole director and controlling mind of the Company and was personally responsible for the ITRs subject to the audits, this breach is equally applicable to Mr Norman as it was to the Company.
2. Pursuant to section 43(1) of the AAT Act, the AAT has the power to affirm, vary, set aside, make a decision in substitution of, or remit a decision under review. In Shi v Migration Agents Registration Authority [2008] HCA 31, Keifel J, as her Honour then was, explained the role of the Tribunal as follows (citations omitted):

[134] Section 43(1) expresses clearly that the Tribunal may exercise all of the powers and discretions conferred upon the original decision-maker. The Tribunal has been said to stand in the shoes of the original decision-maker, for the purpose of its review. In Minister for Immigration and Ethnic Affairs v Pochi Smithers J said that, in reaching a decision on review of a decision of the original decision-maker, the Tribunal should consider itself as though it were performing the function of that administrator in accordance with the law as it applied to that person.

1. The Full Federal Court in Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99 said at 106:

When reviewing an administrative decision under s 43(1) the AAT stands in the place and is empowered to exercise all of the relevant powers and discretions, of the decision-maker in respect of the decision under review. The AAT hears the matter de novo in the light of the evidence placed before it.

1. Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 2 ALD 60 (at 589) clearly identified the role of the Tribunal as distinct from that of a court:

The function of the Tribunal is ... an administrative one. It is to review the administrative decision that is under attack before it. In that review, the Tribunal is not restricted to consideration of the questions which are relevant to a judicial determination of whether a discretionary power allowed by statute has been validly exercised. Except in a case where only one decision can lawfully be made, it is not ordinarily part of the function of a court either to determine what decision should be made in the exercise of an administrative decision in a given case or, where a decision has been lawfully made in pursuance of permissible policy, to adjudicate upon the merits of the decision or the propriety of the policy. That is primarily an administrative rather than a judicial function. It is the function which has been entrusted to the Tribunal.

The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.

1. There was no objection by Mr Norman to the Tribunal considering the alleged additional Code breaches.
2. As to whether Mr Norman breached section 30-10(13) of the Code by failing to maintain professional indemnity insurance that met the TPB's requirements, this issue was resolved at the stay hearing and is no longer pursued by the TPB.

The Breaches leading to Mr Norman's Termination as a Registered Tax Agent

1. As Mr Norman was the sole director and controller of the Company, Mr Norman is responsible for the conduct breaches engaged in by the Company. The alleged conduct which led to the termination of Mr Norman's tax agent registration include the following:
   • the misapplication of taxation laws in relation to the Paramedic Client base;
   • the failure to inform the TPB of the Trust's tax liability;
   • misleading the TPB regarding the proposed tax debt payment arrangement;
   • making a false statement in the Trust's ITR for the 2015/16 financial year;
   • causing the Trust to fail to pay GST/PAYG when due;
   • causing the Trust to default on the payment arrangement for its tax debt;
   • the Company's failure to lodge BAS when due in breach of sections 31-5 and 31-8 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act);

Did Mr Norman fail to act honestly and with integrity (section 30-10(1), Code)

1. In the Company's annual declaration to the TPB submitted on 18 April 2017, Mr Norman declared that neither the Company nor its director had outstanding tax obligations.[25] As part of the application Mr Norman declared that he was aware that if he had made any false and misleading statements he may be guilty of an offence pursuant to section 8K of the Taxation Administration Act 1953 (Cth) ("TAA 1953").
2. In Mr Norman's annual declaration to the TPB submitted on 16 February 2018, Mr Norman declared that he did not have outstanding tax obligations.[26] As part of the application Mr Norman declared that he was aware that if he had made any false and misleading statements he may be guilty of an offence pursuant to section 8K of the TAA 1953.
3. In the Company's annual declaration to the TPB submitted on 5 April 2018, Mr Norman declared that neither the Company nor its director had outstanding tax obligations.[27] As part of the application Mr Norman declared that he was aware that if he had made any false and misleading statements he may be guilty of an offence pursuant to section 8K of the TAA 1953.
4. In Mr Norman's renewal application submitted to the TPB on 5 February 2019, Mr Norman declared that he did not have outstanding tax obligations.[28] As part of the application Mr Norman declared that he was aware that if he had made any false and misleading statements he may be guilty of an offence pursuant to section 8K of the TAA 1953.
5. In the Company's renewal application submitted to the TPB on 5 March 2019, Mr Norman declared, as director, that neither he, nor the Company, had any outstanding tax obligations.[29] As part of the application Mr Norman declared that he was aware that if he had made any false and misleading statements he may be guilty of an offence pursuant to section 8K of the TAA 1953.
6. Following the 2019 renewal applications, the TPB contacted Mr Norman via email on 4 April 2019. The TPB advised that its search of ATO records indicated that the Trustee for the Trust had an outstanding integrated client account debt totalling $13,649.55. The TPB requested that Mr Norman provide evidence that:[30]

(a) all outstanding tax debts had been paid in full or, alternatively, evidence of any payment arrangement entered into with the ATO; and

(b) the business had current professional indemnity insurance.

1. Mr Norman advised the TPB that he:[31]

(a) had paid $8,543 of the outstanding GST/PAYG liability and that a final payment of $5,000 would be paid within a week;

1. Documents submitted by Mr Norman to the TPB indicated that:

(a) he paid $8,543 to the ATO on 12 April 2019 (i.e. a week after being notified of TPB's awareness of the debt);[32]

(b) the Company had PII in place until 23 July 2019.[33]

1. Despite declarations to the TPB on numerous occasions between 2017 and 2019 that neither he nor the Company had any outstanding tax debts, this was found to be false.
2. Mr Norman failed to declare that there was an overdue tax debt. When pressed by the TPB about the debt, Mr Norman represented the debt would be paid in full in April 2019. It was not. The debt was not paid in full until 16 August 2019.[34] Mr Norman says he could not pay it earlier due to a cash shortfall, and that this does not mean he was being dishonest when he originally advised the TPB of the intended date of payment. Mr Norman did not update the TPB at the time that he was no longer able to make the final payment by the originally advised date. Mr Norman also submitted that the TPB seems to consider "the ATO to be a preferential creditor, contrary to...Australian laws". Mr Norman says he had other liabilities to pay that took priority. As far as Mr Norman was concerned "late payment does not constitute anything outside of normal trade practices".[35]
3. Mr Norman also submitted that he failed to lodge some of the BAS on time and to pay a small tax debt for "cash flow reasons".[36]
4. In his written submissions Mr Norman went so far as to say that being asked to declare whether he has a tax debt "denies [his] basic rights not to answer".[37] At the hearing Mr Norman changed his explanation said it had nothing to do with the TPB not being entitled to ask for that information and said, "there is no explanation...other than laziness."[38] Mr Norman said he wanted to move past that submission and that he had had an aggressive attitude at the time he prepared his submissions.[39]
5. Mr Norman admitted that he was aware he had a tax debt when he declared he did not.[40]
6. The Tribunal finds Mr Norman's conduct constitutes a breach of section 30-10(1) of the Code.

1. The TPB contends that Mr Norman acted dishonestly in amending and lodging at least two clients' ITRs without prior consent being obtained.
2. Following receipt of the August 2019 Notice (see paragraph 14 above), Mr Norman provided the TPB with some documentation. In written submissions Mr Norman says that "nothing was prepared or lodged without client knowledge or consent".[41] The TPB contends that there is no evidence that Mr Norman obtained the consent of at least two of the Paramedic Clients before amending their 2016 financial year ITRs.[42]
3. Contrary to Mr Norman's written submissions, Mr Norman admitted to the TPB that he did not obtain the consent from all clients before amending their ITRs. The excuse given by Mr Norman for his failure to do this was that some of the clients lived remotely and were not easily contactable, and, as a result, he says either he, or his administration staff, explained the reason for the amended assessments to the clients after the fact.
4. The Tribunal is unaware of any legitimate explanation that would excuse altering a person's ITR without their express permission and consent. How can a member of the public have any faith or trust in a tax agent who engages in this type of conduct, well-meaning or otherwise, with the ATO? If Mr Norman was unable to obtain instructions, he should not have altered the ITRs. The ATO would then have amended the assessments themselves and reissued the assessment to the client.
5. In his affidavit Mr Norman also denied that he failed to obtain client consent prior to lodging amendments to their ITRs.[43] The evidence does not support Mr Norman's denial.
6. There is evidence of a file note of the ATO that records that one of Mr Norman's former clients (Client SL) had her new tax agent telephone the ATO regarding her amended ITRs. The note records that the new agent's instructions from Client SL were that Mr Norman lodged her amended 2016 ITR and the 2017 ITR without her knowledge and she does not have any knowledge of signing the returns to be lodged.[44]
7. Mr Norman denies that he did not obtain Client SL's instructions before amending her ITR and says this file note is hearsay. It is correct that this is hearsay evidence. The Tribunal is, however, not bound by the rules of evidence pursuant to section 33(1)(c) of the AAT Act. Section 33(1)(c) of the Act provides:

(1) In a proceeding before the Tribunal:

(c) the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate.

1. Despite the apparent flexibility afforded to the Tribunal, decisions need to be reached fairly and reasonably. In Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482; [1979] AATA 64 ("Pochi") , Brennan J (at that time President of the Tribunal) noted (citing Hughes CJ in Consolidated Edison Co. v. National Labour Relations Board [1938] USSC 176; (305 U.S. 197 at p.229 that ""this assurance of desirable flexible procedure does not go so far as to justify orders without a basis in evidence having rational probative force". Brennan J went on:

To depart from the rules of evidence is to put aside a system which is calculated to produce a body of proof which has rational probative force

1. The fact that the Tribunal is not bound by the rules of evidence "does not mean that all rules of evidence may be ignored as of no account... although rules of evidence, as such, do not bind, every attempt must be made to administer 'substantial justice.' "": Brennan J, Pochi at [256].
2. In relation to reliance or rejection of hearsay evidence in the Tribunal setting Brennan J said in Pochi at [257]:

As the New South Wales Law Reform Commission has pointed out in its Report on the Rule against Hearsay, hearsay "has a wide scale of reliability" (1978, L.R.C. 29, p.35), and there is no reason why logically probative hearsay should not be given credence. However, the logical weaknesses of hearsay evidence may make it too insubstantial, in some cases, to persuade the Tribunal of the truth of serious allegations.

1. There is no evidence from the ATO officer or Client SL to confirm the contents of that telephone discussion recorded in the file note. Where the issue of whether Mr Norman obtained clients' consent is relevant to a determination of whether he is a fit and proper person, the Tribunal considers that it is inappropriate to rely on this file note in circumstances where neither party were available for cross-examination.
2. In addition, Mr Norman has not produced any documentary proof that Client SL gave Mr Norman instructions to amend her ITR or that she signed the taxpayer declaration.
3. Another file note from the ATO records that another client of the Company, Client JF, told the ATO that Mr Norman amended his ITR without consent.[45] Mr Norman says the Client JF was "misled by the ATO into making the allegation".[46]
4. Again, even ignoring this unsubstantiated allegation against the ATO, and ignoring the file note on the grounds of hearsay, Mr Norman has not provided any documentary proof that Client JF gave Mr Norman instructions to amend his ITR or that he signed the taxpayer declaration prior to his lodging an amended ITR. The evidence provided by Mr Norman shows that Mr Norman did not tell Client JF, and other clients, about amending their ITRs until after he had done so.[47] This was eventually admitted by Mr Norman in cross-examination at the hearing. Mr Norman tried to say "I couldn't find the original consent email" so, instead, he gave the TPB a consent from Client JF in relation to a different ITR. Mr Norman said he did not explain this to the TPB.[48] Mr Norman was on official notice to provide the corroborating documents. It makes no sense to have provided a consent from a client which related to a different ITR, unless the intention was to mislead the TPB into believing consent had been obtained.
5. The Tribunal asked Mr Norman how many of the 300 paramedic clients did not provide consent prior to his lodging amending ITRs. Mr Norman said, "Couldn't tell you...more than two". The Tribunal took Mr Norman to his response to the TPB in 2019 (see paragraph 17 above), where Mr Norman said "many" clients could not be contacted:[49]

MEMBER: On page 335, I'm looking at paragraph 3, which is headed 'action after receiving the letter from the ATO' - regarding the need for amendments.

MEMBER: If you go down to line 6 there's a sentence that starts 'many of the clients are not easily contactable. Many never read their emails or return their calls'.

MEMBER: Many would be the majority of the 300? What does 'many' mean?

MEMBER: You're saying here that you didn't get consent from 50 to 100?

WITNESS: No, not at all - they were difficult to get in touch with. It took numerous phone calls, emails, (indistinct) eventual contact.

MEMBER: In that last sentence, where it says 'many completed ignored all of our attempts'. That would be 50 to 100 completely ignored your attempts?

WITNESS: No, I put a figure on it and said 10 of people who just didn't want to correspond with us but eventually we made a reach in some way, shape or form and convinced them that it was the right way to go forward.

MEMBER: I'm just trying to understand because you've used the word 'many' several times in this paragraph and so I just want to understand your meaning. You're using the word 'many' but it means different things depending on the sentence.

MEMBER: Your evidence is it could be 10 or so people you didn't actually get consent from before you did the amendments?

1. At the hearing, following a lunch adjournment, Mr Norman produced a spreadsheet which he says shows that he only lodged five ITRs without obtaining the client's consent.[50] Mr Norman says the spreadsheet was prepared by administrative staff at the time the ATO conducted the client audits in 2018. The spreadsheet records which clients were contacted and whether they provided their consent.
2. Obtaining a client's consent for the work to be performed is one of the specifically identified steps that a registered tax practitioner may take to ensure that tax agent services are provided competently, pursuant to Explanatory Paper 01/2010 (para 105).
3. The Tribunal notes that Section 30-10(6) of the Code specifically states that "unless you have a legal duty to do so, you must not disclose any information relating to a client's affairs to a third party [such as the ATO] without your client's permission". The Tribunal considers that making amendments to a client's ITR and lodging it with the ATO, without that client's permission, is conduct in breach of the Code for which there is no excuse.

1. As a result of the above evidence regarding the conduct of Mr Norman the Tribunal finds that Mr Norman has acted in breach of section 30-10(1) of the Code.

Conduct in relation to Mr Norman's tax affairs (section 30-10(2), Code)

1. The section 30-10(2) breaches regarding Mr Norman's tax affairs comprise of:

(a) his failing, as the sole director of the Company in its capacity as the trustee for the Trust, to:

(i) cause the Trust to lodge five BASs by their respective due dates (being BASs for the quarterly tax periods ending 30 September 2014, 30 June 2015, 31 December 2016, 30 June 2017, and 30 June 2018);[51]

(ii) pay its overdue ICA debt (which comprised GST and PAYGW for the quarterly tax periods ending 31 December 2016, 31 March 2017, 30 September 2017, 30 June 2018, 30 September 2018, 31 December 2018, 31 March 2019);[52]

(iii) make a false and misleading statement to the Commissioner in its 2016 tax return;[53]

(iv) default on a payment arrangement made with the ATO on 10 January 2017 to pay the Trust's activity statement debts by a certain date;[54]

(v) pay the Trust's activity statement debts when demanded to do so by the ATO, including the amounts of $8,079.10[55] and $11,978;[56]

(vi) to pay the activity statement debt of the Trust which was $12,584 as at 30 August 2019.[57]

1. On 10 January 2017 the Trustee entered into a payment plan with the ATO to pay a GST debt totalling $7,184.75 by way of four instalments between 31 January 2017 and 28 April 2017.[58]
2. On 19 June 2018 the ATO advised that, as a result of its audit findings, it proposed to impose an administrative penalty of 50% on Mr Norman for:[59]

(a) making false and misleading statements in his ITR which had to be adjusted by $12,324 (this was to take into account his 100% share of the income from the Trust) - pursuant to section 284-751 of Schedule 1 of the TAA;

(b) being reckless and not taking care in completing his personal ITR - consistent with Miscellaneous Taxation Ruling MT2008/1: Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard.

1. On 7 December 2017 the ATO advised that it would start collection action if the outstanding activity statement debt of $8,079.10 was not paid immediately.[60]
2. A year later the Trust was warned by the ATO again on 6 December 2018 that it would start collection action if the outstanding activity statement debt, which had now increased to $11,978.00, was not paid immediately.[61]
3. Mr Norman does not dispute that he failed to comply with his tax obligations.[62]
4. By way of excuse Mr Norman says that:

(a) the ATO could have sent him reminder notices;[63]

(b) he was busy with client lodgements;[64]

(c) work "caused us to overlook the [June 2017 BAS] lodgement"

(d) the ATO is not a preferential creditor and he "used the available funds to pay more pressing creditors";[65] and

(e) the imposition of the penalty on him personally was made by the ATO "simply out of spite"[66]

1. Based on the above conduct, the Tribunal finds that Mr Norman was in breach of section 30-10(2) of the Code.

Did Mr Norman act in breach of subsection 30-10(7) by failing to ensure he provided competent tax agent services?

1. In relation to the 30 audits undertaken by the ATO in relation to the Paramedic Clients, the total amount of deductions disallowed was $496,903.[67] After the ATO gave the clients time to self-amend, a further reduction of WRE's, totalling $1,205, 274, was made.[68]
2. Mr Norman submitted that the deductions claimed in the original lodged ITRs were not "contrived" and that it was only after the ATO made its own enquiries of the QAS that "a position was reached of the relevant laws to be applied which led to amendments being prepared".[69] Mr Norman says the view taken by the ATO was different to his view but he disputes that he failed to provide competent services. Mr Norman explained at the hearing that he had acted for paramedic clients for over 10 years and had made similar claims previously which were not rejected by the ATO.[70] Mr Norman understood that the deductions claimed by the paramedics were deductible as a result of a workplace agreement. Mr Norman says changes were obviously made to that workplace agreement which he was not aware of at the time of lodging the ITRs. A copy of a workplace agreement was not before the Tribunal.
3. At the hearing Mr Norman acknowledged that he no longer disputed the correctness of the ATO's amended assessments.[71]

1. Based on the above conduct, the Tribunal finds that Mr Norman was in breach of section 30-10(7) of the Code.
2. There was a consistent misapplication of the law by Mr Norman relating to claimable deductions. Mr Norman did not identify any information/law to support the basis for the Paramedics' WRE claims.

Did Mr Norman act in breach of subsection 30-10(9) by failing to take reasonable care in ascertaining a client's state of affairs?

1. On 9 August 2016, a client of the Company, Client LC, asked Mr Norman for advice regarding whether living away from home expenses could be claimed in his 2016 ITR. Client LC gave Mr Norman a spreadsheet showing his income and expenses for the year.[72]
2. Mr Norman incorporated all of the expenses listed in the spreadsheet into Client LC's ITR.[73] Following lodgement of the ITR, the ATO audited Client LC's ITR and made adjustments, disallowing all of the living away from home expenses claimed.[74] Client LC was unable to provide documentary evidence to support a large amount of the expenses claimed and in relation to living away from home expenses, these were simply not claimable in Client LC's circumstances. Mr Norman told the hearing that Client LC had not explained that he had relocated, and was not living away from home, and said "that's just deceptive conduct by the taxpayer."[75] Perhaps if Mr Norman had asked further questions or requested substantiating documents this would have been uncovered, particularly in circumstances where the client specifically requested advice from Mr Norman on what he could claim by way of living away from home allowance.
3. There is no evidence that Mr Norman made any enquiries of Client LC to substantiate the claims made, nor did he provide any advice to Client LC regarding whether he was entitled to claim living away from home expenses.
4. At the hearing Mr Norman said he would not have asked for any substantiation documents but rather informed him that he was required to have them.[76] There is no documentary proof that Mr Norman informed his clients of the need for documentary substantiation.
5. Mr Norman says he did not check the correctness of the Paramedic Clients' claims because:[77]

(a) he "understood the tax claims to be legitimate and within the tax laws"; and

(c) if the clients were "unable to substantiate these expenses later, then the onus for this falls on them"; and

(d) "we've just got to take each client on face value".[78]

1. Mr Norman acknowledged that it was not his usual practice to check clients' WRE claims substantiation documents.[79]
2. Mr Norman submits that there is no legal obligation on him to sight each client's supporting documentation before lodging an ITR.
3. Based on the above, and the conduct referred to in paragraphs 86 to 90 above, the Tribunal finds that Mr Norman has failed to provide tax agent services competently and has failed to take reasonable care that taxation laws are applied correctly. As a result, the Tribunal finds that Mr Norman is in breach of sections 30-10(7) and 30-10(9) of the Code.
4. It is a tax agent's responsibility to know what is claimable and what is not and to advise their clients accordingly. That responsibility entails making sufficient enquiries of the client to satisfy the agent that the proposed claimed deduction is justifiable and permissible.
5. In Su and Tax Practitioners Board [2014] AATA 644 ("Su 2014"), Mr Su was found to have lodged a large number of ITRs which contained false information - the pay-as-you-go (PAYG) tax amounts claimed to have been withheld were overstated, the income figures were wrong, and the deductions were claimed that were not allowable. The Tribunal noted that Mr Su did not acknowledge "the importance of testing and confirming the financial information that his clients provide to him". Similarly, there is no acknowledgement by Mr Norman of the importance of not simply accepting whatever the client instructs. He was, as Mr Su was, a "mere conduit for the provision of inaccurate information to the ATO".[80] In the Tribunal's opinion in Su 2014 there is no room for an agent of that calibre. The Tribunal in Su 2014 opined:

[28] The Board, the ATO and the public expect more than that from a tax agent. The self-assessment tax system requires accurate information to be provided to the ATO. It requires tax agents to do all they can to ensure that the information their clients provide is accurate. From time to time they need to ask their clients hard questions. They need to scrutinise the answers and form a professional judgement as to whether what they are being told is reliable. There is no room in the system for tax agents who do not understand these simple but fundamental propositions.

1. The Tribunal agrees with the remarks in Su 2014, that registered tax agents need to do more than simply follow a client's instructions. The Tribunal is concerned about the extent of Mr Norman's understanding of the required nexus for WRE deductions and the lack of verification and quality control measures that have been implemented.

Did Mr Norman fail to take reasonable care to ensure taxation laws were applied correctly to the circumstances in relation to which he was providing advice to a client? (section 30-10(10), Code)

1. The TPB contends that Mr Norman has also engaged in conduct in breach of section 30-10(10) of the Code by failing to advise his clients of their objection and review rights. As outlined in paragraphs 25 and 38-43 above, although not dealt with in the reviewable decision, the Tribunal has jurisdiction to determine if Mr Norman's conduct also breaches section 30-10(10) of the Code. This was not disputed.
2. The TPB submits Mr Norman breached the Code as follows:[81]

(a) in the 2015/2016 ITR of Client DC, the Company failed to properly apply the zone tax offset in circumstances where the taxpayer did not have a residence within the zone;

(b) for the 2015/2016 ITR of Client LK, the Company failed to properly apply the zone tax offset in circumstances where the taxpayer did not have a residence within the zone;

(c) for the 2015/2016 ITR of Client DJR, the Company failed to properly apply the zone tax offset in circumstances where the taxpayer did not have a residence within the zone;

(d) for the 2015/2016 ITR of Client JH, the Company claimed $441 for a Foxtel payment for "what is happening in the market" for a taxpayer who was a bank manager;

(e) for the 2015/2016 ITR of Client TM, the Company claimed $440 for a Foxtel payment for a taxpayer whose occupation was a police detective as "a source of international information" because he was involved in "counter terrorism".

Did Mr Norman breach section 30-10(12) of the Code by failing to advise his clients of their rights and obligations under taxation laws?

1. The TPB contends that Mr Norman has also engaged in conduct in breach of section 30-10(12) of the Code by failing to advise his clients of their objection and review rights. As outlined in paragraphs 38-43 above, although not dealt with in the reviewable decision, the Tribunal has jurisdiction to determine if Mr Norman's conduct also breaches section 30-10(12) of the Code. This was not disputed.
2. Mr Norman did not advise his audited clients that they had the right to lodge an objection to the ATO's assessments or the right to amended two ITRs prior to doing so on their behalf without consent. Instead, Mr Norman told his clients in his email to all of the paramedic clients under audit, "we will endeavour to reach a negotiated position...At this point in time it is the best we can hope for".[82]
3. Mr Norman did not dispute these breaches.

1. Given the above, the Tribunal finds that Mr Norman breached sections 30-10(1), 30-10(2), 30-10(7), 30-10(9), 30-10(10) and 30-10(12) of the Code.
2. Given these findings the question arises as to whether Mr Norman is a fit and proper person and therefore eligible for registration. The issue of whether the four-year prohibition on registration imposed on Mr Norman by the TPB is an appropriate sanction in the circumstances also has to be decided.

IS MR NORMAN A "FIT AND PROPER PERSON" (SECTION 20-5(1)(A), TASA)

1. The factors outlined above and the conduct in breach of the Code is what the TPB submits give rise to a finding that Mr Norman is not a fit and proper person for the purposes of being registered as a tax agent.

1. Davies J in Re Su and Tax Agents' Board of South Australia [1982] AATA 127; (1982) 61 FLR 1 ("Su") set out what is required for a person to be considered fit and proper to handle the ITR affairs of a client at 95:

The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.

1. In Stasos v Tax Agents Board of NSW [1990] FCA 379; (1990) 21 ATR 974 Hill J held (at 983) that in determining whether a person is fit and proper, it is also "relevant whether the person has understood the error of his ways". Hill J also referred to a tax agent's dealings with the ATO as another relevant indicator of fitness. Hill J said (at 984):

In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the Boards or Tribunals to which I have already referred. Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate.

...a person who has been shown to be other than fit and proper to be registered must satisfy the tribunal considering his registration or cancellation of his registration as the case may be that he appreciates the significance of his wrongdoing and that he regrets it...and that it is truly unlikely that there will be any lapse in the future of the standards which are required of him.

1. In Proh v Tax Agents' Board of Victoria (2010) 78 ATR 663 Deputy President McDonald noted that:

[15] It is generally accepted, and the Tribunal accepts, that a failure of an agent to attend to his/her own taxation affairs demonstrates a lack of suitability, rendering the agent unfit to handle the affairs of those who may seek to utilise his/her services.

1. In Su, Davies J (then President of the Tribunal) found that a failure to comply with taxation obligations may render a person unsuitable to be a registered tax agent because of the impact such conduct would have on the person's relationship with the ATO which may in turn reflect on their handling of their client's taxation affairs.
2. In Su, Davies J found that the failure of Mr Su to lodge his personal income tax returns and the failure to pay group tax instalments on time suggested incompetence.
3. In Toohey and Tax Agents Board of Victoria [2009] AATA 603 the Tribunal noted that (at [36]):

As a tax agent, the applicant should hold himself up to a higher standard than the general public. He has an intricate knowledge of tax laws and it is reasonable to assume that he knows the importance of lodging tax returns on time. His clients, as well the general public, should be able to entrust their taxation affairs to him and have confidence that he will be able to lead by example and file his tax returns on time as required by the law.

1. In GJ Brown & Co Ltd v Tax Practitioners Board [2016] AATA 740 the Tribunal found that, not only was a failure to comply with tax obligations a breach of the taxation law, it is conduct which undermines clients' confidence.[83]
2. The principles and examples highlighted in the above-mentioned decisions, guide the Tribunal in its determination of whether of Mr Norman is a fit and proper person.

1. Mr Norman says he is "sincerely sorry and regretted fact that [he] had submitted incorrect renewal applications".
2. Mr Norman told the Tribunal that:[84]

(a) the business has not had an unsuccessful audit since the 2018 audit;

(b) the ATO has advised that it has no further audits planned;

(d) he accepts that he has acted in breach of the Code.

1. In relation to failing to disclose the tax debt Mr Norman submits this does not make him improper because it does not affect his ability to serve his clients and further, that it has no impact on the TPB or the taxation system.[85]
2. Mr Norman has failed, through his conduct, to indicate any significant contrition, remorse or insight into his conduct. Mr Norman downplayed his obligation to keep his tax obligations up to date, he disputed the ATO's interpretation of the law, he failed to obtain clients' consents to lodge amended ITRs, he disregarded the seriousness of the importance of obtaining a client's consent, and he misled the TPB on a number of occasions in relation to his tax status. An inference can be drawn that he fails to take his tax obligations and the obligation to provide competent tax agent services seriously. This weighs strongly against a finding that Mr Norman is a fit and proper person to be a tax agent.
3. At no time during the final hearing did Mr Norman express an understanding of how his conduct and failure to take reasonable care impacted the Paramedic Clients. Those Clients went through ATO audits, all of which resulted in their having to pay additional tax and, in some cases, penalties. No regret or remorse has been shown for those clients. Instead, Mr Norman argued that the onus fell solely on the clients. There was a lack of acknowledgement that he had interpreted the law incorrectly until the hearing. This gives rise to serious doubts about Mr Norman's fitness to practice as a registered tax agent.
4. Taxpayers have a right to expect that the advice they are receiving from the tax agents they engage is competent and that they are not being led into danger of breaching their tax obligations by claiming deductions which cannot be maintained.
5. The breaches of the Code by Mr Norman raise significant and serious concerns about his fitness to practice as a registered tax agent.
6. In light of the circumstances outlined, the Tribunal finds that Mr Norman is not a fit and proper person as required by section 20-5 of the TASA.

IS THE SANCTION IMPOSED APPROPRIATE IN THE CIRCUMSTANCES?

1. Where the TPB determines that an agent has breached the Code, the following sanctions may be imposed:

30‑15 Sanctions for failure to comply with the Code of Professional Conduct

(1) This Subdivision applies if the Board is satisfied, after conducting an investigation under Subdivision 60‑E, that you have failed to comply with the *Code of Professional Conduct.

(2) The Board may do one or more of the following:

(c) suspend your registration under section 30‑25;

(d) terminate your registration under section 30‑30.

1. The types of orders that may be imposed, set out in section 30‑20(1) of the Code, include "but [are] not limited to, the following" ("Orders"):

(a) completing a course of education or training specified in the order;

(b) providing *tax agent services for which you are registered only under the supervision of a *registered tax agent or BAS agent specified in the order;

(c) providing only those tax agent services that are specified in the order.

1. Time periods within which Orders are to be complied with may also be imposed (section 30-20(2)).
2. If an agent's registration is terminated under section 30-30 of the Code the TASA sets out what sanctions may be imposed. Pursuant to section 40‑25:

(1) If the Board terminates your registration, the Board may also determine a period, of not more than 5 years, during which you may not apply for registration

1. In this instance the TPB determined that termination is an appropriate sanction and has imposed a four-year period during which the Applicants may not reapply for registration.
2. As this Tribunal said in Yvonne Anderson and Associates Pty Ltd and Tax Practitioners Board (Taxation) [2020] AATA 1881:

[71]...Deregistration of tax agents is a step taken by the TPB to protect the public; it is not a punishment.[86] The TPB's focus is on ensuring that taxpayers can have confidence that they are obtaining competent services.

1. Deregistration also acts as a deterrence to the agent under investigation and to other agents. In Kishore and Tax Practitioners Board [2017] AATA 271 where Deputy President Frost said:

[18] The imposition of a sanction is not for the purpose of punishing the individual, but for the protection of the public and the maintenance of proper standards within the regulated industry. A sanction may also serve the purpose of personal deterrence (to encourage the individual to comply with standards in the future) or general deterrence (to encourage others to comply).

1. Mr Norman submitted that a six-month ban on registration would be a sufficient penalty.[87]
2. The following Tribunal decisions are examples of the types of conduct in which various sanctions have been imposed.
3. In Delis v Tax Practitioners' Board [2015] FCA AATA 820 ("Delis"), Mr Delis' tax agent registration application was refused by the TPB on the grounds that it was not satisfied that Mr Delis was a fit and proper person. The Tribunal found that Mr Delis had entered into a pattern of conduct in respect of his taxation obligations which included failing to pay tax assessments on time, defaulting on payment arrangements, and failing to lodge BAS when they became due. The Tribunal found that this history of non-compliance disclosed a pattern of behaviour over a 14-year period likely to continue in the future. In addition to outstanding personal tax liabilities, there was also outstanding superannuation guarantee liabilities and a history of non-compliance in the lodgement of BAS. In his defence Mr Delis contended that his health and financial circumstances had adversely affected his ability to comply with his taxation obligations. As in this matter, Mr Delis did not produce all relevant medical or financial evidence to the Tribunal at the hearing. The Tribunal found that, amongst other things, the failure to make the required statutory superannuation guarantee payments was inexplicable and upheld the decision of the TPB.
4. In Cleary v Tax Practitioners Board [2014] AATA 260 ("Cleary"), the TPB found that the applicant had failed to lodge ITRs, had a tax debt under $80,000. The Tribunal found that an appropriate sanction was a 12-month suspension. A 12-month suspension appears minor compared to a 4-year termination contended for here. However, the debt in Mr Norman's case is ten times larger than that of Mr Clearly, which is a significant factor. Further, there is no current genuine attempt to renegotiate a payment plan with the ATO. The Tribunal found in Clearly (at [19]) that his "failure to meet his obligations constitutes not only breaches of the law but a failure to uphold the confidence and trust that the public are entitled to expect in the services offered by a registered tax agent".
5. In Phillip Same Accountants Proprietary Limited v Tax Practitioner's Board [2010] AATA 439, the Tribunal found that:

[24] balance must be reached between the failures of the past with the actions taken to correct them plus proposals that conduct will be modified in the future. The only way in which this can be done is for the decision maker to have regard to the past performance or lack of it. In this case the failures are extensive and Mr Same has had the use of money which ought to have been paid to the ATO. The public can expect those such as Mr Same, who as the result of registration as tax agents, to lead by example by meeting their obligations to file required returns and to pay tax owing on time. It is clearly a breach of trust for money, which should be set aside for the ATO, to be diverted for other purposes. That breach of trust occurs in circumstances when the clients are unaware that money, they have paid for remission to the ATO as GST, has been diverted for use by Mr Same until such time as he chooses to pay it or indeed, as in the case of JMN, if it is ever paid

1. In Ridden and Hill v Tax Practitioners Board [2020] AATA 678 ("Hill") two-year bans were considered appropriate. As here, in Hill and Ridden there were false declarations made to the TPB and there was relevant conduct in relation to clients. In Hill there were repeatedly failures to declare outstanding tax to the TPB and a significant tax debt of $720,000. The TPB thought Mr Hill's conduct warranted a five-year ban but the Tribunal varied it to two years.
2. Each matter must be assessed objectively based on its own facts. DP McCabe cautioned in Ridden v Tax Practitioners Board [2020] AATA 422 ("Ridden"), at [40] that "[t]here is some danger in rifling through reported cases in search of comparisons". The Tribunal agrees with this notion to the extent that other cases should not be slavishly followed. The Tribunal must exercise independent discretion based on the unique facts before it. It is also important that there is consistency in Tribunal decisions. Although the Tribunal is not bound by other decisions, it can be guided by them, with a view to ensuring that parties are treated equally and fairly and providing a form of precedence that the public can take notice of. In Drake Brennan J (as President of the AAT) noted (at 643) that consistency with comparable cases and decisions is "[o]ne of the factors to be considered in arriving at the preferable decision".[88]
3. The TPB originally pressed for a four-year ban on Mr Norman re-applying for registration. The only case the TPB and this Tribunal could find where the Tribunal found that a four-year ban on reapplying for registration was appropriate was Middlebrook v Tax Practitioners Board [2020] AATA 3698 ("Middlebrook").
4. In Middlebrook, the Tribunal found that Mr Middlebrook had failed to take proper steps to verify clients' identities. Mr Middlebrook lodged in excess of 100 tax returns on the clients' behalf and some of those turns turned out to be fraudulent. The Tribunal found that through his "sloppiness [Mr Middlebrook] inadvertently facilitated the frauds". Mr Middlebrook had also lodged personal ITRs which underclaimed his income by $660,000. The Board commenced an investigation into all of this following a referral from the Commissioner. The applicant failed to respond in a timely and cooperative way. The Tribunal found this was a "significant problem" noting that "the Board's efficacy as a regulator is undercut if registered agents do not cooperate. Delayed and drawn out processes are also costly". Mr Middlebrook also failed to disclose his overdue tax debts to the TPB. It also turned transpired that Mr Middlebrook was involved in the lodgement of ITRs after his registration had been terminated. Mr Middlebrook had also had his registration cancelled on a previous occasion. Deputy President McCabe found that:

[30] While there is no direct evidence of dishonesty, the applicant's lack of rigour in the conduct of his affairs and his apparent disregard for the duties of his role adds up to something that is almost as bad, and which certainly reflects poorly on his integrity and character. He may not be dishonest, but he has not demonstrated the commitment to competent and conscientious behaviour that one would expect of a tax agent

1. The Tribunal in Middlebrook found that deregistration was appropriate and that he should not be permitted to apply for registration for a period of four years. The Tribunal took into account the serious nature of the conduct, the repeated conduct, personal circumstances, his dire financial affairs, his age, and ability to obtain new work and the need for general deterrence.
2. The TPB acknowledges that this Middlebrook is not comparable to Mr Norman's circumstances.[89]
3. Having reconsidered some recent decisions, and particularly that of Middlebrook, the TPB contended in final submissions that a two to three-year ban is more appropriate.
4. Mr Norman contends that a two to three-year ban is "too harsh" and "would completely destroy his professional life and reputation".[90]
5. In the current matter the Tribunal considers Mr Norman's conduct to be serious. Misleading the TPB in official declaration forms, failing to properly advise clients, and failing to take responsibility for his actions, reflects poorly on Mr Norman's character. This conduct is unacceptable of a registered tax agent and warrants a deregistration.
6. The Tribunal considers that a four-year ban is inconsistent with other Tribunal decisions, and finds that a two-year ban is more appropriate in the circumstances.

1. The Tribunal considers that a two-year (2) prohibition is more appropriate and varies the decision under review accordingly.

1. The Tribunal varies the decision under review and replaces it with a decision that Mr Norman's registration as a tax agent is terminated pursuant to section 40-5(1)(b) of the Tax Agent Services Act 2009 (Cth) ("TASA") and that he may not apply for registration under the TASA for a period of two (2) years pursuant to subsection 40-25(1) of the TASA.

I certify that the preceding 152 (one hundred and fifty-two) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

............................................................

[1] Exhibit 1, T documents, T4, page 26, paragraph 2, Submission to Board Conduct Committee Attachment 3

[2] Exhibit 1, T documents, T4, page 26, paragraph 3, Submission to Board Conduct Committee attachment 3

[3] Exhibit 1, T documents, T4, pages 26, 41-45, Submission to Board Conduct Committee attachment 3

[4] Exhibit 1, T documents, T4, pages 26, 46, 79-81, Submission to Board Conduct Committee attachment 3

[6] Exhibit 1, T Documents, T4, page 126, Submission to Board Conduct Committee attachment 22

[8] Exhibit 1, T Documents, T4, pages 124-125, Submission to Board Conduct Committee attachment 22

[9] Exhibit 1, T Documents, T4, pages 98-99, Submissions to Board conduct Committee Attachment 21

[10] Exhibit 1, T Documents, T4, pages 101-107, Submissions to Board Conduct Committee Attachment 15

[11] Exhibit 3, T Documents, T4, pages 172-176, Submissions to Board Conduct Committee Attachment 13

[12] Exhibit 3, T Documents, T4, pages 177-183, Submission to Board Conduct Committee Attachment 27

[13] Exhibit 3, T Documents, T4, pages 188-189, Outcome of Audit Letter Attachment 30

[14] Exhibit 3, T Documents, T4, page 190, Submissions to Board conduct Committee Attachment 30

[15] Exhibit 3, T Documents, T4, pages 184-187, Submission to Board Conduct Committee Attachment 28

[16] Exhibit 1, T Documents, T4, pages 35-36, Submissions to Board Conduct Committee Attachment 1

[17] Exhibit 1, T Documents, T4, pages 36-40, Submissions to Board conduct Committee Attachment 1 - 2.

[18] Exhibit 1, T Documents, T3, pages 19-21, Notice of decision to investigate; T6, page 137, Extract of minutes to Board Conduct Committee

[19] Exhibit 1, T Documents, T5, pages 131-134, Applicant Response to Submissions from Board Conduct Committee

[20] Exhibit 1, T Documents, T6, pages 136-137 Extract of minutes from Board Conduct Committee ; T7, pages 139-142, Letter regarding outcome of investigation

[21] Exhibit 1, T Documents, T7, pages 139 Letter regarding outcome of investigation ; T8, page 183, Explanatory Paper 01/2010 : Code of Professional Conduct

[22] Exhibit 3, Supplementary T Documents, T7, pages 21-22, Letter Regarding outcome of Investigation

[23] Exhibit 1, T Documents, T1, pages 1-5, Application for Review dated 26 November 2019.

[24] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640.

[25] Exhibit 1, T Documents, T4, page 47-49, Submission to Board Conduct Committee Attachment 5

[26] Exhibit 1, T Documents, T4, page 53-54, Submission to Board Conduct Committee Attachment 7

[27] Exhibit 1, T Documents, T4, page 55-57, Submission to Board Conduct Committee Attachment 8

[28] Exhibit 1, T Documents, T4, page 58-64, Submission to Board Conduct Committee Attachment 9

[29] Exhibit 1, T Documents, T4, page 65-71, Submission to Board Conduct Committee Attachment 10

[30] Exhibit 1, T Documents, T4, pages 72-73, Submission to Board Conduct Committee Attachment 11

[31] Exhibit1, T Documents, T4, pages 72, Submission to Board Conduct Committee Attachment 11

[32] Exhibit 1, T Documents, T4, page 75, Submission to Board Conduct Committee Attachment 11

[33] Exhibit 1, T Documents, T4, page 77, Submission to Board Conduct Committee Attachment 11

[34] Exhibit 1. T Documents, T3, page 52, Notice of Decision to Investigate

[35] Exhibit 7, Affidavit of Alan Norman dated 12 May 2020, page 3, Item 15

[36] Response to Supplementay Submissions

[37] Exhibit 7, Affidavit of Alan Norman dated 12 May 2020, page 2, Item 6 Allegation 'A'

[41] Exhibit 5, Response to Respondents Statement of Facts, Issues and Contentions dated 24 June 2020, page 3 Item 34.

[42] Respondents Supplementary submissions dated 21 September 2020, page 8, paragraph 35.

[43] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 3, under heading 'Item 6, Allegation C', Item 16.

[44] Exhibit 3, T Documents, T4, page 180, Submission to Board Conduct Committee Attachment 28

[45] Exhibit 3, Supplementay T Documents, T4, page 182, Submissions to Board Conduct Committee, Attachment 28

[46] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 3, under heading 'Item 6, Allegation C', Item 16.

[47] Exhibit 3, T Documents T4, pages 299, 303, 319, Submission to Board Conduct Committee Attachment 32

[51] Exhibit 1, T Documents, T4, page 82-86, Submission to Board Conduct Committee Attachment 12

[52] Exhibit 1, T Documents, T4, pages 50-52, Submission to Board Conduct Committee Attachment 6

[53] Exhibit 1, T Documents, T4, page 112, Submission to Board Conduct Committee Attachment 18

[54] Exhibit 1, T Documents, T4, page 95, Submission to Board Conduct Committee Attachment 14

[55] Exhibit 1, T Documents, T4, page 118, Submission to Board Conduct Committee Attachment 19

[56] Exhibit 1, T Documents, T4, page 120, Submission to Board Conduct Committee Attachment 20

[57] Exhibit 1, T Documents, T4, page 52, Submission to Board Conduct Committee Attachment 6

[58] Exhibit 1, T Documents, T4 pages 95-97, Submission to Board Conduct Committee Attachment 14

[59] Exhibit 1, T Documents, T4, pages 110-117, Submission to Board Conduct Committee Attachment 16

[60] Exhibit 1, T Documents, T4, pages 118-119, Submission to Board Conduct Committee Attachment 19

[61] Exhibit 1, T documents, T4, pages 120-121, Submission to Board Conduct Committee Attachment 20

[63] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 4, under heading 'Item 19, Allegation 19B

[64] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 4, under heading 'Item 19, Allegation 19B

[65] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 4, under heading 'Item 19, Allegation 19C

[66] Exhibit 7, Affidavit of Alan Norman sworn 12 May 2020, page 4, under heading 'Item 19, Allegation 19A

[67] Exhibit 1, T Documents, T8 - T10, pages 193 to 282, Explanatory Paper 01/2010: Code of Professional Conduct, Explanatory Paper 02/2010: Fit and Proper Person, Information Sheet TPB(I) 34/2018: Code of Professional Conduct.

[68] Exhibit 1, T Documents, T4, page 55, Submission to Board Conduct Committee Attachment 8

[69] Exhibit 7, Affidavit of Alan Norman dated 12 May 2020, page 1, Item 2.

[72] Exhibit 3, T Documents, T4, page 325, Submission to Board Conduct Committee Attachment 32

[73] Exhibit 3, T Documents, T4, pages 262-263, Submission to Board Conduct Committee Attachment 31

[74] Exhibit 3, T Documents, T4, pages 261 - 266, Submission to Board Conduct Committee Attachment 31

[77] Exhibit 5, Response to Respondents Statement of Facts Issues and Contentions dated 24 June 2020, Item 3, Item 38.

[80] [2014] AATA 644, at [27].

[81] Exhibit 4, Respondents Statement of Facts, Issue and Contentions, page 11, paragraph 49; Exhibit 3, T Documents, T4, pages 128-144, 156-162, 251, 271, 285.

[82] Exhibit 3, T Documents, T4, pages 163-164, Submission to Board Conduct Committee Attachment 24

[83] [2016] AATA 740, at [71].

[85] Exhibit 7, Affidavit of Alan Norman dated 12 May 2020, page 2, Item 6 Allegation 'A'.

[86] See Stasos v Tax Agents' Board of New South Wales [1990] FCA 379; (1990) 21 ATR 974, at 978.

[88] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 643.

[89] Respondents Supplementary submissions dated 17 February 2021, page 3, paragraph 13.

[90] Applicant Submission in Reply to Respondent dated 24 February 2021, page 2, paragraph 2.