Tax Agent - stay of implementation of decision to refuse re-registration - preservation of status quo pending determination of application for review.

Administrative Appeals Tribunal Act 1975: Ss.41(]),(2)

Income Tax Assessment Act 1936: Ss.251JC(4)

Re Aquatic Airways v Civil Aviation Authority (Decision No 5689)

Re Bishop and Secretary Department of Social Security (1989) 18 ALD 661

Re Dekanic and Tax Agents' Board (1982) 6 ALD 240

Solicitors for the Respondent: Australian Government Solicitor

UPON HEARING the applicant in person and Mr Pestorius for the respondent and being satisfied it is desirable to do so for the purpose of securing the effectiveness of the hearing and determination of the application for review and for the reasons attached to this decision

I ORDER that the respondent's letter of 2 March 1993 implementing the decision under review be stayed until determination of the application for review or further order.

K.L. BEDDOE The applicant sought an order under sub-section 41(2) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act").

2. Section 41 of the AAT Act provides that the Tribunal, including an authorised senior member, if of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make an order or orders staying or otherwise affecting the operation or implementation of the decision as considered appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.

3. Sub-section 251JC(4) of the Income Tax Assessment Act 1936 provides in effect that where a Tax Agents' Board makes a decision refusing to re-register an applicant as a tax agent and notice of the Board's decision was served on the applicant at a time after the expiry of the registration, then the applicant shall be taken to have been registered as a tax agent during the period commencing at the time the notice expired and the date notice of the Board's decision was served on the applicant.

4. By letter dated 2 March 1993 the Secretary of the Tax Agents' Board notified the applicant that his application for renewal of registration as a tax agent made in 1992 had been refused by the Board.

5. The applicant subsequently sought review of that decision in this Tribunal and sought a stay of the Board's decision.

6. At the hearing of the application pursuant to section 41 of the AAT Act the applicant appeared on his own behalf and Mr Pestorius of counsel appeared for the respondent Board.

7. The respondent did not oppose the making of a stay order under section 41 but contended that such an order would be ineffective so as to permit the applicant to practie as a tax agent pending the hearing before this Tribunal.

8. The basis of this contention was that because the Board had refused re-registration there was no current registration as a tax agent and the staying of the Board's decision to refuse registration would not thereby change the situation. Instead Mr Pestorius submitted that the Tribunal should direct the Board to register the applicant as a tax agent until determination of the application for review.

9. In making that submission counsel relied upon the decision of the Tribunal in Re Bishop and Secretary Department of Social Security, a decision of Senior Member Purcell reported at (1989) 18 ALD 661. In that case the applicant was seeking review of a decision refusing benefits under the Social Security Act 1947 because of a lump sum payment period determined in accordance with section 153 of that Act. The Tribunal decided the applicant was entitled to receive sickness benefits pending the review of the decision and made an order affecting the operation of the decision. Counsel also referred me to an unreported decision in Re Aquatic Airways v Civil Aviation Authority dated 1 September 1989 (Decision No 5689) where an attempt to have a licence issued pending the review of a decision to cancel a licence was unsuccessful on the merits rather than as a result of any consideration of the Tribunal's powers under sub-section 41(2). However as Mr Pestorius quite properly drew to my attention, Purvis J did not explicitly consider the width of the powers under section 41.

10. I have come to the conclusion that the Tribunal does not have the power to direct that the applicant be registered (or re-registered) as a tax agent without dealing with the merits of the application for review. Essential to deciding to register a person as a tax agent is a finding that the applicant is a fit and proper person within the terms of the Income Tax Assessment Act 1936. This matter is before this Tribunal because the respondent Board decided that the applicant was not such a fit and proper person. The only basis for this finding, according to the section 37 statement, is "that in the course of his employment over the last 5 years there had not been substantial involvement in the preparation or examination of a broad range of income tax returns, that is, returns covering a breadth of subject matter from a breadth of taxpayers". The section 37 statement makes it clear that the applicant was not held to be not a fit and proper person on any other relevant ground and, in particular, the Board found that the applicant is of good fame, integrity and character.

11. Sub-section 41(1) of the AAT Act makes it clear that the making of an application for review to the Tribunal does not affect the operation of the decision under review or the implementation of that decision.

12. In Re Dekanic and Tax Agents' Board (1982) 6 ALD 240, Davies J, as President of the Tribunal, dealt with the operation of section 41 in the context of a cancellation of a tax agents' registration. His Honour placed considerable emphasis on the right to be heard on a cancellation of registration, dicta which must apply with equal force on a refusal to renew a registration. Of more relevance to this matter is his Honour's conclusion at page 242:

". . . it is the ordinary practice of the Tribunal in the review

of a cancellation of a tax agent's registration to grant a stay if

the Tribunal is asked to do so, and it grants that stay until the

hearing and the determination of the review."

"That, as I see it then, is the basic approach to take in these

matters but, of course, in every particular case the circumstances of

the case must be considered and in not every case will it be

appropriate that a stay should be granted."

His Honour then went on to discuss the public interest in relation to the stay of a decision cancelling registration, and, taking public interest factors into account, his Honour stayed the decision to cancel registration subject to certain undertakings to be given by the applicant.

13. It seems to me to be beyond argument that where a Tax Agents' Board decides to cancel the registration of a tax agent this Tribunal has the power, in the appropirate case, to stay that decision pending determination of an application for review in this Tribunal.

14. The power conferred by section 41(2) of the AAT Act when considered in conjunction with sub-section 251JC(4) of the Income Tax Assessment Act 1936 reveals a basis for preserving the status quo pending the hearing of the application for review. Parliament must be taken to have intended that the tax agent is to have the benefit of a deemed registration pending the Board's decision on an application for re-registration where the registration would otherwise have expired. There are sound reasons for this view because the agent's business of annual lodgment of income tax returns would become chaotic, unmanageable and contrary to the interests of the agent's clients if registration ceased automatically because of a failure, for whatever reason, by the Board to re-register the agent in accordance with his application. It is the clear intention of the legislation that the registration only ceases when the applicant is advised that his application for re-registration has been refused. Clearly sub-section 251JC(4) does not apply where there is no valid application for re-registration pending.

15. It follows, in my view, that where this Tribunal decides under sub-section 41(2) of the AAT Act to stay the implementation of the decision under review the effect will be the same, from the date of the Tribunal's order, as if the Tribunal had decided to stay a decision to cancel a registration of a tax agent. Sub-section 251JC(4) will then operate to deem continuing registration.

16. In the circumstances of this case, and there is no submission to the contrary, it is desirable to maintain the status quo, i.e. maintain the applicant's registration as a tax agent pending the determination of the application for review. I can see no risk to the public interest on the material before me and an appropriate order staying the implementation of the Board's decision has been made.