Tax Agents' Board of New South Wales v Aqabani

The Tax Agents' Boards and requirements for registration as a tax agent 8 Before turning to the Tribunal's decision, it is necessary to set out the relevant statutory background. 9 Persons registered as tax agents have, in effect, a statutory monopoly in the preparation of income tax returns and the transaction of business on behalf of tax payers in income tax matters for reward: s 251L of the Income Tax Assessment Act 1936 ("the Act"). Application for registration is required to be made to a Tax Agents' Board: s 251J of the Act. 10 The Act requires there to be a Tax Agents' Board in each State. There appears to be no requirement that application be made to a particular board, although normally one would imagine applications are dealt with by the board in the State of residence of an applicant. Application is to be in an approved form, accompanied by such information as is required by the relevant form: s 251J(3) of the Act. 11 Under s 251JA(1) of the Act, the Board is required to register an applicant as a tax agent if the applicant satisfies the Board as to various matters. These include, for example in the case of a natural person, that the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of tax payers in income tax matters. Section 251BC of the Act provides, however, that a person will not be a fit and proper person to prepare income tax returns etc if the person does not hold such qualifications, whether academic, by way of experience or otherwise, as are prescribed. The prescription is to be found in Part 9 of the Income Tax Regulations ("the Regulations"). Clause 156 of the Regulations sets out the prescribed qualifications, which vary depending upon matters such as the period of time an applicant has been in employment and whether the applicant is, or is not, a barrister or solicitor. Relevantly, Regulation 156(1)(a) provides: "(1) For the purposes of subparagraph 251BC (1) (b) (ii) of the Act, the following qualifications are prescribed: (a) the person: (i) shall have completed the academic requirements for the award of a degree, diploma or other qualification from an Australian university, college of advanced education or other tertiary institution of an equivalent standard, and have passed examinations in such subjects, under whatever name, which an appropriate authority of the university, college of advanced education or other tertiary institution certifies to the Board to represent a course of study in accountancy of not less than 3 years' duration and in commercial law of not less than 18 months' duration or shall possess such other qualifications as the Board regards as equivalent to those qualifications; (ii) shall have: (A) been engaged in relevant employment on a full‑time basis for not less than a total of 12 months in the preceding 5 years; (B) otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or (C) been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A); and (iii) shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board;" 12 The Board had prepared what counsel for the Board referred to as "Guidelines" dealing with matters such as accountancy and commercial law courses and the acceptability of income tax courses. There is nothing in the evidence that explains the provenance of these documents, save that correspondence between the Secretary of the Board and Mr Aqabani refers to the two documents that were in evidence as "appendix document". Nothing suggests they have any particular status. They found their way into evidence as part of the "T documents", relevantly, as part of the correspondence between the Board and Mr Aqabani. They are referred to in the Tribunal's reasons as "Guidelines", no doubt because this was the way they were referred to by counsel appearing for the Board before the Tribunal and in the course of submissions before me. There may be a difficulty in regarding them as "guidelines" in the normal sense of that word as used in administrative law cases. This is so because it would appear that at least one other Tax Agents' Board, that established for Victoria, has not issued any guidelines of a similar kind. So much appears from the decision of the Tribunal in John William Brough Wright v Tax Agents' Board Victoria No V93/1319 AAT No 9841 to which the Tribunal in its reasons in the present review refers, although for a different purpose. I shall, however, hereafter refer to them as "the Guidelines" consistent with the way they are referred to in the Tribunal's reasons and in the submissions. 13 The document headed "Appendix C" dealt with three cases, one of which related to applicants with overseas qualifications. It would not seem to have any relevance to the question in issue in the appeal, although it did have relevance to an issue no longer in dispute. Appendix E was headed "Qualification - Courses". In large print, the document said that it was the responsibility of applicants to prove to the Board that the prescribed qualifications were met and noted that certain information would be required. Under the heading "evidence of successful completion of a course of study in Australian income tax law", the following appears: "Reg 156(1) requires inter alia that a person shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board.(emphasis in original) A description of the course undertaken including the number of contact hours will need to be provided. The following criteria may provide some guidance on a course of study the Board is likely to consider acceptable: - the course should involve approximately 3 hours contact per week for an academic year or the equivalent. Study should concentrate on the Australian income tax system particularly the Income Tax Assessment Act (1936 & 1997) and related Acts; Topics should include the concepts of income and capital, assessable income, exempt income, allowable deductions, capital gains tax, fringe benefits tax, tax accounting, salary packaging, taxation of retirement payments and superannuation funds, liability for professional negligence, tax ethics and tax agents, trusts, partnerships and anti avoidance. The course should be designed to assist applicants to competently prepare income tax returns for individual, partnerships, companies, trusts, and superannuation. The following courses in Australian income tax law are currently acceptable to the New South Wales Board and may provide guidance to an applicant, however they are not the only courses which satisfy Regulation 156(1)(iii): 1) CPA Taxation Module + 1 semester of study from a tertiary institution; 2) Institute of Chartered Accountants Taxation Module of the PY Programme + a semester of study from a tertiary institution; 3) 2 semester courses from a recognised Australian University If an applicant is in doubt about whether the Board will approve a particular course of study in Australian income law they should contact the Secretary, Tax Agents' Board. PLEASE NOTE: admission to a professional body does NOT automatically ensure registration as a tax agent in New South Wales.'

The Tribunal's reasons 14 Before the Tribunal there were two matters in dispute. One related to whether Mr Aqabani had satisfied the requirements of the regulation concerning an acceptable course of study in accountancy and commercial law. The Tribunal found that he had and that matter is no longer in issue between the parties. The other matter was whether Mr Aqabani had undertaken an appropriate course of study in Australian income tax law. Again the Tribunal found in favour of Mr Aqabani. Its reasons on this second matter appear under the heading "Does Mr Aqabani meet the requirements of Regulation 1561(a)(iii)?" 15 The Tribunal noted that Mr Aqabani had completed the course in "Income Tax and Aspect Co Law" at the University of Southern Queensland and that the Board estimated that the tax aspect of the course was four months study which the Board apparently regarded as not complying with the requirements of Regulation 156(1)(a). That this was the Board's position appeared from a letter dated 22 April 2004 from the Secretary of the Board addressed to Mr Aqabani notifying him of the Board's decision not to grant him registration, to which the Tribunal referred. In that letter the Secretary wrote, relevantly: "The Board were of the opinion that your academic qualifications record you as having completed a subject titled 'Income Tax & Aspect Co Law', which it estimates as being equivalent to one third commercial law or 2 months study, and two thirds Australian income tax law or 4 months study which does not comply with the requirements of Regulation 156 (1)(a)." 16 The Tribunal continued: [35]"However, the duration of the course is not, in fact specified by Regulation 156(1)(a)(iii). For that matter, it is not a requirement of the Guidelines either. [36] One criterion the Guidelines purport to introduce is that the course should involve 'approximately three hours contact per week'. Mr Aqabani's evidence, which was not challenged, was that the CPA Taxation module and the Institute of Chartered Accountants Taxation Module, courses identified as some courses which are acceptable to the Board do not require face-to-face attendance at all. Many other university courses also do not require attendance at all." 17 The Tribunal then referred to a decision of Deputy President Purvis in Al Mughrabi and Secretary Department of Immigration and Multicultural Affairs [1999] AATA 164 ("Al Mughrabi") discussing guidelines "under" s 13 of the Australian Citizenship Act 1948. In the passage cited, the learned Deputy President pointed out that while guidelines might deal with the policy to be considered in exercising a discretion, each case had to be decided on its merits and the discretion could not be fettered by guidelines so as to preclude a decision which took into account any unique circumstances of a case. 18 The Tribunal then noted that the Appendix E guidelines had treated as "currently acceptable" the taxation module of the "PY Programme" conducted by the Institute of Chartered Accountants, together with a semester of study from a tertiary institution and that Mr Aqabani had been exempted from that program. The learned member noted also that Mr Aqabani taught taxation at the St George College of TAFE and, although of lesser relevance, that a major part of his studies for the American CPA qualification had covered American taxation law. She noted that the tertiary course that Mr Aqabani had undertaken in Queensland had been at postgraduate level and that it had concentrated on the provisions of the Act and the Income Tax Assessment Act 1997. She listed the subjects studied in the course. She noted that the course had not previously been considered by the Board. The reasons continue: [43]"His (Mr Aqabani's) evidence was that the course was one completed by written examination, which is the only stated criteria for the course which appears in Regulation 156(1)(a)(iii). That he may not strictly come within the Guidelines because of his exemption, does not, in my view defeat his application. The Guidelines have been shown to be internally inconsistent, and rather than amplifying the requirements of the Regulation in fact purport to impose requirements that are simply absent from the Regulations. [44] I therefore find that he had, by written examination, successfully completed a course of study in Australian income tax law, as required by Regulation 156(1)(a)(iii)."

Submissions on behalf of the Board 19 Counsel for the Board submitted that the Tribunal had erred in law in failing to take into account the Guidelines. It was submitted that the Queensland course did not comply with the Guidelines because it ran for a single semester and was not coupled with either the CPA or ICA taxation module or a further semester at an Australian university. Accordingly, it was not a course lasting approximately one academic year. It was submitted also that the Tribunal had erred in finding the Guidelines to be "internally inconsistent" and in "purporting" to impose requirements absent from the Regulations. 20 It was submitted that the policy adopted by the Board to govern what, in effect, was a discretionary power of the Board, was a relevant consideration for the Tribunal to take into account on review and that the Tribunal's failure to do so was an error of law, being failure to take into account a relevant consideration. The misconstruing of the policy by the Tribunal, evident both by the Tribunal's reference to internal inconsistency and its reference to the Guidelines purporting to impose requirements absent from the Regulations, amounted to a failure by the Tribunal to have proper regard to the Regulations and thus, an error of law. It was accepted that it was open to the Tribunal, after having applied or at least properly interpreting the Guidelines, to find that Mr Aqabani's qualifications satisfied Regulation 156(1)(a)(iii). However, to ignore the Guidelines, as the Tribunal did, was an error of law by the Tribunal which required that the Tribunal's decision be set aside and the matter remitted to the Tribunal to be determined in accordance with law.

Discussion 21 It may be accepted that it can be an error of law for the Tribunal to ignore guidelines which have been formulated by an administrative authority as a guide to the exercise of a discretion or power and which are within power. The status of guidelines was discussed by a full court of this Court in Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 ("Drake") at 590 where Bowen CJ, and Deane J said: "In a matter such as the present where it was permissible for the decision-maker to take relevant government policy into account in making his decision, but where the Tribunal is not under a statutory duty to regard itself as being bound by that policy, the Tribunal is entitled to treat such government policy as a relevant factor in the determination of an application for review of that decision. It would be contrary to common sense to preclude the Tribunal, in its review of a decision, from paying any regard to what was a relevant and proper factor in the making of the decision itself. If the original decision-maker has properly paid regard to some general government policy in reaching his decision, the existence of that policy will plainly be a relevant factor for the Tribunal to take into account in reviewing the decision. On the other hand, the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be." 22 As the Court explained in the comments which followed the above passage, consistency of administrative decisions meant that it was appropriate to take into account policy matters in exercising discretions, although an uncritical acceptance of policy and giving that policy automatic effect could represent an abdication by the Tribunal of its responsibilities itself to make a decision. 23 In Nikac & ors v Minister for Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 611 ("Nikac") at 625 Wilcox J said: "Although a non-statutory policy is not binding upon a decision-maker, in the sense that he or she may decide in the particular case not to act in accordance with that policy, a policy applicable to the case is always a relevant consideration in the making of a decision. Unless it can be said that the policy is so insignificant that it could not have materially affected the decision … any failure to take that policy into account will lead to invalidity." 24 These cases were both cases where the policy in question was a policy of the decision maker. Neither were cases which considered whether the Tribunal might commit an error of law in failing to take into account a policy formulated by the decision maker whose decision is the subject of review by the Tribunal. However, since the Tribunal itself has the power to exercise the discretion or power otherwise vested in the decision maker, it must follow as a matter of principle that if the decision-maker was bound to take a policy formulated and applied to ensure consistency of decision making, so too must the Tribunal. There can be little doubt that misconstruction of the policy would include a failure to have proper regard to it: BHP Direct Reduced Iron Pty Ltd v Chief Executive Officer, Australian Customs Service [1998] FCA 1346. 25 There are three questions, however, which arise in the present case. The first is the status of the so-called "Guidelines"; the second is whether the Tribunal "misconstrued the Guidelines" and the third question is whether any error involving misconstruction of, or failure to consider, the Guidelines actually effected the decision the Tribunal reached or, in other words, it is necessary to determine what the basis of the Tribunal's decision was. Before considering these questions it is useful to consider the role of the Tribunal on a review of a decision of the Board. 26 Under the AAT Act the Tribunal is authorised to review the Board's decision here to refuse registration to an applicant. In exercising this review and for the purpose of that review, the Tribunal is authorised to exercise "all the powers and discretions that are conferred by any relevant enactment on the person who made the decision": s 43(1) of the AAT Act. It was accepted by counsel for the Board that in the present case that meant that it was for the Tribunal to decide whether, for the purposes of Regulation 156(1)(a)(iii), a particular course which had been undertaken by the applicant (ie Mr Aqabani) was "acceptable". 27 It might have been suggested (although it was not) that the question whether a particular course of study was acceptable was a decision that had to be made by the Board and that it was irrelevant in making that decision whether the particular course was or was not, when regard is had to the particular applicant, acceptable. Thus, once the Board had decided that a particular course was acceptable, it was acceptable in all cases. That this is not the proper construction and that the concession made by counsel was correctly made follows, I think, from the fact that the content of courses may change from year to year. It also can be said to be, otherwise, a strange policy that would require courses to be accepted without regard to other qualifications of an applicant. An intensive one week course conducted at postgraduate level by a particular tertiary institution may suffice (ie be acceptable) in the case of an applicant with particular qualifications (for example because the applicant lectures in taxation) that would not be appropriate to the registration of another person without those particular qualifications. 28 It follows, as the submissions made by counsel for the Board made clear, that it was open for the Tribunal itself to consider on the facts before it whether the particular course undertaken by Mr Aqabani was an "acceptable" course for the purposes of Regulation 156(1)(a)(iii) so as to entitle him to registration as a tax agent, or strictly, whether his failure to undertake another course meant he was disentitled to registration because he had not undertaken a course involving a written examination which course was "acceptable" to the Tribunal acting in the stead of the Board. 29 There is, I think, a real question about the status of the Guidelines in the present case. While I can accept that a statutory authority may promulgate guidelines notwithstanding that the statute under which it operates may make no provision for such guidelines (so long as the guidelines promulgated are relevant to the exercise of power or discretion with which they are concerned) there is a problem here, where the legislation (the Act), provides for the establishment of separate Tax Agents' Boards, albeit that the Act is expressed in language which, at the least, can be said to contemplate that the boards will speak with one voice. As will be seen, this is not a matter which need be considered in the present case. However, there is a hypothetical difficulty if guidelines, promulgated by one board differed from guidelines promulgated by another. Would a Tribunal be required to take one set of guidelines into account when reviewing the decision of one board and another and potentially inconsistent set of guidelines when reviewing the decision of another board? There is a similar difficulty in the present case in that the annexure documents in question were not guidelines in force in all boards because it is known that at least one other board had no guidelines at all. Would it mean that the Tribunal would, if the "Annexure E" document was treated as a guideline of policy, be required to take it into account in reviewing a decision made by, say, the New South Wales board but would not be required to take it into account in reviewing a decision made by, say, the Victorian board? In the result, it would be possible that different conclusions might be reached by the Tribunal depending upon whether it was reviewing a decision of the New South Wales board or of the Victorian board. This may well lead to the conclusion that "Annexure E" should not be given the status of a guideline in the same sense as the guidelines of national policy were given in Drake or Nikac and that failure to take the Guidelines into account might not constitute error of law. 30 As to the second question, it is not entirely clear why the learned tribunal member thought there was an internal inconsistency. However, there appear from her reasons to be two possible explanations. The first is that there was an internal inconsistency between "Appendix C" and "Appendix E" relating to the requirements for the study of commercial law and accountancy. This was a matter considered earlier in the Tribunal's reasons. As the Tribunal pointed out, "Appendix C", when dealing with applicants with overseas qualifications, omitted reference to commercial law requirements. "Appendix E", in what was said to be an introductory statement, took a particular view about the accountancy and commercial law subject required to be undertaken. I think this is the matter to which the Tribunal adverted. The other possibility is that "Annexure E" appeared to regard the CPA or Institute of Chartered Accountants tax module as requiring face to face attendance when this was, according to the evidence before the Tribunal, not the case. I think it is possible to regard there to be some internal inconsistency as suggested by the Tribunal. 31 The other matter discussed by the Tribunal, namely that the Guidelines purported to impose requirements absent from the Regulations, would seem to be wrong. This comment appears to arise from the letter to Mr Aqabani to which reference has already been made, where it is said that a course of four months income tax study would not comply with the Regulations. No doubt, it is strictly correct that the Regulations do not require the course of tax study to have a particular time limit. To that extent, the Tribunal is correct. However, while the Secretary to the Board was wrong in suggesting that the Regulations did require the taxation course to have a particular time limit, that is not what "Annexure E" says at all. "Annexure E" is consistent with the fact that the Regulations leave the question of the acceptability of a particular course to the Board. The only requirement of the Regulations is that the applicant successfully complete a course of study in Australian income tax law which is "acceptable" to the Board. No doubt in an appropriate case the Board could decide that a course of 12 months and no less was, in the case of the particular applicant, appropriate so that a four month course was not, in respect of that applicant, "acceptable". In fact, the examples given in "Appendix E" are all examples of courses requiring 12 months study, although in some cases, the 12 months takes into account other courses, for example, the modules prescribed by the accounting bodies. I therefore agree with counsel for the Board that the Tribunal to this extent fell into error so that if the error was material to the decision, the result would be that the decision would be set aside. 32 However, I do not think that the Tribunal reached its decision by ignoring the so-called "Guidelines" in this case and doing so because of the error which I have identified in the last paragraph. 33 As I have noted, the Tribunal, in reviewing the decision of the Board, was empowered itself to consider whether in the case of this applicant, the course which he undertook in Queensland and at postgraduate level, was acceptable after taking into account all the relevant facts, including the experience of the applicant including the fact that he taught taxation at TAFE. The Tribunal was not bound to apply the Guidelines and require Mr Aqabani to undertake a course of 12 months study, which the Guidelines might suggest. Indeed, had the Tribunal done so it would have been an error of law involving a failure to take into account the personal circumstances of Mr Aqabani in deciding whether the course he undertook was "acceptable". 34 Certainly, the reasons of the Tribunal are not as clear as might be desired. However, it seems to me to be the case that the Tribunal understood, as illustrated by the citation of Al Mughrabi that any unique circumstances of this applicant were required to be considered and that "Appendix E" did not control the decision, albeit, if a guideline, that it was necessary to take it into account. The unique circumstances of Mr Aqabani's case were set out. The reference to the Guidelines purporting to impose requirements absent from the Regulations, while an error, appears clearly to be a reference to the Board's reasons for refusing Mr Aqabani registration as communicated through the Secretary, where it is clear that the Board was (assuming the letter reflected the Board's actual reasons - it may not have done so) purporting to apply a requirement which the Regulations did not apply. The reference to "internal inconsistency" is probably not erroneous, although it is difficult to see that "Appendix E" itself is internally inconsistent. 35 In my view the Tribunal was applying the question of acceptability of the Queensland course in the unique circumstances of Mr Aqabani's case against the background that the normal case involving an application to be a tax agent would require a longer course of study in Australian income tax law. I do not think that in the circumstances of the present case the Tribunal's decision was affected by such error of law, if there were any, as flowed from the comments about internal inconsistency and imposition of a requirement inconsistent with the regulation. I would accordingly dismiss the appeal. There will be no order as to costs as Mr Aqabani was self-represented. 36 I would like to make the following comments for consideration in due course by those responsible for administering the Tax Agents' Boards. It is undoubtedly useful for there to be national guidelines to assist in the determination whether, in a particular case, a particular course is acceptable before registration is granted. It would be far from helpful for there to be inconsistent guidelines and desirable that all boards adopt guidelines if any are to. Secondly it would be desirable, if guidelines are to be adopted, that they be published as guidelines, so that their status is clear on their face. Thirdly, it would be desirable, if there are to be national guidelines, that they make clear that they apply only to the ordinary case and that the determination will need to take into consideration the particular educational and/or professional qualifications or experience in Australian income taxation which the applicant for registration has. It is fair to say that "Appendix E" generally sets out an appropriate prescription of the type of course that would in the ordinary case be thought to be a minimum requirement for a person who was to be given the right to charge for the preparation of income tax returns and advice. Some attention might, however, be given to the wording of the appendix, at least so far as it makes reference to contact hours, having regard to the evidence in the present case that the modules required by the accounting bodies do not have contact hours. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.