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[2012] FCA 1153
Federal Court of Australia
2012-08-24
Emmett J
Original judgment source is linked above.
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 451 of 2012
JUDGE: EMMETT J DATE: 24 AUGUST 2012 PLACE: SYDNEY
REASONS FOR JUDGMENT 1 The applicant, the Tax Practitioners Board (the Board), is established under s 60-5 of the Tax Agent Services Act 2009 (Cth) (the Tax Agents Act). The Board seeks relief against Mr Malcolm Campbell in respect of contraventions of the Tax Agents Act. The proceeding was commenced by originating application and statement of claim filed 22 March 2012. 2 Notwithstanding that the originating process and the statement of claim have been served on Mr Campbell, he has not appeared and has not filed a defence to the statement of claim. Both were served on him not later than 21 May 2012. On that day, Mr Campbell telephoned the Board's solicitor and confirmed that he had received the documents. The Board also, through its solicitor, informed Mr Campbell by email that the proceeding was listed for hearing today, and that the Board would seek to have the matter heard in the absence of Mr Campbell if he chose not to appear. There was no appearance when the matter was called on for hearing at 10.15 today. 3 The evidence before me indicates that between April 2010 and November 2011, Mr Campbell, on 18 occasions, committed contraventions of s 50-5(1) of the Tax Agents Act. A person contravenes that provision if the person provides a service that the person knows or ought reasonably to know is a tax agent service, it is not a BAS service, the person charges or receives a fee or other reward for providing the tax agent service, and the person is not a registered tax agent. I am satisfied from the evidence that Mr Campbell was not, at any relevant time, a registered tax agent, and that on 18 occasions he provided to individuals a relevant tax agent service, for which he charged or received a fee or other reward. 4 On 13 occasions, Mr Campbell provided a tax agent service to individuals (the Taxpayers) by providing for them tax return amendment requests to forward to the Commissioner of Taxation (the Commissioner), in respect of tax returns that had already been furnished to the Commissioner by the Taxpayers. On five other occasions, Mr Campbell provided to individuals income tax returns for the individuals to furnish to the Commissioner. 5 The functions of the Board include the administration of the system for the registration of registered tax agents. Section 50-5(1) of the Tax Agents Act is a civil penalty provision. It provides that, within four years after a contravention, the Board may apply on behalf of the Commonwealth to the Federal Court for an order that the contravener pay a pecuniary penalty to the Commonwealth. If the Court is satisfied that a contravention has occurred, the Court may order the contravener to pay to the Commonwealth, for each contravention, the penalty that the Federal Court determines is appropriate, but not more than the maximum amount specified in relation to each contravention. In the present case, the maximum pecuniary penalty that might be imposed in each case is $27,500. The overall maximum pecuniary penalty, therefore, that could be imposed in relation to the 18 contraventions is $495,000. 6 The Board seeks declarations that Mr Campbell has contravened s 50-5(1) of the Tax Agents Act, an injunction restraining him from providing tax advisory services and an order that he pay a pecuniary penalty in respect of each of the contraventions. The Board also seeks its costs. 7 In considering the relief that is claimed in a proceeding such as this, the Court must have regard to whether or not the relief granted will have utility, whether the proceeding involves a matter of public interest and whether the circumstances of the contraventions call for the marking of disapproval of the conduct. 8 The purpose of s 50-5 of the Tax Agents Act is to protect the public by preventing unregistered persons from providing tax agent services for a fee. The object is to protect members of the public who may not be sophisticated in matters of business and commerce and who are in need of protection from persons who hold themselves out as being able to provide tax agent services but are not qualified to do so. 9 In considering the imposition of a penalty in circumstances such as these, both general and specific deterrence are relevant. Not only is it necessary to deter Mr Campbell from repeated contraventions, it is also desirable to indicate to the community generally that there are serious consequences for committing contraventions of legislation such as the Tax Agents Act. The penalty should be such as will demonstrate to the community generally that the consequences of a contravention outweigh the cost of adopting a culture of compliance. 10 As I have said, Mr Campbell charged or received a fee for the services that he purported to provide. The total fees received were $6385. The contraventions occurred over an extended period of time. It is fair to describe them as deliberate and systematic. There were multiple breaches of s 50-5(1). The contraventions were committed in circumstances where Mr Campbell had been informed in clear and explicit terms of the provisions of s 50-5(1). One can conclude, therefore, that his contraventions were knowing and intentional. He was specifically informed of the provisions by a letter of 28 June 2010, which was written in connection with proceedings previously commenced against Mr Campbell in relation to 23 alleged breaches of s 251L of the Income Tax Assessment Act 1936 (Cth), a predecessor of s 50-5(1). Those proceedings were discontinued by reason of the death of a prosecution witness. 11 A number of Mr Campbell's contraventions resulted in tax audits of individual Taxpayers, which, in turn, resulted in the imposition of significant penalties on some of the Taxpayers. Those factors are relevant in assessing the penalty that is appropriate in the circumstances of the contraventions presently before me. Each of the contraventions, but one, resulted in a tax mischief, in that the conduct of Mr Campbell led to Taxpayers making unsubstantiated claims for deductions to which they were not entitled. One of the Taxpayers to whom he provided taxation services suspected that the amendment request was false, and, therefore, did not lodge it with the Commissioner. Rather, the Taxpayer complained to the Commissioner. Mr Campbell has shown no cooperation with the Board in seeking to address his conduct. 12 The Board has prepared a statement of facts upon which it invites penalties to be assessed. The statement of facts, prepared from statements signed by each of the Taxpayers, demonstrates that Mr Campbell engaged in a deliberate and systematic course of conduct. His conduct involved meeting with the Taxpayer and advising the Taxpayer to obtain notices of assessment for prior years' income tax returns from the Commissioner. He then advised that amendment requests should be made to the Commissioner and provided general advice as to the amount of tax refunds that could be expected to be received. 13 He received notices of assessment from the Taxpayers and completed or arranged for the completion of requests for amendment for each taxpayer. He then arranged for the preparation of a document to be signed by the Taxpayers and gave advice as to the forwarding of the document to the Commissioner with their amendment requests. Mr Campbell also prepared letters addressed to the Commissioner for the Taxpayers to sign, which objected to the Commissioner's refusal to consider amendment requests that were out of time. In some of the cases, Mr Campbell advised the Taxpayers as to income tax obligations and entitlements before income tax returns were furnished. In those cases, he completed or arranged for the completion of income tax returns on behalf of the Taxpayers. 14 The service purportedly provided by Mr Campbell involved making claims for deductions in amendment requests and returns without instructions to do so. In doing that, Mr Campbell was aware that the Taxpayers were relying on his specialist knowledge in relation to taxation matters. Mr Campbell was not, at the relevant times, a registered tax agent. The Board has no evidence that he has the required educational qualifications or relevant experience to be registered and the Board has no basis for concluding that he is a fit and proper person to be registered. 15 In all of the circumstances, I consider that it is appropriate to grant declaratory relief and injunctions in relation to the conduct of Mr Campbell. In relation to the 13 contraventions where amendment requests were prepared for a taxpayer, I consider that the appropriate penalty is $4,000 for each contravention. In relation to the five instances where the Taxpayers were provided with income tax returns, which is regarded by the Board as a less serious offence, I consider that the appropriate penalty is $2,500 for each contravention. It is also appropriate that Mr Campbell be ordered to pay the Board's costs of this proceeding. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate: Dated: 23 October 2012 SCHEDULE A PERSON DATE Bani, Bolabasaga 16 May 2010 Fine, Toakase 18 January 2011 Funaki, Amini 20 December 2010 Funaki, Iliase 20 December 2010 Gaul, Carleen 14 October 2010 Gravina, Lena 3 May 2011 Hema, Melaime 23 February 2011 Ilhan, Murat 20 August 2010 McLeod, Kelvin 6 March 2011 Naloku, Azadeh 24 May 2010 Ofiu, Taani 27 October 2010 Shum, Temalesi 20 August 2010 Varawa, Wati 22 September 2010
SCHEDULE B PERSON DATE Gravina, Lena 19 April 2011 McLeod, Kelvin 1 August 2010 Shum, Temalesi 12 August 2010 Varawa, Wati August 2010 and November 2011
FORM A I, [print full name] ……….………………………….………..…………………….…………, having requested Malcolm Campbell to provide a service (i) to me / (ii) to the entity named: ………………………………………………..….….………. [delete whichever inapplicable] relating to one or more of the following: (a) giving advice concerning entitlements, liabilities or obligations that arise or could arise under a taxation law; (b) completing a return or statement in relation to a taxation law; or (c) lodging a return or statement in relation to a taxation law with the Australian Taxation Office; and having been informed that:
Tax Practitioners Board
Campbell