Tax Practitioners Board v Li

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 8 of 2014

JUDGE: EDMONDS J DATE OF ORDER: 17 MARCH 2015 WHERE MADE: SYDNEY

1. Between August 2011 and September 2011, in relation to the 24 taxpayers named in Schedule A in the statement of claim, and the 66 taxpayers named in Schedule B in the statement of claim, the respondent, by lodging income tax returns in respect of each of the taxpayers, while a registered tax agent, which lodgements were: (a) accompanied by explicit acknowledgments to the effect that; or (b) made subsequent to a prompt that the return should not be lodged unless; (i) the return had been prepared in accordance with the information supplied by the taxpayer; (ii) he had received a declaration from the taxpayer stating that the information provided to him was true and correct; and (iii) he was authorised by the taxpayer to lodge the return on behalf of the taxpayer; when in fact, in respect of each return, none of those things in (b) above was the case, in each case recklessly made a statement to the Commissioner of Taxation ("Commissioner") which was false, incorrect and/or misleading in a material particular, in contravention of s 50-20 of the Tax Agent Services Act 2009 (Cth).
2. Between August 2011 and September 2011, in relation to the 24 taxpayers named in Schedule A in the statement of claim, and the 66 taxpayers named in Schedule B in the statement of claim, the respondent by preparing and lodging income tax returns in respect of each of the taxpayers, while a registered tax agent: (a) which returns contained false, incorrect or misleading statements about material facts relating to employment, income, tax withheld amounts and claims for work-related deductions; and (b) in circumstances where: (i) the respondent had no dealings with any of the taxpayers regarding the preparation of any tax return and had not received declarations from the taxpayers stating that the information provided to the respondent was true and correct; (ii) the information provided to the respondent for the purpose of preparing the returns included amounts for tax withheld amounts that were significantly more than would in fact be the case given the applicable taxation rates; and (iii) the respondent had access to, and did not take steps to access, information held by the Australian Tax Office by which he could have checked the veracity and accuracy of information supplied to him for the purpose of preparing the returns; in each case recklessly made a statement to the Commissioner that was false, incorrect or misleading in a material particular, in contravention of s 50-20 of the Tax Agent Services Act 2009 (Cth). THE COURT ORDERS THAT:
3. The respondent pay the applicant's costs of the proceeding as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 8 of 2014

JUDGE: EDMONDS J DATE: 17 MARCH 2015 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By an originating application filed on 7 January 2014 the applicant, the Tax Practitioners Board ("Board"), seeks two declarations against, and the imposition of, a pecuniary penalty on the respondent, Cheng Cheng Li ("Mr Li"), in respect of contraventions of s 50-20 of the Tax Agent Services Act 2009 (Cth) ("Act"). Insofar as the application seeks the imposition of a pecuniary penalty on Mr Li, it is made pursuant to s 50-35 of the Act, which provides: Application for order (1) Within 4 years after you contravene a civil penalty provision, the Board may apply on behalf of the Commonwealth to the *Federal Court for an order that you pay the Commonwealth a pecuniary penalty. Court may order you to pay pecuniary penalty (2) If the *Federal Court is satisfied that you have contravened a civil penalty provision, the Federal Court may order you to pay to the Commonwealth, for each contravention, the pecuniary penalty that the Federal Court determines is appropriate (but not more than the maximum amount specified for the provision). Conduct contravening more than one civil penalty provision (3) If conduct contravenes 2 or more civil penalty provisions of this Act, proceedings may be instituted against you in relation to the contravention of any one or more of those provisions. However, you are not liable to more than one pecuniary penalty in respect of the same conduct. 2 Section 50-20 of the Act provides that: You contravene this section if: (a) you are a *registered tax agent or BAS agent; and (b) you: (i) make a statement to the Commissioner; or (ii) prepare a statement that you know, or ought reasonably to know, is likely to be made to the Commissioner by an entity; or (iii) permit or direct an entity to do a thing mentioned in subparagraph (i) or (ii); and (c) you know, or are reckless as to whether, the statement: (i) is false, incorrect or misleading in a material particular; or (ii) omits any matter or thing without which the statement is misleading in a material respect. Civil penalty: (a) for an individual - 250 penalty units; and (b) for a body corporate - 1,250 penalty units. 3 In his amended defence filed on 1 September 2014, Mr Li admitted that he had contravened s 50-20 by making statements to the Commissioner, as a registered tax agent, reckless as to whether the statements were false, incorrect or misleading in a material particular.

Statement of Agreed Facts 4 A statement of agreed facts ("SAF") was filed on 23 September 2014 in the following terms: The following facts are agreed between the parties pursuant to s191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding only. This agreement is not to be taken as containing admissions by [Mr Li] to these facts outside that context. BACKGROUND 1. Mr Cheng Cheng Li ("Mr Li"), also known as Tom Lee, became a registered tax agent under the Tax Agent Services Act 2009 (Cth) ("TASA") on 24 November 2010. His registration was terminated by the Applicant on 20 August 2013. 2. At the relevant time, Mr Li was an individual registered tax agent with an office at Level 2, Suite 54, 48-50 George Street, Parramatta, New South Wales. He traded under the business name "Accountant Professional Services". 3. Mr Li has not before been the subject of any complaint to the Tax Practitioners Board ("Board"), or the Australian Taxation Office ("ATO"). 4. At all material times the ATO operated and managed a web based database system named the Tax Agent Portal ("the Portal") via the ATO's website, which gave registered tax agents 24 hour on-line access to its information, functions and services. Mr Li was a sole practitioner and the only person within his business with access to the Portal. 5. Mr Li was approved and registered to use the Electronic Lodgment Service ("ELS") on 27 January 2011. Mr Li's ELS approval number, password (which changed periodically), and ATO access codes made up his unique identification, enabling him to use the ELS while a registered tax agent. These credentials were maintained by Mr Li at all relevant times. 6. The ELS is an electronic exchange data system hosted by the ATO which allows the transmission and receipt of electronic versions of particular returns and reports, forms and data, to and from the ATO. The main feature of the ELS is its ability to accept the electronic lodgement of income tax returns, as well as other superannuation and tax returns, by registered tax agents. This feature is not available on the Portal. CIRCUMSTANCES IN WHICH [MR LI'S] CONDUCT HAS TAKEN PLACE 7. Mr Li admits the contraventions of s50-20 of the TASA (making false or misleading statements to the Commissioner). 8. In August 2011, a man who introduced himself as Saiful Islam attended Mr Li's office. Mr Islam told Mr Li that he worked for a recruitment agency and produced a business card from ''Kelly Services," which is in fact an established recruitment agency with its own website. 9. Mr Islam asked Mr Li to prepare and lodge income tax returns ("returns") on behalf of a large number of taxpayers. The identities of those taxpayers had in fact been stolen, although it is not alleged that Mr Li was aware of that fact. According to Mr Li in his statements later to the ATO and to the Administrative Appeals Tribunal, Mr Islam wore a suit, conducted himself professionally and was very convincing. Mr Li did not seek to verify Mr Islam's employment with Kelly [S]ervices other than by checking the website for Kelly Services, and did not meet or request to meet or make direct contact with any of the taxpayers referred by Mr Islam. 10. Mr Li agreed to prepare and lodge the returns and asked Mr Islam to provide him with information about each taxpayer, such as PAYG summaries and bank account details. The information was contained in several bundles of documents that were subsequently delivered to Mr Li by one of Mr Islam's associates, a person who called himself "Sam". 11. A few days later, Mr Li was approached in his office by another man who introduced himself as Sunny Rahman and who claimed to work for an employment agency known as "Sunny Employment Services." Mr Rahman also asked Mr Li to prepare and lodge income tax returns on behalf of a large number of taxpayers. The identities of those taxpayers had in fact been stolen, although it is not alleged that Mr Li was aware of that fact. 12. Mr Li agreed to prepare the returns and was provided with documentation by Mr Rahman. 13. In bringing the current proceedings against Mr Li, the [Board] relies on 90 income tax returns ("returns") that Mr Li prepared and lodged, between about mid-August 2011 and 19 September 2011. 14. Mr Li charged his usual fee of $60 for each tax return and received a total of $5,400 in fees for work which is the subject of the proceedings. He did not require either of Mr Islam or Mr Rahman to sign any letter of engagement. 15. According to the documentation that was provided to Mr Li by Messrs Islam and Rahman: 15.1. The majority of the taxpayers had high levels of tax withheld relative to their income and were, on the face of the returns, thereby entitled to refunds. 15.2. Work related deductions of about $300 for expenses relating to laundry and uniforms or shoes were claimed. In the case of Mr Azrin Majeed, the work related deductions exceeded $300. Mr Li lodged returns claiming these deductions. 15.3. There were different bank accounts nominated for the majority of the taxpayers, but in some instances, the same bank accounts were nominated for multiple unrelated taxpayers. Each bundle of documents had different account numbers for each client, but some of the same accounts were used in later bundles of documents. 16. Mr Li queried the level of tax withheld and was told that many of the taxpayers were overseas residents and/or students. Mr Li did not make any inquiries in order to establish the residence status of the taxpayers and, contrary to what he was told by either Mr Islam or Mr Rahman, lodged all 90 returns as residents which had the effect of triggering inflated refunds. 17. Mr Li proceeded to lodge the returns after signed copies had been returned to his office by Mr Islam, Mr Rahman or one of their associates. However, the returns were not signed by the taxpayers. 18. In about the second or third week of September 2011, Mr Li was informed by an ATO officer, Ms Teena Walker, that there was a problem with one of the returns because the relevant taxpayer had attempted to submit their return for the 2011 financial year but were unable to because a return had already been lodged on their behalf by Mr Li. 19. In about October 2011, Mr Li had several telephone conversations with Ms Luini D'Souza from the ATO. Mr Li says he told Ms D'Souza about his discussion with Ms Walker in September and requested that the processing of relevant returns be stopped. He then faxed through two lists of taxpayers' names whose returns he was concerned about. The ATO went on to identify a total of 60 returns that were subsequently stopped at the processing stage and selected for a review. Mr Li says Ms D'Souza Instructed Mr Li not to tell Messrs Islam and Rahman that there was a problem and to try to get more information from them. 20. Mr Li stated in his 14 June 2013 letter to the ATO that he subsequently told Messrs Islam and Rahman that he could not lodge any more returns unless he received copies of the taxpayers' drivers licenses and agreements authorising the intermediaries to arrange for the preparation and lodgement of their tax returns. Messrs Islam and Rahman said they had the information from their clients and would provide it but never did so. 21. Mr Li did not lodge any further returns after this time. 22. The information Mr Islam, Sam and Mr Rahman provided Mr Li, purportedly relating to each of the Schedule C taxpayers (see below), included a false type-written payment summary and, in many cases, handwritten information (sometimes written onto a post-it note) purporting to relate to the Schedule C taxpayers. They did not provide Mr Li with written authorisations from the Schedule C taxpayers that they were claiming to represent. Mr Li did not require either of Mr Islam or Mr Rahman to sign any letter of engagement. 23. [Mr Li] does not have a complete record of the returns lodged for Mr Islam, Mr Rahman and Sam. Schedule C Taxpayers 24. Between August 2011 and September 2011, 90 income tax returns were prepared and lodged by Mr Li in the name of each of the Schedule C taxpayers, being the total taxpayers in Schedules A and B of the Statement of Claim (lodged between about 11 August 2011 and 14 September 11). The returns were for the tax year ending on 30 June 2011 ("the 2011 tax year"). [Mr Li] lodged each of these income tax returns (hereinafter referred to individually as a "Schedule C return" and collectively as "the Schedule C returns") using the Electronic lodgement Service ("ELS"). All of the 90 returns were cancelled by the ATO because the Tax File Numbers ("TFNs") for the actual taxpayers named in the returns had been compromised as they had been used by [Mr Li] without their knowledge (that is, the TFNs were used by [Mr Li] without the actual taxpayers' knowledge). These 90 TFNs were also compromised and, accordingly, cancelled by the ATO. … 26. The Schedule C returns: a. contained information relating to wages, salaries and tax instalment deductions ("TIDs"), which did not accord with the payment summary details reported to the ATO by the relevant employers of the taxpayers; and b. claimed TIDs that were in fact in excess of that to which the actual taxpayers were entitled. 27. The ELS recorded the tax agent details of Mr Li as the details of the tax agent who lodged each of the Schedule C returns. 28. Mr Li acted on the representations of the individuals purporting to act on behalf of the Schedule C taxpayers, that they had the authority to act on behalf of the Schedule C taxpayers for the purposes of preparing and lodging the Schedule C returns using the ELS. 29. At the time Mr Li lodged the income tax returns he either knew that there was a real risk or was grossly indifferent as to whether or not the individuals that attended his office had that authority. 30. Mr Li did not use the pre-filling on the Portal or use the Portal to check the PAYG Payment Summaries and other information such as prior year return information, for the 90 Schedule C taxpayers prior to lodging income tax returns on their behalf. 31. Employers were required to lodge annual reports of their PAYG payment summaries (known as a "PAYG withholding payment summary annual report"), together with originals of their PAYG payment summary statements issued to their employees and others by 14 August 2011. 32. If Mr Li had checked the Portal when preparing and lodging returns after 14 August 2011, being the dates by which employers are required to lodge annual reports of their PAYG withholding payment summaries of their employees to the ATO, it would have alerted him to mismatches between the payment summaries he received and the information on the database (where employers had complied with their statutory obligations). 33. The Portal allowed a registered tax agent to, among other things add or delete a client, update client details (such as their name, address, email address and contact details), view a client's income tax lodgement status and their income tax account balance details, and obtain a pre-generated "pre-filling report" to assist in completing a client's income tax return. 34. The pre-filling report for the 2011 tax year ("pre-filling report 2011") displayed amongst other things: a) a taxpayer client's details (name, sex, Australian residency at date of report, address, phone number and date of birth); b) information from PAYG payment summaries lodged by employers with the ATO; and c) particular prior year income tax return details (based on the income tax return lodged for the previous tax year), including spouse as at the previous 30 June (name, sex. date of birth) if a spouse tax offset had been claimed in the previous year's income tax return. 35. The Schedule C returns prepared by Mr Li: a. largely returned assessable income between $27,000 and $32,000; b. leading to $3,068 and $3,744 tax payable; and c. had TIDs between $6,000 and $8,000. 36. The TIDs that Mr Li declared in each of the Schedule C returns was significantly higher than the tax that would ordinarily have been deducted by the employer for the amount of wages declared in the returns. 37. On 13 October 2012 an interview was conducted on a voluntary basis at Mr Li's office, attended by Mr Gong and another ATO officer, Ms Jeevachandran. 38. On each of the 90 occasions Mr Li lodged a Schedule C return, Mr Li admits that on or about the lodgement date set out in Schedule C for that return, he recklessly made false, incorrect or misleading declarations in the tax agent certificate in respect of that return because: (a) The Schedule C return was not prepared in accordance with information supplied by the corresponding Schedule C taxpayer; (b) Mr Li had not received a declaration from the Schedule C taxpayer stating that the information provided to Mr Li was true and correct; and (c) Mr Li was not authorised by the Schedule C taxpayer to lodge the corresponding Schedule C return on behalf of that Schedule C taxpayer. 39. The 90 false tax agent certificates constitute 90 contraventions of s 50-20 of the TASA. 40. Apart from the declarations made in the tax agent certificate for each of the Schedule C taxpayers, Mr Li also admits that he was reckless in making statements to the Commissioner in each of the 90 Schedule C returns that were that were false, incorrect or misleading in that they falsely or incorrectly stated the name, identity or details of the taxpayer, based on the information provided to him by the individuals who attended his office, relating to each Schedule C taxpayer. BENEFIT OBTAINED BY [MR LI] 41. Mr Li has received a financial benefit (the fees charged) in respect of each of the 90 occasions he prepared and lodged the Schedule C returns, as set out in the Statement of Claim. Mr Li charged his usual fee of $60 for each return and received a total financial benefit by virtue of the contraventions of $5,400.00 ($60 for each return x 90). THE CONSEQUENCES OF THE CONTRAVENING CONDUCT FOR THE COMMONWEALTH AND THE 90 SCHEDULE C TAXPAYERS 42. Mr Li's conduct has contributed to loss being occasioned to the Commonwealth of Australia ("the Commonwealth"), and inconvenience and delay to the Schedule C taxpayers. 43. Mr Li's conduct resulted in the affairs of genuine taxpayers having been compromised by the fraudulent use of their TFNs. The Schedule C taxpayers were required to obtain new TFNs, and in some cases were required to make several visits to an ATO shopfront to verify their identity and to obtain a new TFN. In some cases the Schedule C taxpayers faced delay in receiving their new TFN, as a return had already been lodged in their name by Mr Li on the basis of the fraudulent information provided to him by the individuals who attended his office. This resulted in delays in their refunds being issued. 44. Mr Li's conduct, in lodging the Schedule C returns containing false information, contributed to a loss to the Commonwealth in the amount of $445,917.27 through the payment of refunds to which were not, in fact, payable. … THE CONSEQUENCES OF THE CONTRAVENING CONDUCT FOR [MR LI] 46. On 11 January 2013, the [Board] commenced a formal investigation of Mr Li's conduct for possible contraventions of the TASA. On 31 May 2013 a draft submission to the Conduct Committee of the [Board] ("the Board Conduct Committee"), which outlined evidence obtained during the course of the [Board's] investigation, and included the material to be considered by the Board Conduct Committee, was sent to Mr Li. 47. On 14 June 2013 Mr Li responded to the draft submission by letter. 48. By a letter dated 16 July 2013 the [Board] notified Mr Li that inter alia the [Board] was satisfied Mr Li had breached subsection 50-20 of the TASA and that the [Board] had decided to apply to the Federal Court for an order that Mr Li pay a pecuniary penalty under Subdivision 50-C of the TASA. 49. On 11 July 2013, Mr Li was informed by the Board that: (a) In accordance with subsection 60-125{2) of the TASA, Mr Li's registration as a tax agent was terminated under paragraph 40-5(1)(b) of the TASA; and (b) Pursuant to subsection 40-25(1) of the TASA, Mr Li may not apply for registration under the TASA for a period of three years from the date the termination of his registration took place. 50. On 20 August 2013, Mr Li's registration as a tax agent was terminated. 51. On 9 August 2013 Mr Li subsequently filed proceedings in the Administrative Appeals Tribunal seeking review of the [Board's] decisions set out above. The Tribunal affirmed the decisions of the [Board] to terminate Mr Li's registration as a tax agent, to set a period of three years during which Mr Li may not apply for registration and to reject his application to renew his registration. 5 By way of clarification, the reference in para 21 of the SAF to "after that time" is a reference to the time of Mr Li's telephone conversations with Ms Luini D'Souza in late September/early October 2011 (paras 36 to 41 of Ex A), not to the date of his letter to the ATO of 14 June 2013 (para 20 of the SAF).

Objections to Other Evidence Sought to be Relied On 6 Senior counsel for Mr Li sought to read, over objections by the Board's representative, two affidavits sworn by Mr Li: the first sworn 28 September 2014, which I marked Ex A, and the second sworn 10 December 2014, which I marked Ex B. I indicated that I would take Exs A and B into evidence subject to the Board's objections which I would rule on as part of these reasons for judgment.

Exhibit A: Mr Li's affidavit sworn 28 September 2014 7 The Board's objection to Ex A was to the reading of paras 10 to 58 "to the extent that it traverses the plea"; and that those paragraphs amount "more to a victim impact statement than an acknowledgment of the elements of the contravention": T 4.41-4.46 8 The Board's representative was only able to point to one paragraph, para 54, as allegedly "traversing the plea". It read: I never intended to act dishonestly or to do anything to assist in the commission of the fraud. The relevant pleas are to be found in paras 38 and 40 of the SAF and, in my view, what Mr Li deposes to at para 54 of Ex A, in particular reading the last two words "the fraud" as "a fraud", does not traverse those pleas. 9 The other objection, that the relevant paragraphs amount "more to a victim impact statement" is essentially a relevance objection, but I regard many of paras 10 to 58 as being relevant to the issue of quantum of penalty. 10 In any event, the Board's representative was afforded the opportunity to cross-examine Mr Li on this material, an opportunity of which he availed himself. 11 I am therefore of the view that the whole of Ex A should be allowed into evidence, particularly bearing in mind my ruling that insofar as there is any affidavit evidence relied on, or any oral evidence that emerged, from either side, which was inconsistent with the SAF, the SAF was paramount and was to prevail.

Exhibit B: Mr Li's affidavit sworn 10 December 2014 12 This is only a very short affidavit of two paragraphs in which Mr Li seeks to clarify paras 26 and 27 of Ex A. It was objected to on the basis that it raised "a new topic", but having regard to the considerations referred to in [10] and [11] above in relation to Ex A, I have concluded that Ex B should be allowed into evidence.

Exhibit A 13 Contrary to the submissions of the Board, most of Ex A is relevant and I propose to set it out in full, although only one or two of the annexures. 14 Exhibit A reads: Background 1. I am 56 years old. 2. I also so go by the name Tom Lee. 3. I was born in Swatow in Guangdong, China. 4. My occupation in China was a high school teacher. 5. I came to Australia in January 1990. I studied accounting at TAFE and Macquarie University. 6. Between 1999 and 2006 I worked as an accountant for Naamoro Aboriginal Employment Services. 7. In 2002 I became a member of the Institute of Public Accountants . 8. From 2006 to 2008 I worked for UCG Tax Pty Ltd. I later moved to an accounting firm called Prompt Accounting, where I worked from 2008 to 2010. 9. I became a registered tax agent on 24 November 2010. I started a business known as "Accountant Professional Services" and began operating as a sole practitioner out of a small office on George Street in Parramatta. Falling victim to fraud 10. In August 2011, a man walked into my office and introduced himself as Saiful Islam. I had never seen or spoken with Mr Islam before. 11. Mr Islam said words to me to the following effect: Islam: My name is Saiful Islam. I Work as a recruitment officer for a recruitment agency called Kelly Recruitment Services. My role is to help my clients find employment and assist them with other services, such as finding accommodation and lodging their tax returns. I would like you to prepare and lodge tax returns on behalf of my clients. 12. Mr Islam was dressed in a suit and very well spoken. His conduct was very professional. He handed me a business card, which appeared to be professionally printed and contained the name "Kelly Services." Annexed to this affidavit and marked "CCL1" is a copy of the business card that I received from Mr Islam. 13. We then exchanged words to the following effect: Me: In order to prepare the returns, I will need the following information about each client: their full name, date of birth, address, tax file number, bank account details, occupation, PAYG payment summaries, the details of any other income and the details of any work-related expenses, including copies of invoices and receipts if those expenses are over $300. My fee will be $60 per return. Islam: Yes, I have all of that information. Someone from my office will provide it to you shortly. 14. Mr Islam then left the office. 15. When Mr Islam was gone, I used my computer to look up the website for Kelly Services that was printed on his business card. I found the website and confirmed that the address for the company was the same as the address that appeared on Mr Islam's business card. Annexed to this affidavit and marked "CCL2" is a print-out of the website for Kelly Services. 16. The Kelly Services website, the business card and Mr Islam's professional manner and attire all led me to believe that he did in fact work for Kelly Services. 17. A few days after Mr Islam's visit, another man came to my office and introduced himself as Sunny Rahman. I had never seen or spoken with Mr Rahman before. 18. Mr Rahman said words to the following effect: Rahman: My name is Sunny Rahman. I work for an employment agency. We have agreements with our clients to help them find employment and assist them with other services, such as finding accommodation and lodging their tax returns. I have a number of clients who need to have their tax returns prepared and lodged, are you able to do it? 19. We then exchanged words to the following effect: Me: In order to prepare the returns, I will need the following information about each client: their full name, date of birth, address, tax file number, bank account details, occupation, PAYG payment summaries, the details of any other income and the details of any work-related expenses, including copies of invoices and receipts if those expenses are over $300. Rahman: OK, I will provide all of that. 20. Within a few days of attending my office, Messrs Islam and Rahman returned separately with some of paperwork relating to their clients for the tax returns. They came back to my office on several occasions to drop off more documents. 21. I reviewed the documentation that had been provided by Messrs Islam and Rahman. It contained all of the information about each taxpayer that I had requested. The taxpayers' names appeared to match the names on the bank accounts and the bank account numbers appeared to be different. It looked as if the information had been provided by genuine taxpayers. 22. I thought that the only way that Messrs Islam and Rahman could have been in possession of personal information relating to a large number of taxpayers was if the taxpayers had willingly provided that information to their employment agencies. I also thought that Messrs Islam and Rahman hoped to get a low fee by having one agent prepare multiple returns. 23. I went ahead and prepared the returns that had been submitted by Messrs Islam and Rahman. 24. I charged my normal rate of $60 per tax return. 25. Most taxpayers had claimed no more than $300 in work-related deductions, with some exceptions. Since the ATO only requires records to be submitted in respect of work­ related deductions over $300, I thought there was no need to ask for receipts for deductions below $300. But I did ask Mr Islam and Mr Rahman separately to provide copies of receipts or invoices in relation to claimed deductions over $300. If the requested receipts were not provided, I reduced the corresponding deductions to nil or less than $300. This meant that for some taxpayers, there was a difference between the amount of the deduction appearing in the information that was provided to me by Mr Islam or Mr Rahman and the amount of the deduction that was actually claimed in the final tax return that I prepared and lodged on the taxpayer's behalf. 26. I noticed that a high level of tax had been withheld for each taxpayer according to the PAYG summaries that had been provided to me. I raised this separately with Mr Islam and Mr Rahman, in words to the following effect: Me: The PAYG summaries show that there has been quite a high level of tax withheld for each taxpayer. Why is that? lslam/Rahman: These taxpayers are non-residents for tax purposes. A lot of them are foreign students. 27. After speaking with Messrs Islam and Rahman, I used the ATO website to check the applicable rates of withholding tax for non-residents. The rates seemed consistent with the amounts of tax that had been withheld in relation to each taxpayer. 28. Once the draft returns had been completed, I printed a copy of each tax return and additional copies of the first and last page, which had to be signed by the taxpayer. I gave the documents to Messrs Islam and Rahman so that they could arrange for their clients to sign the papers. 29. I lodged the tax returns after Messrs Islam and Rahman had separately returned the signed copies to me and paid my fees. 30. In about early September 2011, I received two or three telephone calls from different people at the ATO. On one of the calls I was asked to confirm a taxpayer's name. On a separate call I was asked to provide a copy of a taxpayer's PAYG summary. I complied with these requests and the relevant returns were processed by the ATO. 31. In about the second or third week of September 2011, I received a telephone call from Ms Teena Walker at the ATO. Ms Walker advised me one of the taxpayers whose return I had already lodged had tried to lodge another return for the 2011 financial year. 32. After speaking with Ms Walker, I logged into the ATO's tax agent portal and discovered that some of the PAYG summaries that had been provided to me by Messrs Islam and Rahman were not recorded on the ATO's system. 33. I had not logged into the portal previously for several reasons. First, I thought the information that had been provided to me about each of the taxpayers, such as PAYG summaries, bank account details and so on, was very clear. Secondly, none of the taxpayers had declared any other income aside from the income stated in their PAYG summary, and I had asked Messrs Islam and Rahman to provide me with the details of any other sources of income that was being claimed by the taxpayers. Thirdly, on the information that had been provided to me, none of the taxpayers were entitled to receive any Centrelink payments because, as I understood from Messrs Islam and Rahman, the taxpayers were mostly overseas students. 34. Moreover, in my experience, the information displayed in the ATO portal was not always reliable. For example, the portal might record a taxpayer as having received Centrelink payments when in fact they had not. On other occasions, a client would tell me that they had received income in the form of interest, but the relevant field in the portal would simply say "no details are recorded check with client before lodging." For these reasons, I would typically check the portal only if I had doubts about the accuracy of the information that had been supplied to me by a taxpayer, or if I needed more information. 35. I asked my office assistant, Mr Hoai Nguyen, to look up the telephone numbers for the relevant employers on the internet. Itchen attempted to speak to those employers by telephone. Some of the people I spoke to said they would check their files and call me back, or have a manager call me back. I never heard back from any of the employers I contacted. 36. I contacted the ATO and spoke to several officers, none of whom were willing or able to provide me with any assistance. 37. Eventually I spoke to Ms Luini D'Souza from the ATO. I explained how I had been asked by Messrs Islam and Rahman to prepare tax returns on behalf of their clients and how they had provided me with information about each taxpayer. I also told Ms D'Souza about the call that I had received earlier from Ms Walker and my concerns regarding the missing employer information. I suggested to Ms D'Souza that the ATO hold off on processing the tax returns that I had lodged. 38. I sent three fax messages to Ms D'Souza containing lists of taxpayer names, tax file numbers and bank account details. Annexed to this affidavit and marked "CCL3" are copies of the faxes that I sent to Ms D'Souza in about late September or early October 2011. 39. During one of our conversations, Ms D'Souza said words to me to the following effect: D'Souza: Do not inform Mr Islam or Mr Rahman of the situation. Please try to get more information from them to help the ATO uncover the fraud, 40. Ms D'Souza also provided me with the telephone number for her direct line, which I used to speak with her on several occasions. 41. After speaking with Ms D'Souza, I stopped lodging any more tax returns. 42. I was worried about confronting Messrs Islam and Rahman because I thought they might try to threaten me or my family. I decided nonetheless to follow the ATO's request to attempt to obtain more information from them. 43. In about late September or early October 2011, I telephoned each of Mr Islam and Mr Rahman and said words to the following effect: Me: I want you to provide me with a copy of each taxpayer's drivers license and a copy of the agreement that you have with each client authorising you to lodge tax returns on their behalf. 44. Mr Islam responded to the following effect: Islam: Aim going on holidays. My colleague Sam will bring all the information you need to you. 45. I had a conversation with Mr Rahman to the following effect: Rahman: Some people do not have a driver's license. Me: In place of a driver's license, you can provide me with a copy of the taxpayer's passport. Rahman: I promise I will bring all the information you need next time. 46. Neither Mr Islam nor Mr Rahman provided me with the requested Information. 47. Mr Rahman came to my office during the evening a few days later and we had a conversation to the following effect: Rahman: Did you lodge the tax returns I gave to you last time? Me: No, as I had not gotten the information you had promised to give me. 48. I did not see or speak to either of Mr Islam or Mr Rahman again. 49. On 10 October 2011, I received a telephone call from Mr Run Gong of the ATO. Mr Gong said words to the following effect: Gong: I would like to make an appointment to see you at your office. 50. Mr Gong came to my office with another ATO officer, whose name I recall being Angeline, on 13 October 2011. Mr Gong introduced himself and then asked me some questions, such as how I prepared and lodged tax returns, how much I charged and whether l saw clients face-to-face when preparing their tax returns. I responded to all of Mr Gong's queries. 51. I also told Mr Gong about Messrs Islam and Rahman. I told Mr Gong everything that had happened and provided him with all the documents that were in my possession. I cooperated fully with every request that was made of me. 52. On 17 December 2011 I received a letter from the ATO thanking me for my cooperation with their investigation and advising me to exercise greater care in verifying the identities of future clients. Annexed to this affidavit and marked "CCL4" is a copy of the ATO's letter dated 15 December 2011. 53. I now know that I was the victim of a sophisticated scam perpetrated by Messrs Islam and Rahman against the ATO. 54. I never intended to act dishonestly or to do anything to assist in the commission of the fraud. 55. I deeply regret having been caught up in the scam. It has cost me my only source of income on which my entire family and extended family was dependent. I have worked very hard since I arrived in Australia to acquire the skills and experience to conduct a business through which I could support my family. I have now lost not only that business, but the ability to work in any of the areas for which I have training and experience. 56. It has cost me dearly in terms of my good reputation in the fields in which I have worked, with the cancellation of my tax agent registration now being public on the Internet. It has embarrassed me in front of all of my professional peers and colleagues that I have been found not to be a fit and proper person to be a tax agent. It has embarrassed me in front of my former clients, who l have had to send away to other tax agents and who are unlikely ever to return to me once the period of my cancellation expires. At that point I will be 58 years old. 57. It has also caused me great embarrassment, as well as stress and anxiety, with my family. My children, who are in high school, have the shame of a father who is unemployed. I have difficulty paying the additional expenses for them at school, and in giving them the kinds of things that other kids their age have. For example, our 13- year-old daughter, who is at North Sydney Girls High School, needed a computer for her school work, which I could not afford. One of the other parents gave me a computer, which I have not told my daughter about in order to avoid embarrassing her. I could only pay the parent for the computer after I received money from Centrelink. 58. Prior to the incidents arising out of my involvement with Messrs Islam and Rahman, I had never been the subject of any complaint or investigation before the Tax Practitioners Board or any other professional association. Current financial situation Family dependants 59. I am currently living in my family home in West Pennant Hills with my wife, two children, mother and parents-in-law. 60. My children are aged 13 and 15. Both are currently attending state high schools. 61. My wife does not work because she spends all of her time caring for her father and my mother at home. 62. My mother is 82 years old and suffers from dementia. She is unable to look after herself and requires 24 hour care. Annexed to this affidavit and marked "CCL5" is a copy of a letter from Dr Allan Mak regarding my mother's condition. 63. My father-in-law is 79 years old and in extremely poor health. He has osteoarthritis, diabetes and Alzheimer's disease. He is unable to walk unassisted and requires 24 hour care. Annexed to this affidavit and marked "CCL6" is a copy of a Centrelink medical report concerning his condition. 64. At the time of swearing this affidavit, my father-in-law was recently diagnosed with lung cancer. He was recently admitted to hospital. Annexed to this affidavit and marked "CCL7" is a copy of a letter from Hornsby Hospital concerning my father-in-law's recent treatment. I have also been informed by Centrelink that I am eligible to apply for a carer payment because of my father-in-law's condition. I have sent an application form to Centrelink and have not yet received a reply at the time of swearing this affidavit. 65. My parents-in-law are currently ineligible to receive any Centrelink benefits because they only migrated to Australia about 11 months ago. Annexed to this affidavit and marked "CCL8" are copies of my parents-in-law's passports and a letter from the Department of Immigration and Citizenship confirming their receipt of permanent visas to Australia. 66. My wife, children, mother and parents-in-law are all financially dependent on me as the only income-earner in the family. Efforts to find employment 67. I have been unable to find work since my registration as a tax agent was cancelled in August 2013. I had to turn away former clients who still wanted me to prepare their income tax returns because I could no longer practise as a registered tax agent. 68. A short time after my registration was cancelled, I found out that my membership of the Institute of Public Accountants will be terminated. This will make it impossible to find work as an accountant performing regular bookkeeping tasks. 69. Any accounting or bookkeeping job that I apply for I will have to tell about my time as a tax agent, and the cancellation of my registration. As someone who has been cancelled for not being a fit and proper person, the chances of getting work in accounting or bookkeeping seem to be very small. I have applied for many such jobs since my cancellation but have not been successful. In order to maintain Centrelink payments, I must apply for at least six jobs each fortnight, which I have done. On most occasions I have in fact applied for more than six jobs each fortnight. 70. Because I have not been able to get work in accounting or bookkeeping, I have been applying for other jobs. I have no other experience, except in accounting and bookkeeping, and have not been able to get any other job. In about May, I applied for a job at Brighting International Pty Ltd in Rhodes as a warehouse assistant and cleaner. The job was advertised in the newspaper. At the interview, I was told that I was too old and not strong enough to do the job. 71. I only received one other phone call from a potential employer who asked me why I had stopped running my business. They never offered me a job. 72. I am currently receiving unemployment benefits from Centrelink. Assets and income 73. Prior to the cancellation of my registration as a tax agent, my wife used to work for me as an administrative assistant. Our combined net income from the business was approximately $60,000 per annum. After August 2013, we had to close the business. Annexed to this affidavit and marked "CCL9" are copies of notices of assessment of income tax for me and my wife for the income year ending on 30 June 2013. 74. My family's current sources of income comprise the following: (a) my Centrelink New Start allowance, which is approximately $238.50 per week; (b) my wife's Centrelink New Start allowance, which is approximately $238.50 per week; (c) my wife's carer allowance for her father, which is approximately $59.10 per week; and (d) my mother's pension, which is approximately $400 per week. 75. My wife and I own our family home, which we purchased in about 2001 for $390,000. I estimate that its current market value is about $720,000. We still owe about $137,808 on the mortgage to ING. I approached some mortgage brokers to refinance the loan in about May, but all of them refused to do so because I have no income to make repayments. 76. My only other assets comprise: (a) a 2003 Toyota, which has a market value of approximately $2,500; (b) Telstra shares with a value of approximately $9,000; (c) AMP shares with a value of approximately $1,500; and (d) cash deposits in bank accounts with the National Australia Bank, Westpac and Citibank totalling approximately $736.65 as at August 2014. 77. Annexed to this affidavit and marked "CCL10" are copies of account statements from Westpac, the National Australia Bank and Citibank. Liabilities 78. Annexed to this affidavit and marked "CCL11" is a spreadsheet that I prepared listing my family income and expenses. My current liabilities comprise: (a) mortgage repayments of approximately $242 per week; (b) council rates; (c) water and electricity bills; (d) telephone and internet expenses; (e) petrol; (f) car registration and insurance; (g) food and groceries; (h) medicine; (i) dental treatment and health insurance ; (j) clothing and footwear; (k) schooling and stationery expenses; and (l) general household expenses. 79. In addition to the liabilities listed above, I also owe: (a) Resolve Litigation Lawyers $8,748 in legal fees; and (b) the Australian Taxation Office $1,087.10 in unpaid income tax. 15 Annexure "CCL4" to Ex A reads: Tax agent compliance visit Summary of Issues Dear Mr Li Thank you for your time and cooperation during our visit on 13 October 2011. Our discussions focussed on the issue of identity fraud. You had lodged a large number of 2011 returns which were brought to you by certain representatives. The relevant payment summaries appear to be fictitious. We recommend that you improve your return preparation process and make sufficient inquiries and checks regarding the identities of your clients. More information If you have any questions, please phone 13 28 69 between 8.00am and 5.00pm, Monday to Friday, and ask for Run Gong on extension 43747. Yours faithfully Erin Holland Deputy Commissioner of Taxation 16 Annexure "CCL11" to Ex A reads: INCOME EXP P/L Week Annual Week Annual tom new start 238.5 12402 loan 242 12584 wife new start 238.5 12402 rate 31 1612 wife carer allowance 59 3068 water 50 2600 mum give fr her pension 400 20800 electricity 38 1976 family tax benefit 234.5 12194 tel & internet 18 936 0 petrol 50 2600 0 car reg/insu 38 1976 0 food 560 29120 0 medicine 34 1768 0 dental treatment/ 70 3640 0 medical insurance 37 1924 0 cloth & shoes 35 1820 0 school/stationery 60 3120 0 houseware 22 1144 0 0 0 Total 1170.5 60866 1285 66820

Exhibit B 17 Exhibit B reads: 1. I refer to paragraphs 26 and 27 of my first affidavit sworn 28 September 2014. I wish to clarify the matters set out in paragraph 27. 2. Messrs Islam and Rahman both told me that the level of tax withheld for each taxpayer was due to their status as overseas residents. The information that was supplied to me by the intermediaries indicated that each taxpayer had lived and worked in Australia for one year or more. On that basis, they qualified as Australian residents for tax purposes. This was reflected in the draft tax returns that I prepared.

The Board's Written Submissions ON Penalty 18 The Board's written submissions on penalty restated a number of the facts and circumstances covered in the SAF and there is no utility in repeating them under this head. The same applies to those parts of the Board's written submissions on penalty which refer to matters dealt with by Mr Li in Ex A, which are reproduced in [14] above. I will therefore confine my review of the Board's written submissions to a summary of the arguments relied on by the Board for its ultimate contention that it would be appropriate to impose a total penalty of approximately $223,000, an amount which the Board submits reflects the amount of loss to the Commonwealth as a result of Mr Li's conduct: 50% of the Commonwealth's loss of $445,917.27; and a penalty of appropriate deterrent value. 19 At the outset the Board submitted that the contraventions were serious, numerous (180 contraventions - two in respect of each of 90 income tax returns) and sustained over a five week period. It was further submitted that the contraventions were motivated by greed: through them, Mr Li personally obtained income ($5,400) for preparing and lodging 90 income tax returns. Finally, it was submitted that in doing so, Mr Li caused direct financial loss to the Commonwealth in the amount of $445,917.27 through the payment of income tax refunds which were not, in fact, payable. 20 The Board's submissions accurately set out the regulatory framework established by the Act - the objective of the Act, the Board's objective, the processes by which the Board goes about achieving the Board's objective and relevant provisions of the Act directed to that end. 21 The Board made the point that unlike some other Commonwealth legislation containing civil penalty provisions, the Act does not specify factors to be taken into account when determining the appropriate penalty. 22 The Board submitted that the contraventions were not isolated or aberrant. They were deliberate. 23 In addition to the resulting loss to the Commonwealth, the Board made the point that Mr Li's conduct resulted in the affairs of genuine taxpayers being compromised by the fraudulent use of their tax file numbers ("TFNs"). The Schedule C taxpayers were required to obtain new TFNs, and in some cases were required to make several visits to an ATO shopfront to verify their identify and to obtain a new TFN. In some cases the Schedule C taxpayers faced delay in receiving their new TFN, as a return had already been lodged in their name by Mr Li on the basis of the fraudulent information provided to him by the individuals who attended his office. This resulted in delays in their refunds being issued. 24 The Board made the following further points concerning Mr Li's recklessness: (1) In accepting information in the circumstances that he did, Mr Li never did anything to attempt to verify the identities of the taxpayers or the accuracy of any of the information provided to him and included in the returns. He did not have any contact with or meet with any of the Schedule C taxpayers. (2) Mr Li's only requirements of Mr Islam and Mr Rahman were the minimal information needed to complete the returns. Some of the information provided was handwritten information on paper that was photocopied onto a false payment summary. Further, the only identification provided by Mr Islam and Mr Rahman was a business card. Mr Li found Mr Islam to be trustworthy on the basis of his attire, because he wore a suit, and because he provided a business card. Mr Li's only attempt to verify Mr Islam's identity was to check the website for "Kelly Services". (3) Mr Li did not use the pre-filling on the Tax Agent Portal ("the Portal") or use the Portal to check the PAYG Payment Summaries and other information such as prior year return information, for the Schedule C taxpayers prior to lodging income tax returns on their behalf. In some cases the actual taxpayer's employer had reported the true payment summaries to the ATO. Had Mr Li checked the Portal just once, he would have been put on notice that the payment summary he had been given was false or likely to be so. (4) Mr Li did not apply an inquiring mind in the face of significant and consistent discrepancies or concerns that should have alerted him to the intermediaries' lack of integrity and the validity of the payment summaries and information they provided him. He merely saw an opportunity to increase his revenue. Further, Mr Li considered he had no role to play in the self­assessment system; it was for the ATO systems to reject any attempted fraud, and he merely was there to provide the information to the system. This is a fundamental misunderstanding of the self-assessment system. Mr Li has not demonstrated any insight into the fact that his accepting commercial profits, without any enquiry into circumstances a reasonable tax agent would have found suspicious, and his lax practices, comprises conduct falling well short of that required of a registered tax agent. 25 The Board made the point that its case was not put on the basis Mr Li knowingly lodged false returns. Rather the Board submitted that Mr Li closed his eyes and ears to obvious features of the circumstances in which the information that formed the basis of the returns came to him, and that those circumstances should have prompted further inquiry which, if pursued, would have revealed the falsity of that information. Indeed, the Board submitted that Mr Li deliberately refrained from asking questions and making inquiry, lest he learn matters he did not want to know. 26 The Board further submitted that Mr Li's behaviour shows that he was also content to recklessly provide false information to the ATO. Mr Li made inadequate inquiries of the people providing him with the information to prepare the returns, and in doing so, allowed himself to be used as a mere conduit for the provision of inaccurate information to the ATO. The Board, the ATO and the public, so the submission went, expect more than this from a tax agent. The self-assessment system requires accurate information to be provided to the ATO, and for tax agents to do all they can to ensure that the information their clients provide is accurate. Tax agents need to ask clients hard questions, scrutinise the answers and form a professional judgment as to whether what they are being told is reliable. According to the Board, there is no room for tax agents who do not understand these simple but fundamental propositions. 27 The Board acknowledged that it has no record of Mr Li ever having engaged in any similar conduct in the past and that the absence of any prior wrongdoing is a mitigating factor. 28 The Board submitted that it is clear that capacity to pay will ordinarily be of limited relevance. Indeed, in Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR 42-091 at [11], the Full Court emphasised the pre-eminence of general deterrence - even if the imposition of a penalty would lead to the financial ruin of a contravener. This has been followed in relation to the Corporations Act 2001 (Cth) (see Australian Securities & Investment Commission v Healey (No 2) (2011) 196 FCR 430 at [122] - [124] per Middleton J). Consistent with this principle, the Court has frequently imposed significant penalties upon impecunious wrongdoers, including companies in liquidation (Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liq) [2010] FCA 597), bankrupt individuals (Secretary v PNP at [58-59] and Australian Securities and Investment Commission v Loiterton & Ors (2004) 50 ACSR 693 at [47]-[54], [67]-[73]), wrongdoers who otherwise do not have capacity to pay the penalty imposed (Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at [44]-[47], [57]-[58]; Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) (2004) ATPR 41-983 at [20]-[25] and Australian Communications and Media Authority v Clarity1 Pty Ltd & Anor (No 2) (2006) 155 FCR 377 at [40]-[41]), or where there is no evidence as to an individual's financial position (see Australian Competition & Consumer Commission v IN Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 at [28]). 29 Likewise, the Board submitted, the weight attached to questions of "good character", even if able to be raised properly on the evidence, should be 'relegated in importance'. 30 The Board submitted that notwithstanding Mr Li participated in voluntary meetings with the ATO, and had telephone discussions with the ATO in October 2011, to a great extent Mr Li took no steps to rectify the harms he has caused. Mr Li did not notify any of the taxpayers that their TFNs had been compromised, and he continued to lodge returns after being notified by an ATO officer over the telephone in the second or third week of September 2011 that a taxpayer had attempted to submit their return but was unable to because a return had already been lodged on their behalf by Mr Li. Mr Li made no attempt to contact this taxpayer. 31 As to Mr Li's co-operation with relevant authorities, the Board made the following points: (1) While Mr Li voluntarily partook in a compliance interview with an ATO officer on 13 October 2012, and provided the ATO with relevant documents, Mr Li only admitted to the contraventions after the pleadings and the Board's voluminous evidence had been filed, and after prolonged negotiations as to facts relevant to the imposition of a penalty had taken place. (2) Mr Li says that he partook in telephone discussions with an ATO officer and requested that the processing of relevant returns be stopped in October 2011; by this time all of the Schedule C returns had already been lodged, and Mr Li had received payment for their lodgement. (3) Notwithstanding Mr Li's lack of candour, both before the proceedings were commenced and after the pleadings had been filed, his admissions prior to the hearing have resulted in a saving of time and resources. If any discount is to be made for this it can only be a moderate one, particularly considering that the Board had already filed its evidence at the time those admissions were made. (4) Further, Mr Li did not accept the Board's administrative decision to terminate his registration as a tax agent. Mr Li sought review in the Administrative Appeals Tribunal. In a lengthy hearing taking place over three days, the AAT affirmed the Board's decision. The Board incurred significant legal costs in defending its decision. 32 The Board noted that under s 50-35 the Court may order a person who has contravened s 50-20 to pay to the Commonwealth, for each contravention, the pecuniary penalty that the Court determines is appropriate. 33 The Board submitted that in addition to taking into account the factors set out at [19]-[31] above, the appropriate pecuniary penalty to be imposed under s 50-35 should also take into account: (1) The identification of how penalties ought to be attached to multiple contraventions; (2) The central object of imposing penalties, namely, the need to secure deterrence; and (3) The "totality" principle.

Identifying how penalties ought to be attached to the multiple contraventions 34 The Board noted that there were 180 separate breaches of s 50-20, over a period of approximately five weeks. Separate contraventions arising from separate acts should ordinarily attract separate penalties. However, in some cases it may be appropriate to treat the contraventions as forming part of a "course of conduct" when they are closely interrelated. 35 The Board submitted that on the facts of this matter the proper way to approach the matter is for the Court to impose one penalty on a "course of conduct" basis for the 180 contraventions. This one penalty would include: (1) The 90 contraventions relating to the false information in the returns, and the false tax instalment deductions included in the returns by Mr Li, which resulted in false excessive refunds being issued, and (2) the 90 contraventions relating to the falsity of the tax agent certificate contained in each return. Although there were 180 separate contraventions, they resulted from the same motive and circumstances.

The central purpose - deterrence 36 The Board submitted that the central purpose of imposing civil penalties is to ensure compliance with the relevant Act by deterring contraventions, both by the present contravener (specific deterrence) and other would-be contraveners (general deterrence). Both are relevant to the imposition of penalty. 37 The Board noted that there is no statutory set of factors required to be considered by the Court in imposing a pecuniary penalty of appropriate deterrent value but submitted that the following factors ought be considered: (1) The nature and extent of the contravening conduct, including such things as the length of time over which it extended, the number of returns prepared and lodged, the number of false claims made in the returns, the number of false tax instalment deductions ("TIDs") included in each return, and the amounts in question. (2) The loss and harm arising from the conduct, including such things as the loss of Commonwealth funds, and the loss to individual taxpayers. (3) The circumstances in which the conduct took place, including the position and role of the contravener and the degree of recklessness/dishonesty involved, and whether Mr Li was honest in his dealing with the ATO. 38 The Board submitted that the pecuniary penalty imposed, to be sufficient to serve as specific and general deterrence for conduct of this magnitude, should significantly exceed the Mr Li's total financial benefit of $5,400 ($60 for each return x 90). In fact, the most appropriate reference in determining penalty should be the amount the Commonwealth lost as a result of Mr Li's conduct. 39 Applying these considerations as guideposts, and bearing in mind all of the relevant factors discussed above, the Board submitted that the most appropriate reference in determining penalty should be the amount the Commonwealth lost, being $445,917.27.

The "totality" principle 40 The Board noted that the totality principle is another well-recognised principle in the criminal context, where it operates as a "final check" to ensure that the sentences to be imposed on a wrongdoer, considered as a whole, are "just and appropriate". Again, the totality principle has been adopted and applied in the civil penalty context: see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [41]-[46] and [90]-[92]; Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [34] and [60] and Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [25], [73]-[74] and [102]. 41 The Board submitted that consideration of totality will not necessarily result in a reduction: see Mornington Inn at [91] and Plancor at [34]. However, in cases where the Court considers that the total penalties to be imposed are inappropriate the Court should, the Board submitted, alter the final penalties to ensure that they are "just and appropriate". 42 The Board submitted that the starting point figure is $445,917.27. According to the Board, the first question is what, if any, reduction is appropriate having regard to the additional effects of the decision made by the Board that Mr Li cannot re-apply for registration as a tax agent for a minimum of three years from the date his registration was terminated, and that Mr Li admitted to the contraventions prior to the hearing. 43 The Board accepted that so-called disqualification orders can in some cases have serious, deleterious financial and other consequences such that a lower penalty is appropriate. In other cases, where the person is no longer involved in the tax agent industry and there is no evidence that they are likely to do so in the future, the Board submitted that the prohibition will not have significant consequences for that individual - in such cases the disqualification will be "only marginally relevant in relation to penalty". 44 Having regard to all of these considerations, the Board accepted that the amount of $445,917.27 could properly be reduced for totality purposes in the order of 50%. Allowing for all of these reductions, the Board submitted that it would be appropriate to impose a total penalty of $222,958.64. This amount reflects the amount of loss to the Commonwealth as a result of Mr Li's conduct. Further, the basis for such an amount will be clear from the Court's reasons. In particular, when understood against the light of what was considered to be an appropriate starting point penalty, this final total will be a penalty of appropriate deterrent value.

Mr Li's Submissions in Reply 45 Comprehensive written submissions in reply were filed on behalf of Mr Li. By way of introduction, they set out what are said to be: (1) The key facts of contravention; (2) The objective features; (3) The subjective features; and (4) The relevant sentencing principles.

The key facts of contravention 46 The matters dealt with in [47] -[50] below were submitted on behalf of Mr Li. 47 The essential facts of the contraventions are set out in [7]-[23] of the SAF. Put briefly, Mr Li was the focus of a sophisticated fraud, the objective of which was to obtain for its perpetrators fraudulent tax refunds from the Commonwealth. It is common ground that Mr Li was not a knowing participant in the fraud. He charged his usual fee of $60 per return, yielding total receipts of $5,400 in respect of the matters the subject of the contraventions, which occurred within a period of five weeks in mid-2011. He was not the only agent who was the focus of such conduct at that time: see Tax Practitioners Board v Su [2014] FCA 731. 48 The reason why Mr Li did not detect that he was the focus of such a fraud is dealt with in part in the SAF at [9] and is elaborated in Ex A from [10]-[27]. When queries were raised by the ATO about particular matters in September 2011, he logged into the tax agent portal and discovered irregularities: Ex A [30]-[32]. While he had previously raised queries with the persons with whom he was dealing, and had been given the explanations set out at Ex A [26]-[27], the reasons why he had not previously logged into the portal are dealt with at Ex A [33]-[34]. He then took steps to pursue matters with the ATO, and co-operated fully with them: Ex A [36]-[52] and Annexure CCL4. 49 It is in the nature of frauds of this kind that the perpetrators choose their targets carefully, and execute the fraud in a manner that is calculated not to arouse suspicions. Common experience of such frauds - be they perpetrated in a tax context, on the internet or in tourist destinations - is that otherwise cautious people are taken in by explanations that with hindsight seem suspicious or improbable. Mr Li, who started in practice the previous year, was a sole practitioner without an immediate point of reference to consult with, whose native language is not English, and who charged the kind of modest fees that might indicate time-pressured processing, might have seemed a likely target. 50 Hindsight, and detailed examination of matters that might have become clear from analysis and comparison, is an inadequate foundation for harsh judgement upon the conduct of an individual in the circumstances as they actually occurred.

The objective features 51 The observations set out at [52]-[58] below were put on behalf of Mr Li. 52 Section 50-20(c) in its chapeau creates two different kinds of contravention: knowingly making false, incorrect or misleading statements, and recklessly making such a statement. The first is obviously very much more serious than the second, and both are embraced within the same penalty range. The Court's task is that of assessing the quality of the particular conduct in the context in which it occurred. 53 On the scale of carelessness, falling victim to a targeted, calculated scam is not at the upper end of the range. In sharp contrast to cases such as Su, the respondent did not charge an elevated fee of a kind that would indicate some consciousness of irregularity or elevated risk in what he was doing. He made every attempt to co-operate with the ATO when the matters were discovered, and the ATO at the time properly acknowledged in writing his assistance: Ex A, Annexure CCL4. He did not seek to cover matters up, or obfuscate, and he did not collude with the perpetrators. He followed the directions of the ATO as to how to proceed: Ex A [39], [42]-[48]. 54 While a significant number of contraventions are alleged, the events in question occurred within five weeks and are part of one course of conduct.

The subjective features 55 The respondent as at 28 September 2014 was 56 years old. He was a school teacher in China before migrating to Australia in 1990, where he studied accounting at TAFE and Macquarie University. He worked as an accountant between 1999 and 2010. He became a registered tax agent on 24 November 2010 and then operated as a sole practitioner out of a small office in Parramatta: Ex A [4]-[9]. Thus, he had been working as a tax agent for about eight months when he was targeted. 56 The respondent has children aged 13 and 15, both in high school. He lives in a family home in West Pennant Hills with his wife, children, mother and parents-in-law. The house is jointly owned with his wife. Prior to his deregistration as a tax agent, he was the sole breadwinner. The family now lives on welfare payments. His wife does not work because she cares for her father and the respondent's mother at home. His mother is 82, and suffers from dementia, and requires 24-hour care: Ex A [59]-[63]. 57 Having been found not to be a fit and proper person to practice as a tax agent, he is effectively unemployable in any field to which his studies, training and experience in Australia have equipped him. At 56 years of age, and without prior relevant experience, he is effectively unemployable in any manual, or other unskilled work: Ex A [67]-[71]. In contrast to the respondent in Su, he is not of an age where it is realistic to expect that he might find employment in the future, whatever efforts he might make. As a result of these events, he and his family will, despite his 20 years of conscientious work and study toward acquiring a modest professional practice, likely be welfare-dependent for the rest of their lives: Ex A [55]. 58 He and his wife still owe about $137,000 on the mortgage on their house. He has been unable, despite attempts, to refinance because he has no income to make repayments. His other assets, detailed in [76] of Ex A, are barely sufficient to meet the needs of his family: Ex A [57].

Sentencing principles 59 Set out at [60]-[73] below are submissions made on behalf of Mr Li as to the relevant sentencing principles to be applied in the present case; the consequences of their intersection and the weight to be attached to them. 60 There are four relevant principles here, being deterrence, parity, totality and capacity to pay. The Court's task is one of "instinctive synthesis", taking into account all relevant factors then arriving at a result which takes all factors into account: Australian Ophthalmic Supplies at [27], [55]; Wong v The Queen (2001) 207 CLR 584 at [74]-[76]; Markarian v The Queen (2005) 228 CLR 357 at [37]. Retribution and rehabilitation have no part to play in civil penalties of this kind, and nor is there any compensatory element in the penalty-fixing process: Trade Practices Commissioner v CSR Ltd (1991) ATPR 41-076 at 152-153 per French J (as his Honour then was). 61 There is no room for specific deterrence as a factor in the present case. The respondent is unable to practice as a tax agent, and will be unable to do so until he is 59 years old. At that point, having regard to the period of his disqualification, which is publicly-available information, and the limited period during which he practised, it is unrealistic to think that he might possibly practise as such again: Ex A [56]. 62 General deterrence is a significant matter, at least in cases of calculated contraventions where commercial profit is the driver of the conduct: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65]. In the context of such a deliberate series of contraventions of s 50-5(1) comparable in number with the present matter but involving three times as much commercial gain, Davies J observed that capacity to pay is of lesser importance than the need for a penalty of appropriate deterrent value, and imposed a total penalty of $43,000 for deliberate contraventions to be paid by instalments with provision for liberty to vary payment dates: Tax Practitioners Board v Dedic [2014] FCA 511 at [4]-[8]. In that case the Board, which was represented by experienced counsel, sought a total penalty in the range of $40,000-$50,000. The maximum penalty for breach of that provision is the same as for s 50-20, and although the conduct implicit in breach of the latter provision may often be more serious, deliberate contraventions of s 50-5 such as that in Dedic cannot be so described. But statements in trade practices and industrial cases about the need for general deterrence must be read in context: they relate to deliberate, calculated conduct undertaken for significant economic gain: See e.g., Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 at [41] and [62]-[64]; General Manager of Fair Work Australia v Health Services Union [2013] FCA 1306; Australian Competition and Consumer Commission v AGL Sales Pty Ltd (No 2) [2013] FCA 1360 at [9]. While they might have some application to systemically reckless conduct by a corporate group of tax agents or financial planners, they have little or no application to a single course of reckless conduct undertaken by an individual. 63 The second principle is parity. The seriousness of the contraventions in the present case is significantly lower than it was in Su, and that case lacked any of the significant subjective mitigating features that loom large in the present case. The facts in Su describe a similar fraud, occurring at about the same time. Fewer contraventions were charged there but the overall conduct reflected in the statement of facts was similar, with some particular aggravating features. 64 As reflected in para 19 of the agreed facts set out at [4] in Su, the respondent in that case charged double his normal fee, and paid a kickback to the intermediary. The objective seriousness of that conduct is much higher, involving as it does intrinsic impropriety of a kind that should have alerted a tax agent to the need to make further enquiries. 65 The subjective features were fundamentally different. The respondent in the Su case, a relatively young man, lived at his parents' house, was working at the time of the hearing and earning about $600-$650 per week after tax, and had no dependants. The Board in that case submitted for a penalty of between $200,000 and $250,000 but Jagot J, after expressing particular concerns about the Board's submissions at [16], and quoting the passage of Dedic referred to above, imposed a penalty of $70,000, payable over seven years and with liberty to apply for an extension of time to pay. 66 The parity principle clearly applies in respect of the decision of the court in Su. The objective conduct there was much more serious, and the difference in number of offences irrelevant given that in each case a single course of conduct was involved. And as will be seen, the point that the decision in Su establishes is that it is impermissible to impose a crushing penalty that the respondent would have no realistic hope of paying except by selling his family home, which would impose a responsibility for general deterrence grossly disproportionate to the objective seriousness of what he has done, and would impose a penalty on members of his immediate family of an unconscionable kind. 67 The totality principle can be briefly dealt with. The matters in question are part of a single course of conduct, and must be treated as such in the same way as they were treated by Jagot J in Su at [14]-[15] and [25]. The totality principle is designed to ensure that aggregate penalties are not oppressive or crushing: Kelly v Fitzpatrick [2007] FCA 1080 at [30]; Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2011] FCA 810 at [119]-[123]. Moreover, "where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality": Construction, Forestry, Mining and Energy Union & Anor v Cahill (2010) 269 ALR 1 at [39] (Middleton and Gordon JJ). Where the principle is applied such that multiple contraventions are, in substance, treated as one course of conduct, the result is that the course of conduct is treated as one contravention for sentencing purposes: e.g., Construction, Forestry, Mining and Energy Union & Anor v Williams (2009) 262 ALR 417 at [31] (Moore, Middleton and Gordon JJ). It is not the case that, because contraventions were of distinct statutory provisions, they must be treated as multiple courses of conduct: see, e.g., BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2014] FCA 193 at [15]. 68 The critical factor in the present case is, apart from parity, capacity to pay. The reasoning of Jagot J in Su on this question is, with respect, unimpeachable. It is axiomatic that in imposing penalties on individuals the capacity of the individual to pay a fine must be considered, and the impact of the penalty upon the individual must be considered. Jagot J set out the principles at [13], [20]-[21]. Those principles have long been settled. They overlap with the principle of totality, referred to above, in requiring that an oppressive or crushing penalty not be imposed. 69 For example, in Rahme v R (1989) 43 A Crim R 81 at 86-87, Finlay J, with whom Studdert J agreed, stated that it was clear that in contemplating a financial penalty a decision is required as to "whether or not the appellant has the means." His Honour quoted from the judgment of Scarman LJ in R v Jamieson ( 1975) 60 Cr App R (S) 318, in respect of a prevalent offence requiring general deterrence, as follows: But there are two principles to be observed when imposing a sentence such as this. The first is that a sentence must always be linked to the particular circumstances of the offender as well as the particular circumstances of the offence. Indeed, a sentence derives its character of justice or injustice from a combination of those two sets of factors. 70 Those principles were affirmed in Environment Protection Authority v Barnes [2006] NSWCCA 246 at [64]-[70] (per Kirby J, Mason P and Hoeben J agreeing). That case involves similarities to the present, in that the appellant was contending that a substantial penalty should be imposed based on the significant equity that the respondent and his wife had in their home. 71 Applying those principles to the present case, Mr Li's capacity to pay is extremely limited. There is one feature of particular significance here: any penalty which is imposed upon Mr Li beyond his capacity to pay will in substance be a penalty upon his wife, the co-owner of the house that Mr Li will be forced to sell. It will also be an indirect penalty of a severe kind upon other members of Mr Li's family. His mother and his wife's parents will be put through a forced relocation into some form of rented accommodation, or into a much less expensive area. His children, at sensitive stages of their secondary schooling, will also endure that process. 72 These submissions do not involve any attempt to excite the Court's sympathy. Mr Li accepts responsibility for what he has done, and the consequences, including for his children. But the consequences of the penalties for which the Board contends are matters to which the Court, in accordance with long-settled principle, must have regard. 73 To balance the competing factors of general deterrence with parity and capacity to pay, the Court should state the penalty which it would have imposed if Mr Li had had sufficient capacity to pay. But the penalty that is actually imposed, if any, should be limited to one which Mr Li has some realistic possibility of paying along with costs if the Court is minded to so order. The Court is not bound to impose any penalty: the penalty must reflect the whole of the circumstances, including those of the contravener. 74 There follows at [75]-[96] below a critique on behalf of Mr Li, of the Board's submissions on penalty. 75 It was submitted on behalf of Mr Li that the Board's submissions on penalty contain a number of factual statements that are unsupported by evidence, and are contrary to the evidence; and that they also contain inflammatory assertions of a kind that are inappropriate to a party in the position of the Board. The submissions on matters of law, except to the extent to which they state general principles apparently derived from general submissions in other cases, are also replete with error. It was submitted that the Court will derive little assistance from them, with respect, and should not accept any proposition of fact or law contained therein without analysis. 76 To give but two examples at this point, in [3] (see [19] above) the assertion that "the contraventions were motivated by greed" must be read in light of the agreed fact that Mr Li charged his usual fee for the preparation of a tax return, $60 per return, and received "a total financial benefit by virtue of the contraventions of $5,400" (SAF [41]). Read in light of that evidence, and of "the agreement between the parties that the relevant state of mind was recklessness and not knowledge" ([10.1]), the Board's assertion must be that those who provide services at their usual professional rate are "motivated by greed". 77 Secondly, the assertion in [15] (see [22] above) that "the contraventions were not isolated or aberrant ... They were deliberate" must be read in light of the uncontradicted evidence that prior to these incidents, Mr Li had "never been the subject of any complaint or investigation before the Tax Practitioners Board or any other professional association" (Ex A [58]), the agreement that recklessness not knowledge is the relevant state of mind, and the fact that the contraventions occurred in a 5 week period ([3]) in what is effectively a single course of conduct. Reckless conduct is different from deliberate conduct, by definition. 78 Other factual matters are dealt with below. As a general matter, the Board's submissions substitute assertion (such as that the conduct was "very serious indeed" at [13]) for analysis of the underlying seriousness of the conduct within the framework of possible contraventions. 79 Though most of the primary facts are not in dispute, Mr Li takes issue regarding the accuracy of the following factual assertions that are raised in the Board's written submissions. 80 First, the statement at [24] that Mr Li "claimed deductions on the returns, without question, because he was told that the expenses had been incurred" requires clarification. Mr Li's evidence is that he did in fact request supporting documentation in some instances for claimed deductions that exceeded the value of $300, and if the requested receipts were not provided, he accordingly reduced the relevant deductions to nil or less than $300 before lodging the returns (Ex A [25]). 81 Second, the assertion that Mr Li was "motivated by greed" (see [19] above) finds no support whatsoever in the facts or evidence in this case. There is no dispute between the parties that Mr Li charged his regular fee of $60 for each tax return and there is no suggestion in the evidence that he engaged in any form of conduct that was intended to inflate or maximise his profit. The Board's contention on this issue is improper and should not have been put. 82 Similarly, the statement that Mr Li "deliberately refrained from asking questions and making inquiry, lest he learn matters he did not want to know" (see [25] above) should also be rejected. There is simply no basis in the evidence to support that conclusion. 83 Third, the facts concerning co-operation are not fairly stated at [31] above. Mr Li co-operated fully with the Board's investigation, as Ex A at [30]-[52] and Annexure CCL4 reflects. The defence was lodged by solicitors he then had engaged at a time when the AAT decision was reserved. The decision was handed down on 14 May 2014. The Court offered to appoint counsel by letter dated 10 July 2014 and confirmed acceptance by letter dated 23 July 2014. On 8 August 2014, counsel and Mr Li met with the Board's representatives and legal representatives. There was nothing unreasonable in a person in the position of Mr Li reserving his position in those circumstances while awaiting the outcome of the AAT hearing. 84 Fourth, the reference at [31] above to prolonged negotiations over the facts is unsupported by evidence, and misstates the true position. Lest the Court be misled by the assertion, the basic and incontrovertible facts should be set out. The Board was provided with a draft statement of agreed facts drafted by counsel for Mr Li at a meeting on 8 August 2014. The Court gave directions by consent on 19 August 2014, including for the filing of a statement of agreed facts by 15 September 2014. On 10 September 2014, the Board supplied a draft responding to that Mr Li supplied on 8 August 2014 (but without changes marked up) on 10 September 2014, leaving four clear working days before the agreed statement was due. The Board's draft had not been settled by counsel then retained by it. A further version was sent by the AGS on 12 September 2014 after discussion between counsel for the respective parties. After further discussion between counsel another version was sent by AGS on 15 September, and another on 17 September. The facts signed by senior counsel for Mr Li upon instructions was sent to the AGS on 9 September 2014. It is simply wrong to suggest that "protracted negotiations" over the facts are somehow a matter to be attributed as a matter of criticism to Mr Li. 85 Fifth, the first sentence at [31(3)] above, in referring to a "lack of candour", is without any foundation in the evidence. Filing a defence at a time when related proceedings are reserved cannot fairly be so described; and the evidence is that Mr Li co-operated fully with the ATO's inquiries. 86 Sixth, as to [31(4)] above, Mr Li had rights of merit review conferred by Parliament. In circumstances where his only source of earning capacity was destroyed by the decision, and where no dishonesty was alleged against him, it cannot be a matter of aggravation of penalty that he exercised his rights to seek review. Again, it is a submission that should not have been put. 87 Turning to Mr Li's capacity to pay a pecuniary penalty, it was submitted on his behalf that, for the reasons set out below, the submission at [28] above that "[i]t is clear that capacity to pay will ordinarily be of limited relevance" is not an accurate statement of legal principle. 88 Among the authorities that the Board relies upon in support of its contention is Australian Competition and Consumer Commission v High Adventure Pty Limited (2005) ATPR 42-091. In that case, the Full Federal Court (Heerey, Finkelstein and Allsop JJ) observed at [11] that the principal purpose for the imposition of penalties for a contravention of the anti-trust provisions in Part IV of the Trade Practices Act 1974 (Cth) is deterrence, both specific and general. The Full Court went on to state that the possibility that a pecuniary penalty may be so high as to cause the offender to become insolvent must not prevent the Court from fulfilling its duty to determine the appropriate penalty in the circumstances of each individual case. Their Honours also noted at [12] that, in assessing the amount of any penalty, the Court is required to take into account a variety of other factors beyond deterrence, including mitigating factors such as the likelihood of the culpable party reoffending. 89 High Adventure is authority, therefore, for the proposition that, in weighing all of the relevant factors, a court must not ignore the seriousness of offending conduct and the need to deter future contraventions by placing undue emphasis on the potentially ruinous financial consequences of imposing a substantial penalty on a guilty corporate party. The case does not support an argument that an offending party's capacity to pay will "ordinarily be of little relevance". 90 Another case relied upon by the Board, Clarity1, contains the following statement by Nicholson J at [43]: … I accept that the issue of capacity to pay is, although a relevant factor, of less relevance when balanced against the necessity of imposing a penalty that satisfies the objective of general deterrence[.] 91 In support of the proposition extracted above, his Honour referred to the decision of Merkel J in Leahy at 284-285, at [9] and [11]. In that case, the ACCC brought proceedings against three companies, Apco Service Stations Pty Ltd, Brumar (Vic) Pty Ltd and Balgee Oil Pty Ltd, for contraventions of s 45(2)(a)(ii) of the Trade Practices Act. The additional respondents comprised three natural persons who were alleged to have been involved in the contraventions. 92 In considering the principles to be applied in respect of determining an appropriate penalty under s 76(1) of the Trade Practices Act, Merkel J said at [9]: The size of the contravening companies and their respective capacities to pay a penalty were relied upon as factors in mitigation in the present case. Plainly, such factors can be relevant to the penalty that is necessary to deter the company from contravening the Act in the future. Size may also be relevant to general deterrence because other potential contraveners are likely to take notice of penalties imposed on companies of a similar size. However, a contravening company's capacity to pay a penalty is of less relevance to the objective of general deterrence because that objective is not concerned with whether the penalties imposed have been paid. Rather, it involves a penalty being fixed that will deter others from engaging in similar contravening conduct in the future. Thus, general deterrence will depend more on the expected quantum of the penalty for the offending conduct, rather than on a past offender's capacity to pay a previous penalty. I therefore respectfully agree with the observation of Smithers J, referred to by Burchett and Kiefel JJ in NW Frozen Foods, to the effect that, a penalty that is no greater than is necessary to achieve the object of generally deterrence, will not be oppressive. I have approached the issue of corporate penalties on that basis. The penalties in relation to the individuals may need to be tempered by personal considerations. (Emphasis added, internal citations omitted.) 93 His Honour's observations regarding general deterrence were thus clearly directed toward the imposition of penalties against the corporate respondents in Leahy, as opposed to the individual offenders. As regards the latter category, his Honour expressly stated that "personal considerations" were relevant to the assessment of penalties. The distinction drawn by Merkel J is not reflected in the summary of Leahy that appears at [43] of Nicholson J's judgment in Clarity1, and does not appear to have been discussed in subsequent cases in which the relevant passages in Clarity1 and Leahy have been cited with approval. 94 Moreover, Merkel J went on to explain in Leahy (at [11]) that, in the circumstances of that case, the giving of undue weight to the corporate respondents' capacity to pay would "not only produce anomalous outcomes, such as the most culpable offender receiving the lightest penalty, but would also reward companies for carrying on business in a manner that resulted in those companies having few, if any, assets available to pay a penalty when it is imposed". Those circumstances are clearly distinguishable from the facts of the present case. 95 In any event, the object of deterrence should be given less weight in the circumstances of this case, because of the termination in August 2013 of Mr Li's registration as a tax agent. This approach was taken by Jagot J in Su at [21] (see [125] below). 96 Su is the only available authority regarding the determination of a pecuniary penalty in respect of contraventions of s 50-20 of the Act. As such, it is directly apposite to the task that must be undertaken by the Court in these proceedings, and binding in parity by way of a ceiling on questions of objective seriousness, given that the conduct there was clearly more serious. Although the penalty imposed was about one third of the bottom end of the range for which the Board there contended, no appeal has apparently been brought. 97 The submissions on behalf of Mr Li then addressed at [98] and [99] below what was described as mitigating factors in his case. 98 Applying the principles examined by Jagot J in Su, in particular at [19], the following factors should be afforded substantial weight in determining whether Mr Li should be liable to any pecuniary penalty under s. 50-35 of the Act: (1) Mr Li did not knowingly make the false statements in the relevant tax returns (SAF [28], [29], [38] and [40]; Ex A [53], [54]). While he "either knew that there was a real risk or was grossly indifferent" as to the intermediaries' authority to arrange for the preparation and lodgement of the tax returns, this is a significantly different state of mind from intentionally misleading the Commissioner. The Board's repeated assertion that the contraventions of s 50-20 by Mr Li "were not isolated or aberrant" and were "deliberate" is unfair and misleading for two reasons. First, it does not accurately reflect the relevant facts in this case, including that the contraventions took place over a five week period in what was effectively a single course of conduct and that Mr Li had not been the subject of any previous complaint to the Board. Second, the Board's repeated use of the term "deliberate" in this context wrongly implies knowledge of falsity, which muddies the distinction between recklessness and knowledge that is evident in the structure of s 50-20(c). To the extent that the lodgement of the tax returns by Mr Li with the ATO was deliberate in the sense that it was not some involuntary act, so much may clearly be accepted. But the relevance of any concept of "deliberate" conduct to the culpability of Mr Li in the circumstances of this case ends there. As stated earlier in these submissions, reckless conduct is different from deliberate conduct, by definition. (2) Mr Li has little, if any, capacity to pay a substantial fine. As discussed in greater detail below, the evidence demonstrates that, in light of Mr Li's dire financial circumstances, the penalty proposed by the Board would be so great as to have a crushing impact not only upon Mr Li but also the members of his family who are dependent upon him for their economic livelihood. The capacity of Mr Li to pay a fine is a factor that must be taken into account in determining the appropriate penalty": Rahme at 86-87; Barnes at [64]-[70]; Su at [19]. (3) Mr Li has not previously been the subject of any investigation by the Board or disciplinary proceedings in relation to his former practice as a registered tax agent: Ex A [58]; SAF [3]. The presence or absence of prior contraventions may be taken into account as a relevant consideration, and was accepted as a mitigating factor in Su (at [19]). There was no pattern of conduct by Mr Li that demonstrates a repeated course of dishonesty or a general propensity to offend beyond the admitted contraventions, which further reduces the need for specific deterrence in this case. (4) Mr Li received little reward for his contravening conduct. He was paid a total of $5,400 for preparing and lodging the relevant tax returns: SAF [14]. The fact that the penalty proposed by the Board is over 40 times the gross amount that Mr Li received further demonstrates its arbitrary and disproportionate character. The Board refers to cases establishing the principles by which an appropriate penalty is to be ascertained, but then plucks from the air the amount of the Commonwealth's loss as the appropriate figure. The randomness of such an approach, and its inconsistency with fundamental principle, hardly needs emphasis. On that approach, if the ATO had detected the frauds early and suffered no loss, no penalty would be appropriate. (5) Mr Li charged his ordinary rate of $60 for each tax return, unlike the respondent in Su, who charged double his usual fee and paid kickbacks to the intermediaries who supplied him with draft returns. There is no basis for the Board's contention that Mr Li was motivated by greed or some more culpable purpose beyond conducting his business in the ordinary manner. The conduct of the respondent in Su was objectively more serious and deserving of greater sanction, in that the inflated fee suggested some consciousness of irregularity or elevated risk on the part of the tax agent. Those circumstances are not applicable to this case. (6) Mr Li has lost his registration as a result of his actions and has little prospect of being successful should he ever apply to be re-registered. He will be 59 years old by the time he is eligible to seek readmission to the profession. He has accordingly lost his livelihood and the ability to work in a profession for which he has trained for many years in order to acquire the necessary expertise and experience: Ex A [55]. The loss of his registration has also left Mr Li unemployed and unable to find any work, as discussed in more detail below. (7) Mr Li was deliberately and carefully targeted by the perpetrators of a sophisticated and calculated scam, who exploited his limited language skills and status as a sole practitioner. Whilst the respondent's conduct admittedly fell below the standard of diligence that may be expected of a registered tax agent, it never rose to the level of colluding with the perpetrators of the fraud or knowingly advancing their fraudulent ends. Contrary to the Board's bald and baseless assertion that "the circumstances of the contravening conduct put it at the most serious end of the spectrum" (at [21] of the Board's submissions), Mr Li's carelessness is more appropriately located towards the lower end of the scale, which should be reflected in a modest sum for any penalty that the Court decides to impose. (8) Finally, though Mr Li's actions contributed to a loss to the revenue and significant inconvenience to the taxpayers whose tax file numbers were compromised, that inconvenience has been largely rectified, as new tax file numbers have been issued and refunds paid to the affected taxpayers: SAF [43]. Similar circumstances were regarded by Jagot J as a mitigating factor in Su. 99 It was submitted on behalf of Mr Li that in his case there are further mitigating factors, above and beyond those in Su, that are directly relevant to his capacity to pay any penalty that may be imposed: (1) Unlike the offending party in Su, who lived with his parents and earned $600 to $650 per week in net wages, Mr Li is currently unemployed and has no regular source of income beyond welfare payments from Centrelink: Ex A [67], [72]. He has tried, unsuccessfully, to find work as an accountant or bookkeeper; such efforts having been further hampered by the cancellation of his membership of the Institute of Public Accountants: Ex A [68], [69]. Mr Li's attempts to find other work, including menial jobs such as cleaning, have also proved fruitless: Ex A [70], [71]. It is unlikely that, at 56 years of age, Mr Li will be able to find gainful employment that would materially alter his financial circumstances. (2) In further contrast to the respondent in Su, Mr Li has several dependants, all of whom reside with him in the family home and are reliant upon Mr Li as their sole source of financial income: Ex A [66]. These include Mr Li's teenage children who are attending public high schools and whose educational expenses Mr Li is barely able to cover: Ex A [57], [60]. Mr Li also lives with his wife, who provides full-time care to her father (who has recently been diagnosed with terminal lung cancer in addition to a number of serious illnesses) and Mr Li's elderly parents, who suffer from dementia and Alzheimer's disease: Ex A [61]-[65]. The imposition of a substantial penalty on Mr Li would therefore have a devastating impact not only on Mr Li's financial condition, but also the lives and well-being of his numerous dependents. (3) Mr Li provided his full co-operation to the ATO and attempted to investigate and rectify the situation when he became aware that something was wrong with the returns that he had lodged. Upon first being informed by an ATO officer that there was a problem with one of the returns, Mr Li attempted to contact the employers of the relevant taxpayers and sought further assistance from the ATO: Ex A [31]-[36]. After being rebuffed by several ATO representatives, he eventually spoke to Ms Luini D'Souza. Mr Li stopped lodging any further returns and sent Ms D'Souza three facsimile messages containing the names and tax file numbers of taxpayers whose returns he had processed. It is suggested in the Board's submissions at [54] that Mr Li's decision to stop processing returns in September 2011 came too late as the "the contraventions had already occurred". There is no evidence, however, that refunds generated by the scam had already been paid to some or all of the affected taxpayers at that point - in fact, the evidence suggests that a significant number of the tax returns were stopped by the ATO's systems prior to being processed: Affidavit of Run Gong affirmed 30 May 2013 at [8]-[9]. There is, accordingly, no basis to argue that the timing of Mr Li's co-operation disqualifies its relevance as a factor in mitigation. He also followed Ms D'Souza's directive to seek further information from the fraudsters, despite a genuine fear for his personal safety: Ex A [39]-[48]. When Mr Li was later interviewed by the ATO as part of its formal investigation, he provided all documents and information that were requested: Ex A [50], [51]. Mr Li's assistance was formally acknowledged in writing by the ATO and stands as a mitigating factor that should be taken into account in the circumstances of this case. 100 Mr Li has already paid a very high price for his offending conduct and is genuinely remorseful for his part in the scam that was perpetrated against the Commonwealth: Ex A [54]-[57]. In this regard, the assertion at [87] of the Board's submissions that "there is nothing of any substance to indicate that Mr Li has 'learnt his lesson'" is utterly false. His predicament stands in stark contrast to the real perpetrators of the fraud - the men who called themselves Messrs Islam and Rahman - who have escaped any form of sanction in relation to their conduct. 101 As canvassed above, Mr Li's inability to find work following his deregistration as a tax agent has meant that his only source of income is unemployment benefits from Centrelink, which currently amount to approximately $238.50 per week: Ex A [74]. His wife and mother also receive modest sums in the form of weekly welfare and pension payments. His parents-in-law are ineligible to receive similar benefits on account of their immigration status: Ex A [65]. Mr Li has estimated his family's total weekly income as being approximately $1,170: Ex A [79], Annexure CCL11. 102 The family's weekly income is inadequate to cover mortgage repayments, general household costs, utilities, food, medical and schooling expenses totalling approximately $1,285 per week: Ex A, Annexure CCL11. Mr Li also owes $8,748 in legal fees to his former solicitors and $1,087.10 in unpaid taxes to the ATO: Ex A [79]. 103 The Board's submission that "any medical conditions of the respondent's mother and father-in-law are subject to change that might vary the impact of any such condition on the respondent's financial circumstances (and capacity to pay a penalty)" (at [55]) does little to advance its case. The advanced ages of Mr Li's mother and father-in-law, and the irreversible and degenerative nature of their respective ailments (Alzheimer's disease, dementia and terminal lung cancer) mean they are likely to get worse, not better, thereby putting greater strain on the family's resources and further reducing the respondent's capacity to pay a substantial penalty. 104 Mr Li has also deposed to his limited financial assets, chief among which is the home that houses his immediate and extended family. Mr Li and his wife still owe approximately $137,000 in mortgage repayments on that property and their attempts to refinance the loan have been rebuffed on the basis that their income is insufficient to make repayments: Ex A [75]. Mr Li's assets are limited to his motor vehicle, approximately $10,000 worth of shares, and less than $1,000 in cash deposits at various banks: Ex A [76]. 105 The evidence demonstrates that Mr Li has little, if any, capacity to pay a substantial fine. It is, moreover, misleading to characterise Mr Li as being under "temporary adverse financial circumstances" (at [57] of the Board's submissions) given the nature of his parents' prognoses and the fact that he is unlikely to ever practise again as a tax agent. The reality of Mr Li's financial situation means that, even if he were permitted to pay a penalty by instalments, it would do little to ameliorate the crushing impact of the penalty that is sought by the Board. The allowance of time to pay or payment by instalments does not justify the imposition of a penalty that is disproportionate to the objective seriousness of Mr Li's conduct: Kaye v Vagg (No 2) (1984) 11 A Crim R 127 at 129 per Cox J; Su at [19]. 106 Under s 50-35 of the Act, the Court may order an offending person to pay the Commonwealth a pecuniary penalty, but is not obliged to do so. 107 Mr Li's primary submission is that the circumstances of this case, including the significant mitigating factors discussed in [98] and [99] above, could support a finding that he should not be required to pay any penalty to the Commonwealth. 108 In the alternative, should the Court be of the view that the imposition of a penalty is appropriate, it is submitted that the amount of any such penalty should be significantly less than the $70,000 that the offending party was ordered to pay in Su. 109 In Su, the Tax Practitioners Board submitted that a total penalty of between $200,000 and $250,000 should be imposed upon the respondent. In relation to that contention, Jagot J said at[19]: [T]he total penalty the Board seeks would be crushing to the Respondent. He would have no realistic hope of paying such a penalty even if a lengthy period to pay were given to him. The effect of such an approach would be to make the respondent bear a responsibility for general deterrence grossly disproportionate to the objective seriousness of what he has done, which is impermissible. 110 It was submitted on behalf of Mr Li that the $222,958.64 penalty contended for by the Board in this case is also grossly disproportionate: taking into account all of the relevant factors, it was further submitted that the amount of any penalty to be imposed upon Mr Li should be limited to the range of $10,000 to $20,000.

Consideration and Analysis 111 At the outset, I am driven to say that my overall review and consideration of the evidence and the respective submissions of the parties, raises for me real difficulties with the quantum of penalty ($222,958.64) the Board contends that the Court should determine is appropriate in this case. That sum seems to me to be an amount which is totally disproportionate to the seriousness of Mr Li's contravening conduct, when it is measured and weighed in the context of: The overall fraud perpetrated on the Commonwealth by the real perpetrators; Mr Li's lack of knowledge of, and comparatively limited role in, that fraud; and taking into account all other relevant factors and principles raised in the foregoing submissions. I deal with the circumstances providing the relevant context as well as those relevant factors and principles separately below, although in no particular order of priority and in no ordered sequence. 112 The Board submitted that the most appropriate reference in determining penalty in the present case is the amount the Commonwealth lost, namely, $445,917.27 (see [38] and [39] above), by which I take the Board to mean "the starting point figure": see [42] above. The nexus or underlying basis for this submission is not obvious, but seems to be that the loss was "as a result of Mr Li's conduct" (see [38] above). If that were the case, then there may be some force in the Board's submission; but that is not this case. It may be accepted, as I find at [119] below, that Mr Li's conduct facilitated the success of the real perpetrators of the fraud. But it was they who were the real perpetrators; Mr Li was but the unknowing instrumentality through which the fraud was perpetrated; it was the real perpetrators who benefited, exclusively, from the amount lost by the Commonwealth; Mr Li got nothing other than his ordinary fee of $60 per return for preparing and lodging 90 returns - a total of $5,400. In that scenario, it does not seem to me that the amount the Commonwealth lost is an appropriate reference in determining the penalty to be imposed on Mr Li. 113 It seems to be that a far more appropriate reference or starting point in this case would be the penalty imposed in the recent case of Su involving a factual context, conduct and contraventions not so dissimilar to those involved in the present case as to prevent or impede a sound comparative assessment of culpability, and an informed application of relevant sentencing principles, particularly, but not limited to, parity, to be brought to bear on, and allow for, an analytical determination of the most appropriate penalty. The penalty imposed in Su was an order that, in respect of 50 contraventions of s 50-20 of the Act, the respondent pay one pecuniary penalty in the amount of $70,000, such penalty to be paid in instalments of $10,000 over seven years on or before 1 November in each year with liberty to apply in respect of the extension of any of the times provided for payment. It is not apparent from the reasons for judgment in Su, that the Board's contention in that case for a penalty of between $200,000 and $250,000 (see [10] of Su), had any correlation to the loss to the revenue by reason of the contraventions, which was said to be $133,754.47 (see [11(7)] of Su). To the contrary, her Honour's reasons record the Board's contention that a penalty in the range of $200,000 to $250,000 "would reflect the seriousness of the contraventions and all relevant circumstances" (at [10] of Su). 114 In Su, the parties agreed (see [7]), that the respondent's conduct involved 50 contraventions of s 50-20. As a penalty unit was $110 at the time of the contraventions, the maximum penalty for each offence was $27,500 (or a total, for the 50 contraventions, of $1,375,000). It was apparent from the statement of agreed facts that the contraventions related to the same 25 tax returns. In respect of each tax return the respondent both recklessly made false, incorrect or misleading statements in the tax agent certificate he signed and recklessly made false, incorrect or misleading statements in each of the tax returns about the taxpayer (para 25). The similarity with the factual context in which the contraventions occurred in the present case is self-evident. 115 In Su, Jagot J relevantly said (at [16]): The specific submission that the contravention is particularly serious because of the respondent's status as a registered tax agent fails to have regard to the fact that s 50-20 is a provision which may only be contravened by a registered tax agent. Accordingly, it is difficult to understand how being a registered tax agent can be an aggravating factor. While I accept that registration involves the reposing of trust in the agent so that, in this sense, the contravention of the provision involves a breach of trust, that factor must be common to all contraventions of s 50-20. It is to be understood that the legislature was aware of this fact when it fixed the maximum penalty for contravention of the section. 116 At [17], her Honour continued: The same problem arises with respect to the applicant's reliance on recklessness as an aggravating factor. Section 50-20 necessarily involves either knowledge or recklessness as to the making of false, incorrect or misleading statements by a registered tax agent to the Commissioner. Accordingly, while it may be accepted that, in the ordinary course, knowledge involves a contravention of a higher level of objective seriousness than recklessness, it is difficult to accept that the existence of recklessness is itself any form of aggravating factor. Again, it must be taken that the legislature understood the mental elements of the provision, knowledge or recklessness, in fixing the maximum penalty. This is reflected in the lesser maximum penalties for contraventions of the strict liability provisions ss 50-10 and 50-15. 117 I agree with her Honour's observations reproduced in [111] and [112] above. Her Honour went on (at [19]) to make the following observations on the size of the penalty contended for by the Board relative to the objective seriousness of the respondent's contravening conduct. Her Honour said: [T]he total penalty the Board seeks would be crushing to the respondent. He would have no realistic hope of paying such a penalty even if a lengthy period to pay were given to him. The effect of such an approach would be to make the respondent bear a responsibility for general deterrence grossly disproportionate to the objective seriousness of what he has done, which is impermissible. This approach appears to give no material weight to a number of factors of importance which must be taken into consideration along with the matters emphasised by the Board, being: (1) The respondent did not knowingly make the false statements. While he "either knew that there was a real risk or was grossly indifferent" as to the intermediaries' authority, this is a significantly different state of mind from intentionally misleading the Commissioner. (2) The respondent's submission, uncontradicted by the applicant, is that he has not previously been the subject of scrutiny by the applicant and that no other complaint is made against him in respect of his former practice as a registered tax agent. I accept this submission. The presence or absence of prior contraventions may be taken into account as a relevant consideration (see Singtel Optus at [68]). (3) The respondent received little reward for what he did. While the applicant submits that the penalty imposed should "significantly exceed" the total benefit obtained from the contravention, the range for which the applicant contends is in the order of 70 to 80 times the gross amount the respondent received. (4) The respondent has lost his registration as a result of what he did and may well never receive it back. Consequently, he has lost his livelihood and has been forced to take work in other, lesser, capacities. (5) The respondent has little, if any, capacity to pay a substantial fine. Further, the respondent will be ordered to pay the applicant's costs as well as the fine, it being likely the costs will be not insignificant. 118 Without exception, these factors all exist, and are therefore relevant in the determination of the appropriate penalty, in the present case; indeed, in my view, the weight to be attached to them in the determination process is, by reason of considerations referred to below, even greater than it was in Su. It is to the relevant context in which the contravening conduct occurred in the present case, and the relevant factors and principles to be applied, that I now turn. 119 Contrary to the submissions made on behalf of Mr Li, he was not "the focus of a sophisticated fraud". The focus of the fraud was the Commonwealth, or the revenue of the Commonwealth. Mr Li was but the targeted, unknowing, perhaps even naive, instrumentality through which the fraud was perpetrated, although the success of the real perpetrators of the fraud was facilitated by Mr Li's conduct, which fell well short of that required of a registered tax agent, and which he himself admitted to be reckless. 120 Having considered the evidence embodied in, or emerging from, the SAF, Ex A and the cross-examination of Mr Li, I am of the view, and so find, that Mr Li was targeted as the instrumentality through which the real perpetrators would perpetrate their fraud on the Commonwealth because he was perceived by those perpetrators as being a registered tax agent, unlikely to be sufficiently experienced and vigilant, and therefore percipient, to discern what to others, particularly those with more experience, exemplified indicia that something was wrong; that further enquiry and/or verification should be undertaken. 121 I also find that the objective characteristics of Mr Li and his practice as a registered tax agent, that led the real perpetrators of the fraud to view him in this light, and so target him as the unknowing instrument of their fraud, were: (1) His limited language skills - from my observation of his cross-examination, his command of English left me in considerable doubt as to his ability to properly discharge his duties to a standard of diligence that should be expected of a registered tax agent. (2) His relatively recent registration as a tax agent on 24 November 2010 - less than 12 months before the occasion of the targeting and the ensuing contravening conduct. (3) His status as a sole practitioner, operating out of a small office in Parramatta, with no immediate professional reference point. 122 I reject the Board's submission that Mr Li's contraventions were "motivated by greed". There is no basis for that contention or some more culpable purpose beyond conducting his business in the ordinary manner. Mr Li charged his ordinary rate of $60 for each return - a total of $5,400 for 90 returns - unlike the respondent in Su who charged double his usual fee and paid kickbacks to the intermediaries who supplied him with draft returns. I agree with the submission made on behalf of Mr Li that the conduct of the respondent in Su was objectively more serious and deserving of greater sanction, in that the inflated fee suggested some consciousness of irregularity or elevated risk on the part of the tax agent. Those circumstances are not applicable to this case. 123 I also agree with the submission made on behalf of Mr Li that the Board's assertion that "the contraventions were not isolated or aberrant … they were deliberate" must be read in light of the uncontradicted evidence that prior to these incidents, Mr Li had "never been the subject of any complaint or investigation before the Tax Practitioners Board or any other professional association"; the agreement that recklessness not knowledge is the relevant state of mind; and the fact that the contraventions occurred in a 5 week period in what is effectively a single course of conduct. Reckless conduct is different from deliberate conduct by definition. The Board's repeated use of the term "deliberate" in this context wrongly implies knowledge of falsity, which muddies the distinction between recklessness and knowledge that is evident in the structure of s 50-20(c) of the Act. I agree with the submission made on behalf of Mr Li that to the extent that the lodgement of the tax returns by Mr Li with the ATO was deliberate and not some involuntary act, so much may clearly be accepted. But the relevance of any concept of "deliberate" conduct to the culpability of Mr Li in the circumstances of this case ends there. 124 The Board's submission that Mr Li closed his eyes and ears to obvious features of the circumstances in which the information, that formed the basis of the returns, came to him, and that those circumstances should have prompted further inquiry which, if pursued, would have revealed the falsity of that information, has to be understood in the context of my findings at [117] above. Because of the characteristics there found, there was no deliberate closing of eyes and ears on Mr Li's part; they were never open to that sort of risk. Moreover, I reject the Board's submission that Mr Li "deliberately refrained from asking questions and making inquiry, lest he learn matters that he did not want to know". There is simply no basis in the evidence to support such a finding. 125 The Board's submission (at [36] above) that the central purpose of imposing civil penalties is to ensure compliance with the relevant Act by deterring contraventions, both by the contravenor (specific deterrence) and other would-be contravenors (general deterrence) may be accepted, but the weight to be attached to it as a consideration in determining the quantum of penalty will vary depending on the circumstances. What was said by Jagot J in Su at [21] may be said with even greater force in the present case: In this respect, it is significant that, unlike many other civil penalty cases, a pecuniary penalty is not the only deterrent to operate in relation to contraventions of section 50 20 [of the Tax Agent Services Act 2009 (Cth)]. Loss of registration is also a possibility, as this case discloses. The general deterrent effect of that potential consequence should not be underestimated. In the present case, the respondent's loss of registration also ensures the requirements of specific deterrence are satisfied. The respondent's capacity to pay remains a relevant factor to be weighed in the balance and, here, the small reward the respondent achieved from having recklessly allowed himself to be duped means that the benefits of contravention could never have been of much significance to his conduct. When regard is had to the loss of the respondent's registration as a tax agent, it cannot be suggested that a penalty in the range advanced by the Board is necessary or appropriate in order to promote general deterrence. 126 As was submitted on behalf of Mr Li, he has lost his registration as a tax agent as a result of his actions and has little prospect of being successful should he ever apply to be re-registered. He will be 59 years old by the time he is eligible to seek re-admission to the profession. He has accordingly lost his livelihood and the ability to work in a profession for which he has trained for many years to acquire the necessary expertise and experience: Ex A [55]. The loss of his registration has also left Mr Li unemployed and unable to find any work. 127 In my considered view, the factors put on behalf of Mr Li in mitigation at [94] and [95] above, are not only relevant in respect of the quantum of the penalty contended for by the Board, but are factors which can be taken into account in arriving at a lesser penalty than any principle of parity coming out of Su might otherwise dictate.

Conclusion 128 The primary submission on behalf of Mr Li was that the circumstances of this case, including the significant mitigating factors raised in [98] and [99] above, could support a finding that he should not be required to pay any penalty to the Commonwealth. I agree with that submission. The loss of his registration and the costs order he will have to meet as a result of this proceeding are such that he should not be subjected to any further penalty. The seriousness of Mr Li's contraventions, as a single course of conduct, do not warrant subjugating Mr Li, his wife, their children and the wider family they provide and care for, to any greater financial deprivation going forward. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.