Toohey v Tax Agents' Board of Victoria

Introduction 1 This proceeding concerns the issue of whether or not the Administrative Appeals Tribunal ('the Tribunal') made an error of law in applying the provisions of s 251JC(1)(a) and s 251BC(1) of the Income Tax Assessment Act 1936 (Cth) ('the Act'). 2 The background to the relevant legislation has already been dealt with by me in earlier proceedings involving the parties: see Toohey v Tax Agents' Board of Victoria (2007) 67 ATR 522. 3 It was accepted by the parties that the correct approach to applying the relevant provisions of the Act in determining whether a person is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters is set out in my earlier judgment at [9]-[13]: 9. Therefore, the Board is required, in essence, to consider and determine whether the applicant is the prescribed fit and proper person. In determining the matter, the Board is directed by the legislature that a disqualifying factor for a person not being the prescribed fit and proper person is, relevantly, if the person is not of 'good fame, integrity and character': s 251BC(1)(d). This appeal does not require a consideration of the elements of whether or not a person is the prescribed fit and proper person, although the generality of the phrase 'good fame, integrity and character' is not to be limited by reference to whether the applicant has certain disqualifying convictions or is under sentence of imprisonment (see s 251BC(2) of the Act). The enquiry is whether the applicant is the prescribed fit and proper person, and the disqualifying factors set out in s 251BC(1) do not limit the generality of that enquiry (see s 251JC(1)), although it may well inform that inquiry. The fact that a person is not of good fame, integrity and character means that that person cannot be regarded as the prescribed fit and proper person. However, even if this or other disqualifying factors do not apply, the applicant may still not satisfy the Board that he or she is the prescribed fit and proper person. If not satisfied, the Board 'shall refuse' to re-register the applicant: s 251JC(2). 10. The provisions of s 251BC(3) do not detract from this ultimate issue of whether the applicant is the prescribed fit and proper person, and should not be confused with it. Section 251BC(3) of the Act relevantly provides that: Where: (a) a Board is required, in considering an application for: (i) re-registration as a tax agent; or (ii) re-registration of a nominee of a tax agent; to decide whether the Board is satisfied that a particular person is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; (b) the person is not under sentence of imprisonment for a serious taxation offence; and (c) the Board is satisfied that, because of special circumstances: (i) a conviction of the person; (ii) the doing of an act or thing by the person; or (iii) an omission of the person; should be disregarded; the Board may, in making the decision referred to in paragraph (a), disregard the conviction, the doing of the act or thing or omission, as the case requires. 11. Pursuant to s 251BC(3), in the course of deciding the ultimate issue, certain matters may be disregarded because of special circumstances. Once disregarded, those matters are no longer considered in the enquiry, and then a decision as to whether the applicant is the prescribed fit and proper person is made by the Board. If a conviction, act or omission of the applicant is not disregarded, it will need to be assessed, along with other factors, in order to determine whether the applicant is a fit and proper person if that inquiry can still be made where the disqualifying factors do not apply. It may well be that a particular conviction (other than a disqualifying conviction) is to be taken into account and not 'disregarded', but that, for one reason or another, taking into account all the circumstances, the Board may still be satisfied that the applicant is the prescribed fit and proper person. Again, of course, it is clear that if there is a disqualifying factor, there cannot be a finding in favour of the applicant allowing re-registration. 12. The other matter to observe is that the relevant time for the assessment of whether a person is the prescribed fit and proper person, is at the time of the relevant determination. This is made clear by the Act itself, for it is in considering the application that the Board needs to be satisfied that the applicant is the prescribed fit and proper person. I note the Act specifically uses the present tense. There is no express or implied legislative indication which provides for the assessment of the facts at any other particular date. I refer also to A Solicitor v Council of the Law Society (NSW) (2004) 216 CLR 253 at 268. 13. In view of s 43(1) of the AAT Act, where the matter comes before the Tribunal, the Tribunal must be satisfied that the applicant is the prescribed fit and proper person at the time of the Tribunal's determination. In reaching its decision, the Tribunal should consider for itself, as though it was performing the function of the relevant decision-maker, whether the applicant has satisfied the Tribunal he or she was the prescribed fit and proper person. 4 The ultimate issue before the Tribunal was, again, whether the appellant was a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. The real issue before me was whether the Tribunal properly, as a matter of law, applied the relevant provisions of the Act. 5 As I pronounced on 13 October 2008, after hearing oral submissions, in my view the Tribunal did not approach the matter correctly by properly applying the relevant provisions of the Act in considering the ultimate issue, and I propose to order that the appeal be allowed.