The AAT has ruled that it did not have jurisdiction to review a Tax Practitioners Board (TPB) decision not to investigate a complaint about 2 tax agents.

Mr Gerard Mendonca, the applicant, sought review of a decision made by the Tax Practitioners Board (“the Board”) on 25 July 2017. In that decision, the Board decided not to take any further action in relation to a complaint made by the applicant against two taxation agents because it found that the allegations did not constitute ‘tax agent services’ and was therefore outside of the Board’s jurisdiction (“the decision”).

The TPB had found that the allegations did not constitute “tax agent services” and, therefore, fell outside the Board’s jurisdiction under the Tax Agent Services Act 2009 (TASA). The applicant contended that the TPB decision not to investigate his complaint fell within the AAT’s jurisdiction pursuant to s70-10(ga) of the TASA on the basis that it was a decision “not to terminate” the registration of the tax agents.

It is interesting that TASA allowed an appeal from a decision not to ‘terminate’ an agent’s registration (presumably for situations like this, where a person who’s made a complaint, to appeal if not satisfied with the Board’s handling of the process – normally it is Tax Agents appealing the termination of their registration). Readers will understand that, to have a right to appeal to the AAT, a Federal enactment must expressly create that right (and s70-10 of TASA did just that, for certain matters). This is under s25 of the AAT Act.

The AAT ruled that it did not have jurisdiction to review the Board’s decision not to investigate the complaint. The AAT considered that the Board’s decision was merely an initial step in determining its power to review the complaint. The Board’s decision about whether the allegations constituted “tax agent services” was not a decision referred to in s70-10 of the TASA, the AAT said.

In any event, the AAT noted that the Board had advised, in a letter dated 18 September 2017, that it had referred its decision on the complaint, for independent review, under the process mentioned in its initial 25 July 2017 advice to the Complainant (presumably offering an independent review of their handling of his complaint, if dissatisfied with their handling of it). This is a not-uncommon system, when there is no AAT appeal right.

Having said all that, the decision is short (only 10 paragraphs) and in many respects unsatisfactory.

  1. It does not, for instance, say what the Complaint was about, how related the relevant behaviour was, to ‘tax agent services’ or how serious the behaviour was. There is no way of knowing whether the Applicant was just a trouble maker, complaining about nothing, or whether the Board overlooked a relevant matter, because it thought all non ‘tax agent services’ behaviour was outside its function (which would be plainly wrong and it would be equally wrong for the AAT to decide it had no jurisdiction, on the basis of the same mistaken view).
  2. It is not true that behaviour must be ‘tax agent services’ before the Board, or the AAT, has jurisdiction. For instance, the very first requirement for registration is that the person be a ‘fit and proper person’ (s20-5(1)(a) TASA). All manner of conduct could be relevant to that. For instance, the Tax Agent may have murdered someone. Or, more realistically, it might be relevant that ASIC had deregistered that the Tax Agent, as a person entitled to audit SMSF’s, because of dishonesty or profound ignorance of the relevant superannuation law (SIS Act & SIS Regs). It may be relevant that ASIC had prosecuted the practitioner for giving financial advice, without obtaining a suitable financial adviser’s licence, after repeated warnings that this was illegal.
  3. A Tax Agent’s failure to comply with the ‘Code of Conduct’ can result in termination of his registration (s30-15(2)(d)) and the Code’s requirements aren’t all limited to ‘tax agents services’. For instance, s30-10(3) says that an agent ‘must account to your client for the money or other property’ that you receive on behalf of a client and hold on trust. This provision does not say it is limited to money held on trust for tax related matters. It may be, for instance, that the Tax Agent received money for investment on behalf of the client and did not account for that.

I’m troubled by how short and opaque the Tribunal’s decision was.

(Mendonca and Tax Practitioners Board [2017] AATA 2177, AAT, File No: 2017/4963, Poljak SM, 10 November 2017.)

[FJM; LTN 226, 24/11/17; Tax Month November 2017]

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