The AAT has rejected a tax agent’s appeal and upheld the Tax Practitioners’ Board decision not to re-register her as a tax agent as she did not meet the “fit and proper person” test.
The Tribunal said the agent was a trustee of a self-managed super fund (SMSF) and the ATO had in October 2012 determined she was a disqualified person under the SIS Act and was not a fit and proper person to be a “trustee, investment manager or custodian”.
An audit of the tax agent’s tax returns for the 2008 to 2010 financial years found she had a cumulative tax shortfall of $377,814, and imposed penalties, totaling $283,361, on the basis of intentional disregard of taxation laws.
The ATO’s position in relation to the agent’s disqualification as a superannuation trustee was that she had operated an SMSF (the Friendly Fund) to facilitate the improper early release of superannuation funds and had conducted “an artificial scheme … to undermine the legislation”.
The ATO audit report showed, among other things, that between July 2007 and November 2011, the Friendly Fund’s bank account disclosed a series of deposits (totalling $1.6m) and withdrawals (totalling $1.52m), and related deposits (totalling $996,877) to the tax agent’s personal account. The ATO treated the net deposits as the agent’s assessable income. The Tribunal said the assessment amounts subsequently crystallised (on 2 September 2014) into a Supreme Court judgment debt of almost $870,000.
The Tax Practitioners Board’s findings were that the agent (i) had breached her fiduciary duties as a trustee, in transferring nearly $1m of trust funds into her personal bank account, (ii) could not be regarded as fit and proper, having regard to her SIS Act disqualification and the circumstances underlying it.
The Tribunal said the agent failed to produce satisfactory records of the Friendly Fund. It found that she did not keep the records required of her as a fund trustee. She argued that all of the fund withdrawals were either for investment or permissible compassionate purposes, but the Tribunal said inconsistent explanations she gave led it to conclude that she was “not a reliable witness”.
After reviewing the matter, the Tribunal said it was “far from satisfied that she is a person who has a proper knowledge of relevant taxation laws, that she can be relied on to prepare taxation returns competently and accurately, or that she can be relied on to deal with client’s taxation affairs honestly and competently”. In the Tribunal’s view, the agent was “definitely not a fit and proper person to be registered as a taxation agent”. It therefore confirmed the Board’s decision.
(Re Gylman and Tax Practitioners Board  AATA 1012 (AAT, Taylor SC SM, AAT File No: 2015/4917, 23 December 2015.)
[LTN 1, 5/1/16]