In a decision handed down on Fri 2.5.2014, the Federal Court has dismissed a tax agent’s appeal from AAT proceedings to dismiss earlier proceedings brought against him by the Tax Practitioners Board for making false or misleading statements in connection with the affairs of taxpayers, and for imposing civil penalties against him.
In particular, the tax agent argued that: (1) the Board’s proceedings should be dismissed on the basis the Board had no legal personality and could not sue in its own name, (2) its statement of claim did not disclose a reasonable cause of action and (3) that the originating application did not sufficiently state the relief claimed.
- In dismissing each of the grounds, the Court first found that while technically the Board lacked its own “legal personality”, this did not matter as s50-35(1) of the Tax Agent Services Act 2009 gave it the authority to institute proceedings of the present kind.
- In dismissing the tax agent’s second claim that the Board’s pleading failed to disclose a reasonable cause of action (particularly in relation to the claims of “recklessness”), the Court accepted that “recklessness” could involve an allegation that there was a real risk that statements were false where there was a lack of care whether the statement was correct or not, and that claims of negligence could also encompass such recklessness.
- Finally, the Court dismissed the tax agent’s claim that the Board’s originating application failed to state the statutory provision under which the relief sought was claimed. In doing so, it found that while the Board cited the wrong section, nevertheless it held that while the originating application was defective in this respect, the appropriate order, however, was that the Board file an amended originating application adding a reference to the relief being claimed under s50-35(2) of the Act.
(Tax Practitioners Board v Kim (No 1) [2014] FCA 434, Federal Court, Perram J, 2 May 2014.)
[LTN 82, 2/5/14]
Extract from Tax Agent Services Act 2009
s50.35 – Federal Court may order you to pay a pecuniary penalty for contravening a civil penalty provision
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.