In a decision handed down Thur 10.7.2014, the Federal Court has imposed a $70,000 pecuniary penalty on a tax agent in respect of contraventions of s 50-20 of the Tax Agent Services Act 2009 (TASA).
The Tax Practitioners Board had sought declarations and the imposition of the penalty. In his defence filed on 27 February 2014, the agent admitted that he had contravened s 50-20 by, as a registered tax agent, making statements to the Commissioner reckless as to whether the statements were false, incorrect or misleading in a material particular.
The Court said 3 persons (“intermediaries”) approached the agent and asked him to prepare a large number of income tax returns for persons they acted for on the basis of information they provided to him. The Court said that, at the time he lodged the returns, the agent either knew “there was a real risk or was grossly indifferent as to whether or not the intermediaries had that authority”. The agent lodged the returns but without the actual taxpayers’ knowledge. The returns were found to contain erroneous claims for tax withheld at source. There were some 50 contraventions relating to 25 tax returns, which would in the Court’s view have amounted to a total penalty of id=”mce_marker”50,000. However, the Court considered that, even with a discount of 25% applied for the agent’s early admission, “this would remain a crushing penalty for the [agent] and would fail to give weight to the fact that the 50 contraventions relate to 25 tax returns”. The Court therefore set the maximum penalty at $70,000 payable over time. The Court also accepted that declarations should be made as the Board sought, save that (as agreed between the parties) they should be amended to reflect the fact that the agent did not knowingly make the false, incorrect or misleading statements but was reckless as to that fact.
(Tax Practitioners Board v Su [2014] FCA 731, Federal Court, Jagot J, 10 July 2014.)
[LTN 131, 10/7/14]
Extract from the Tax Agents Services Act 2009
50-20 Making false or misleading statements
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.
Note 1: Subdivision 50-C of this Act and Subdivision 298-B of Schedule 1 to the Taxation Administration Act 1953 determine the procedure for obtaining a civil penalty order against you.
Note 2: In some circumstances, it is an offence to recklessly make a false or misleading statement under sections 8K and 8N of the Taxation Administration Act 1953 .