An individual tax agent and the tax agent company in which they were the sole director of, was found to have breached multiple items of the Code of Professional Conduct (Code) leading to the termination of registrations for both the tax agent individual and the company.

The Board Conduct Committee (BCC) found the tax agent individual had breached Code item 1 by failing to act honestly and with integrity by adding and removing themselves as a director to a company and then appointing an unrelated third party as a director. The tax agent lodged the relevant forms without appropriate authority from the Australian Securities and Investments Commission.

In addition, the tax agent failed to make appropriate enquiries to establish proof of identity and proof of record ownership before becoming an entity’s tax agent and provided tax agent services for 2 separate entities based on instructions from an unauthorised third party.

The tax agent, in their capacity as sole supervising agent of the tax agent company, exposed clients to compliance action from the Australian Taxation Office (ATO) by:

• preparing and lodging a business activity statement on behalf of a client and claiming input tax credits without conducting any checks or obtaining any relevant verification. The client was audited by the ATO which resulted in the determination that the client was not carrying on an enterprise. This caused the ATO to cancel the client’s GST registration and impose penalties for intentional disregard of a taxation law.
• preparing and lodging income tax returns (ITRs) on behalf of 6 clients containing research and development claims and tax offsets, without conducting any checks or obtaining any relevant proof to substantiate the claims. The ATO audited the clients and found they were not entitled to the deductions, resulting in tax shortfalls.
• failing to ascertain client’s circumstances in relation to work-related expense (WRE) claims made in ITRs lodged for 19 clients. The ATO found that the WRE claims could not be substantiated, resulting in tax shortfalls and in some cases, penalties being imposed on the clients.

The conduct resulted in the BCC finding the tax agent individual and the company had breached:

• Code item 7 – you must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently
• Code item 9 – you must take reasonable care in ascertaining a client's state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client.

The BCC also determined the tax agent and the tax agent company had ceased to hold professional indemnity insurance that met the Board’s requirements and determined the tax agent had ceased to be a fit and proper person to be registered.

The conduct of both the individual tax agent and the company was considered so egregious, that the BCC imposed a 4-year period in which both could not reapply for registration.