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ADMINISTRATIVE APPEALS TRIBUNAL - GENERAL DIVISION

AAT CASE 5653

Re STASOS and the TAX AGENTS' BOARD OF NEW SOUTH WALES

P M Roach, Senior Member, C J Stevens, G R Taylor, Members

31 January 1990 - Sydney

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Senior Member, P M Roach; Members, C J Stevens and G R Taylor    The risk of injustice being occasioned by delay is a perennial problem of the law and it is a problem which has particular relevance in the present case. When the applicant applied to this tribunal for a review of a decision of the respondent which had aggrieved him, he contemporaneously made application for an order directing a stay of the implementation of that decision until a hearing by this tribunal could be provided and an adjudication given upon the substantive issue. The importance of the matter was such that a request for a stay of the application was immediately responded to, with the first conference being convened by telephone. In this instance, because the president approved resort to techniques sometimes used in the taxation division of the tribunal, it was possible not only to provide for an early hearing, but also to arrange the due preparation for hearing of the application with minimum inconvenience and expense to the parties, and effort by the tribunal. Because an early hearing was possible, the respondent consented to an order staying proceedings pending the hearing and the determination which would follow it. But for that, in all probability, there would have needed to be two hearings: the first to adjudicate upon the application for a stay; and the second to determine the substantive issue - a course which would have substantially increased the expense to be incurred by all concerned: to the applicant; and to the community, both through the office of the respondent and through this tribunal. Furthermore, as will be seen hereafter, such additional delay - not the responsibility of the applicant - would have compounded the difficulty of the problem.

  2  The applicant is now a married man in his thirty-seventh year. In 1974, then in his twenty-second year, he obtained a technical college certificate in commerce and accounting. He then commenced working full-time for ITP for three months, and subsequently part-time while working as a clerk with a public authority. He then worked for four weeks with the Australian Taxation Office before obtaining his present full-time employment as an accounts clerk with Qantas Airways Ltd. Having worked full-time for ITP for three months, he then worked for them on a part-time basis for some fifteen months. Subsequently he took up a part-time, casual position with tax agents known as S & T Income Tax Aid Specialists Pty Ltd. He served as their nominee tax agent.

  3  The precise date upon which he gained accreditation with the Tax Agents' Board of New South Wales as a tax agent was not disclosed by the evidence, but it was said to have been in 1975. Having gained that status, he was entitled to hold himself out to the public as a person authorised to prepare income tax returns for reward; and to claim a reward for his services. But those rights and privileges were to be attended by responsibilities: responsibilities described by J D Davies, J in Re Su and Tax Agents Board (1982) 13 ATR 192; 82 ATC 4284 at 4286 in the following terms:

   The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.

  4  It was from 1975 that he commenced the development of his own practice as a tax agent, although for many years contemporaneously working in a "full-time" position with Qantas and working as a nominee tax agent for S & T Income Tax Aid Specialists Pty Ltd. Despite the intense effort and the many hours deposed to as committed to his private practice, his evidence that his work with Qantas was unaffected was not challenged. His first lodgments of returns in his own right commenced in about 1975 when he prepared returns for a few friends and relatives, but there was no substantial growth in his practice until after his marriage in 1978. His practice was to grow to the point that by date of hearing (December 1989) he had approximately 3988 clients. His instructions generated returns as follows:

Company returns -	1
Partnership returns -	124
Trust returns -	1
A & B returns -	600
S returns … c -	3262
c -	3988

  5  In an affidavit filed upon the hearing, the applicant (inter alia) described his practice in the following terms:

   "I commence working at home in my private practice at about 5 pm on weekdays and do not finish till midnight at least. Frequently I work until 2 am. I estimate that during the week, I work about thirty-eight (38) hours on the average in my private practice and on weekends, a further eighteen (18) hours also on the average. In addition, I take my annual leave of four (4) weeks during the 'tax season' of July/August and work for my private clients during that period. I also work on most public holidays for my private clients.

   

"Since I commenced my private practice, the number of my private clients has increased each year. I have never advertised my practice as many other accountants do by way of advertisements in local newspapers, business journals, club and other magazines and the like. I believe that the degree to which I have built up my practice is attributable to two factors, namely, the high quality of my work for my clients; and my fee structure which is far lower than that of most other accountants. Most of my clients are migrants of various ethnic backgrounds and most of them are simple, hardworking people on modest salaries near the bottom of the socio-economic ladder. My present fees average $25 for S returns, $30 for A returns and $60-$150 for small businesses. The majority of my clients pay my fees on the spot."

  6  It is relevant at this point to consider the appropriate way to account for fees so paid in the relevant returns. For convenience, we shall refer to successive years of income ended 30 June as years A, B and C respectively. At the close of year A, it becomes the responsibility of taxpayers to prepare and file a return of income in relation to year A. Ordinarily, that return of income will be prepared in year B. In accordance with the practice of the applicant, the taxpayer will make a payment in year B for the preparation of his year A return. The payment so made in year B will give rise to an allowable deduction in relation to the determination of the taxable income of the client for year B. It is therefore a deduction to be properly claimed by the taxpayer when his income tax return in relation to year B is prepared during year C. The fees received by the applicant from clients in year B constitute assessable income of year B.

  7  In January 1978, the applicant married and he and his wife commenced to reside in the home which he had purchased in 1976. It was said that for some five years following their marriage the wife of the applicant worked at her calling as a dental therapist. The applicant went on to say "since then, she has cared for our children and assists me in my practice". As their first child was born in December 1981 and the second in May 1983, it seems likely that the wife had some involvement in the practice much earlier than in 1983. Despite her involvement in the practice, she did not give evidence. In the circumstances, it is not unreasonable to suppose that such evidence as she might have given would not have assisted the applicant (Jones v Dunkel (1959) 101 CLR 298).

  8  At some point of time during the year of income ended 30 June 1980, and probably during the "tax season" of July/August 1979, the applicant embarked upon a course of conduct which has led him to this tribunal. He decided to evade tax. The method by which he proposed doing so was to understate the assessable income derived from his practice as a tax agent. As a means to that end, he commenced opening bank accounts in names other than his own. That of itself would not have led to any evasion of tax. But, following 30 June 1980 - the end of year 1 - he gave effect to the earlier decision by understating his assessable income from the practice in his return of income for year 1. He continued the practice in each of the four years following.

  9  Opening bank accounts in names other than his own was not the only technique to be used to that end. For reasons not clearly explained, the applicant took another step directed to the same end. It became a common practice for him not to claim tax deductions for his clients in relation to the fees they had paid to him for preparation of their returns. That is to say, in a large number of instances and as a matter of common practice, but without being a practice maintained on any orderly basis which could be explained, when in year B he received fees for the preparation of returns for year A, he did not disclose the fees as assessable income; and, further, when in year C preparing returns in relation to year B, for many clients he did not claim as tax deductions for them the fees they had paid to him during year B for the preparation of their returns for year A. The evidence such as it is suggests that he confined his omissions to those clients not likely to become aware of the omission - the persons most dependent upon his integrity.

  10  During 1985, the conduct of the Alpha Tax Aid, the firm name under which S & T Income Tax Aid Specialists Pty Ltd traded, came under question. One result was that on 4 July 1985, he completed a statutory declaration in which he gave details of the work done for Alpha Tax Aid and also declared his total income before tax in relation to each of the years of income ended 30 June 1981 to 1984 inclusive - the figures declared being the figures falsely disclosed as taxable income in his returns of income for those years. He also stated his total income before tax for the nine months to 31 March 1985.

  11  Contemporaneously, but unknown to the applicant, the Commissioner of Taxation was investigating matters relating to certain bank accounts. One result was that on 26 July 1985 the Commissioner seized funds in a bank account held in the name of Michelle Stacey. The seizure was effected pursuant to an assessment of income tax issued against her. The tribunal was not told precisely how much was taken up by the Commissioner. An officer of the Commissioner deposed to the sum having been "approximately $30,000"; and the applicant spoke of it as being a sum of the order of $24,000. Such imprecision does no credit to those responsible for the preparation of either case. Fortunately, nothing turns on the precise amount. Then, early in September 1985, an officer of the Commissioner contacted the applicant by telephone to arrange an interview. We find that the tax officer made it clear that the interview was to relate to the income tax affairs of the applicant rather than of any of his clients, and he took care not to further disclose the matters to be raised. Bearing in mind the tax evasion practices which had been followed by the applicant for some six years prior to that telephone call, the tribunal is in no doubt that the applicant was well aware of, and had to the forefront of his mind, the possibility that his evasion had been detected. It appears more probable than not that, prior to the interview which followed, he became aware that the Commissioner had seized the moneys in the account maintained by the applicant in the name of Michelle Stacey.

  12  The interview so arranged took place on 18 September 1985. The tax officers first raised questions as to whether he held a false name account in the name of Michelle Stacey. Initially he denied it. He then denied holding other accounts in false names. He attributed the funds he controlled to gambling winnings. But ultimately, on being confronted with names and other information by the tax officers, he acknowledged that he had maintained bank accounts in six names other than his own. We find that at no time did he volunteer to the officers any name not previously mentioned by them. In the course of the interview, other questions considered were remuneration from Alpha Tax Aid and from his practice; and the amounts of cash kept on hand. As to the latter, he initially acknowledged only a sum of the order of $220, but subsequently produced a bundle of $20 notes estimated by the officers to contain $3000 to $5000. He admitted gross receipts of c $30,000 from his practice - according to the officer's notes "in the 1985 year" (sic). He acknowledged his only record of fees received in the period for the years of income ended 30 June 1977 to 1985 as being $1160; $1390; $1760; $3866; $3627; $4044; $8485; $12,468; and $29,560 respectively. Having regard to the number of returns lodged and the alleged fees charged, the officers suggested that a current gross income of the order of $48,000 from the practice would have been more appropriate. He was also asked as to the whereabouts of funds which had been withdrawn from one account acknowledged to be maintained by him in a name other than his own. He acknowledged that the funds were held in cash under his control but did not say precisely where.

  13  The tribunal is satisfied that on that occasion the applicant had been anxious and agitated, but is also satisfied that the cause of his concern was not being confronted with what he had described in the affidavit filed at the hearing as his "misdemeanours" being discovered, but rather at the fact that the investigators were so well-informed as to his misconduct. With that came the realisation that his difficulties were substantial.

  14  We find that at no time since that interview has the applicant sought to deceive investigators with stories about gambling winnings, or by denial of any accounts in false names. But that finding must be placed in its context. There has been no need for deception. That is not to say that either the Commissioner or this tribunal is persuaded, or should have been persuaded, that there has been a total disclosure of all that was material.

  15  Nonetheless, next day the applicant called at the offices of the Commissioner. Unquestionably, he was then in an extremely agitated and nervous condition. On that occasion he paid a sum of approximately $24,000 to the Commissioner and provided a list of names compiled from memory: a list which did not disclose to the Commissioner any account or name which had not been mentioned in interview the previous day.

  16  Thereafter, the applicant retained the services of solicitors and negotiations as to his tax liability proceeded, commencing with an interview attended by the applicant and his solicitor on 14 October 1985. Thereafter, the applicant was not directly involved in negotiations.

  17  The investigation remained incomplete at 2 July 1986, on which date the applicant swore an affidavit in proceedings before this tribunal in which Alpha Tax Aid was applicant and the Tax Agent's Board respondent. The significance of that affidavit lies only in the circumstance that he annexed to it a true copy of his earlier statutory declaration of 4 July 1985. He did not expressly affirm in his affidavit that the statements in the statutory declaration were true and correct.

  18  On 18 July 1986 agreement was reached between the tax officer having responsibility for the conduct of the investigation and the representatives of the applicant as to the amended assessments to issue. The tribunal accepts that the taxpayer was not directly involved and was not informed in writing of the proposed terms of settlement. However, he does not dispute that the assessments of income tax which subsequently issued were in accordance with those agreed terms of settlement. The assessments when they issued were objected to, but the objections were not proceeded with.

  19  But what happened, or did not happen, from that point was quite remarkable and contributes to the difficulties which must now be addressed in resolving these matters. Agreement having been reached, it became the responsibility of the tax officer concerned to "write up" the results of the investigation and arrange for appropriate amended assessments to issue. That did not happen with any promptitude. The first record in evidence before the tribunal that the respondent was aware that there had been an investigation is a memorandum of 19 March 1987. An officer of the respondent spoke with the investigating officer that day "… who advised the case, whilst completed had not been written up. He also advised that a compromise had been reached and the credit would cover the debt agreed to. Mr Evans took my name and extension to advise me of its completion".

  20  There is nothing in the record to indicate what it was that prompted the conversation in the first place, but the evidence before the tribunal given by the investigating officer is that it was not until October 1987 that his commitments to other work of higher priority allowed him an opportunity to finalise the figures and to have commissioned the issuing of the relevant amended assessments. What happened thereafter was not known to the investigating officer until shortly prior to the hearing when, upon enquiry being made, he ascertained that the amended assessments in question did not issue until 31 May 1989 (sic). They issued in accordance with the figures which had been finalised on 12 October 1987.

  21  What was disclosed by the amended assessments and the documents prepared in support of them was as follows:

Year ended   30 June	1980	1981	1982	1983	1984	Total
	$	$	$	$	$	$
Taxable income   previously assessed	17,525	14,480	14,502	24,758	27,996	99,261
Omitted income	9,783	20,956	20,892	16,765	21,154	89,550
Amended taxable   income	27,308	35,436	35,394	41,523	49,150	188,811
Tax avoided*	4,605	9,388	9,135	8,515	11,485	43,128
Additional tax incorrect   return	5,800	10,740	8,562	6,375	6,606	38,083

 * Figures have been expressed to the nearest $1.

  22  The additional tax levied for incorrect return was calculated so that the figure to which that additional tax was remitted was equal to the sum of 10% per annum of tax avoided for the period up to 13 February 1983; 20% per annum of tax avoided to c 14 November 1985; and, as a "culpability factor", 50% of tax avoided. The sums so assessed had been paid before October 1989.

  23  But even before those amended assessments had issued, the respondent board had taken action. By notice of 23 January 1989 it had called upon the Deputy Commissioner of Taxation to provide information relating to the affairs of the applicant, and upon that information being provided, the board at its meeting, held on 18 April 1989, resolved to call upon the applicant to: "provide a full explanation of his activities which gave rise to investigations by the Taxation Office."

  24  On 28 April 1989, the secretary of the board wrote to the applicant (inter alia) drawing his attention to "the provisions of subs 251K(2) of the Income (sic) Tax Assessment Act at para (a) and/or (d) and/or subpara (b)(ii) ". The letter went on to say:

   

"Would you please show cause as to why the board should not be satisfied that you have been guilty of one or more of the above, namely:

 

[at para (a) ]:

 

that you have prepared income tax returns (namely your own) which were false in material particular (sic); and/or

 

[at para (d) ]:

 

that you are no longer a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; and/or

 

[at subpara (b)(ii)]:

 

you have been guilty of misconduct as a tax agent."

   A reply within 28 days of the date of that letter was called for.

  25  The response sought was not forthcoming within the time specified, but no point is made of that. A response was provided by the applicant's solicitors on 28 July 1989 and that response was considered at a meeting of the respondent board held 19 September 1989. At that time, the board decided to cancel his registration as a tax agent. By letter of 21 September 1989, the secretary of the board on its behalf gave notice to him of that decision stating (inter alia):

   

"I have been directed by the board to advise you that, after full deliberation (sic) of the information before it, it was of the opinion that even though you submitted a case showing cause why the board should not cancel your registration, according to the three sets of provisions outlined in its 28 April 1989 letter, you failed to address those matters which resulted in and resulted from the Taxation Office investigation.

 

The Board therefore decided to cancel your registration as a tax agent according to the following provisions of the Income Tax Assessment Act 1936 and for the reasons outlined:

 

1 (a)

 

Subsection 251K(2) of the Act at para (a); the board was satisfied that in the preparation of your own income tax returns for the years 1980 through 1984 you knowingly understated your income for those years by a total of $89,550 which resulted in evaded tax of some $43,127 for the five years and attracting (sic) penalties of $38,083 for the same period.

 (b)  Upon being satisfied the board cancelled your registration as a tax agent pursuant to subs 251K(2) para (a) of the Act.

 

2 (a)

 

Subsection 251K(2) of the Act at subpara (b)(ii); the board was satisfied that, in yourself holding and operating some six bank accounts in six difference (sic) names other than your own you had been guilty of misconduct as a tax agent.

 (b)  Upon being satisfied the board cancelled your registration as a tax agent pursuant to subpara 251K(2)(b)(ii) of the Act.

 

3 (a)

 

Subsection 215K(2) of the Act at paragraph (d) ; for the reasons outlined in 1(a) and 2(a) above the board was also satisfied that you are no longer a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters.

 (b)  Upon being satisfied, the board cancelled your registration as a tax agent pursuant to paragraph 251K(2)(d) of the Act.

 

Your attention is formally drawn to the provisions of subs 251L(1)and 251O(1) of the Act in that, until such time as a stay, reconsideration or reversal of the board's decisions is effected, you are strongly urged to immediately cease and desist any such activities which may, directly or indirectly, place you in possible breach of subs 251L(1) and/or 251O(1) of the Act."

   The board went on to advise the applicant of his right to seek a review of its decision before this tribunal.

  26  On 29 September 1989, the applicant applied to this tribunal for a review of that decision and at the same time lodged a request pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) that an order be made staying the operation or implementation of the cancellation decision. As mentioned in the opening paragraph of these reasons, the tribunal was able to respond sufficiently promptly to make a contested stay application unnecessary and the substantive application came forward for hearing on the eleventh and twelfth days of December 1989.

  27  The substance of the case for the applicant as presented before the tribunal at the hearing is as follows:

 (1)  The wrongdoing of the applicant in the course of the performance of his duties as a tax agent servicing his clients and as a tax agent taxpayer as were recounted earlier in these reasons was not disputed; but

 (2)  the applicant contends that, from the month of September 1985, he has been wholly and sincerely contrite; that he has been "punished" for his wrongdoings as a taxpayer by the imposition of penalties by way of additional tax for incorrect returns; that he has in all respects since that time been both meticulous and in all respects diligent and proper in the performance of his duties as a tax agent; and that at the present time he is in every respect, and was so at the time the decision of the respondent was taken, a fit and proper person to be registered as a tax agent.

  28  It is not suggested for the applicant that there has been any culpable delay on the part of the respondent in addressing its mind to the issues giving rise to the cancellation. But it is submitted that to now affirm a cancellation, and even to substitute a suspension for the cancellation, would be oppressive and burdensome, particularly as the applicant has for more than four years demonstrated his fitness to be registered.

  29  In the course of the hearing some reference was made to the possibility that the applicant had also demonstrated prior to September 1985 his unfitness for registration by engaging in an exchange of services from clients for his own services as a tax agent. The tribunal is not persuaded that there was any demonstrated impropriety in anything which might have been undertaken in that regard. Counsel for the respondent also sought to introduce evidence that the applicant may have been party to the evasion of income by one client who gave evidence. Having regard to very substantial difficulties in communicating the concept of privilege against self-incrimination to that taxpayer, the tribunal declined to hear any evidence from him on that point. In consequence, the question not having been previously raised with the applicant during the course of his cross-examination, there is no substantive allegation to be considered. At the end of the day the only conduct since September 1985 to be pointed to on behalf of the respondent as indicating a standard of performance less than that to be expected of a tax agent is in the matter of swearing of the affidavit of 2 July 1986 annexing the statutory declaration of July 1985.

  30  We have no hesitation in finding that a person who embarks upon a course of concealing income with a view to the future understatement of taxable income by the non-disclosure of the concealed moneys is not a fit and proper person to be registered as a tax agent for the purposes of the Income Tax Assessment Act 1936 (Cth). Further, a registered tax agent who knowingly and deliberately understates his assessable income in order to avoid income tax is not a person fit and proper to be the holder of registration as a tax agent for the purposes of the Act. But, a fortiori, a tax agent who endeavours to make effective his attempts to evade income tax by concealing the received assessable income by failing to claim as tax deductions for his clients the fees paid to himself as a tax agent is unfit to be registered as a tax agent. More seriously, a person who exploits the dependence upon him of his clients by not claiming the deductions to which they were entitled with a view to some advantage to himself is not fit to be registered as a tax agent.

  31  The responsibilities which the respondent board was required to discharge in making the determination now under review were those cast upon it by the provisions of s 251K of the Income Tax Assessment Act (the Act). The relevant provisions so far as is material read as follows:

   

" 251 K (2) - A Board may suspend or cancel the registration of any tax agent upon being satisfied that:

 (a)  any return which has been prepared by or on behalf of the tax agent is false in any material particular; unless the tax agent establishes to the satisfaction of the Board that he had no knowledge of the falsity or that the falsity was due to his inadvertence;

 (b)  the tax agent

 (i)  has neglected the business of a principal; or

 (ii)  has been guilty of misconduct as a tax agent; or

 (c)  …

 (d)  if the tax agent is a natural person - the tax agent is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; …"

  32  It was not for the board to determine by reference to some criteria of its own whether the applicant ought to be punished for his wrongdoing. In so finding, we adopt the principles which have been expressed by the High Court of Australia in decided cases dealing with the disbarment of barristers. In Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-2 in a joint judgment, a full bench of the court said:

   Although it is sometimes referred to as "the penalty of disbarment", it must be emphasised that a disbarring order is in no sense punitive in character. When such an order is made, it is made, from the public point of view, for the protection of those who require protection, and from the professional point of view, in order that abuse of privilege may not lead to loss of privilege.

  33  Eight years later, another full bench of the court, of whom only one judge had been a member of the court in Clyne, again spoke unanimously in NSW Bar Association v Evatt (1968) 117 CLR 177. The court said at 183-4:

   The power of the court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved. This has already been pointed out by this court in Clyne v NSW Bar Association. The respondent's failure to understand the error of his ways of itself demonstrates his unfitness to belong to a profession where, in practice, the client must depend upon the standards as well as the skill of his professional adviser. (It is appropriate to acknowledge immediately that the present applicant now professes a complete understanding of the error of his ways and sincere contrition that he ever acted as he did.)

  34  It follows that it was not for the board to take into account any view it might have formed as to whether taxable income had been under-assessed, or additional tax for incorrect return too liberally remitted. It was not for the board to give effect to a view that the Commissioner ought not have prevented any prosecution for any offence against the provisions of the Act. In so far as the applicant engaged in wrongdoing which resulted in small but repeated losses to a significant number of his clients - people known to him to be unlikely to be able to identify his wrongdoing and known to him to be persons who by reason of their social disabilities were substantially dependent upon him, and in so far as he embarked upon and continued over a long period in systematic tax evasion, the question is whether his registration as a tax agent should have been cancelled on [sic] some lesser sanction (if any) imposed.

  35  If the board or, in its place, this tribunal considers a suspension or cancellation or registration to be appropriate, it is no less appropriate because hardship, and even substantial hardship, may flow, either socially or financially or both, from giving effect to such a decision, or because it may flow not only to the applicant, but to his family. The question is not one of punishment, but one of "fitness" to enjoy the privileges of a registered tax agent.

  36  In our view, the abuse of privilege involved in not claiming deductions in relation to fees he had received from clients, and doing so for his own perceived advantage was a more serious breach of the responsibilities of the tax agent than the understatement of his income or the steps taken to conceal his true taxable income. Had the conduct which has been revealed been reviewed by the board as soon as it came to be known to the Commissioner, there can be no doubt but that cancellation of registration would have been the only appropriate order.

  37  But it is not September 1985 or any date shortly thereafter. It is now January 1990. That there was evidence warranting the issue of amended assessments was known to the Commissioner in September 1985 but it was not communicated to the board. That there had been an investigation was known to the board as early as March 1987, but although known, the matter was not followed up by the board until January 1989 - presumably because, in March 1987, the board had been assured that a report would in due course be forthcoming from the Commissioner. But that there had been exploitation of clients and an abuse of the trust placed by them in the applicant was not known to anyone other than the applicant until it emerged in the course of these proceedings.

  38  It was not until January 1989 that the respondent took effective steps to inform itself as to the results of the investigation. Thereafter there was no delay to be complained of.

  39  But in a period of over four years (from September 1985 to December 1989), with the exception of the affidavit already referred to, the applicant has not been shown to have performed below the standards to be expected of tax agents in the exercise of their privileges and the discharge of their responsibilities. On the other hand, the nature and circumstances of the evasion of income tax and the absence of any disclosure at any time to the Commissioner of information not already known to him is such as to reasonably leave doubts as to whether in all respects there has even now been full disclosure. Similar doubts would reasonably exist in hitherto trusting clients upon becoming aware of the prolonged period of repetitive and frequent deception of clients.

  40  During the hearing, several clients came forward to offer their testimony as to their confidence in and respect for the applicant. Some of them were hardly in a position to do otherwise for they had no basis for doubt: they lacked the capacity, experience and information to effectively make a critical assessment. What is more, the information available to those witnesses as to the extent and nature of the wrongdoing was quite limited. It is not surprising therefore that expressions of confidence in the applicant became less sure as an understanding of what had been done grew.

  41  The section provides that the powers of suspension and cancellation operate in futuro. Upon the board or, in its place, the tribunal, being satisfied (in the present tense) as to past conduct, that any return previously prepared was false; or that the agent had neglected the business of a principal or, had been guilty of misconduct, suspension or cancellation may follow. But the exercise of the other relevant head of power is conditioned upon a finding that "the tax agent is not a fit and proper person" (emphasis added), a reference to the present, but a reference which carries inherently within it the notion of a finding that the individual is presently not a fit and proper person by reason of past conduct. Therefore it is argued that, if the tribunal should find that by reason of the events of the past four years, the applicant is a fit and proper person at the present time, there is no basis for exercise of the power set forth in s 251K(2)(d); although suspension or cancellation may follow by reason of past conduct in relation to the other provisions.

  42  In the view of the tribunal, having regard to the gravity of the misconduct extending over several years to 1985, and notwithstanding the absence of any proven misconduct since, the applicant is not now a fit and proper person to be registered as a tax agent.

  43  A second consideration also needs to be borne in mind. Davies J in Re Su, supra, was addressing a situation in which the only question to be considered was whether status as a tax agent should be cancelled; there was no power of suspension. Similarly, in relation to barristers, the comments of the High Court of Australia were directed only to a situation of disbarment. But, as the Court of Appeal of the Supreme Court of New South Wales held in Evatt v Bar Association of NSW (unreported 1981):… demonstrative, objective proof of persistence in habits of integrity, uprightness and responsibility in the pursuit of ordinary business or other activities over a period sufficiently long …

   may warrant restoration to the status forfeited.

  44  In line with the observations of the court in the latter case, one would be loath to say that the applicant should never again be registered to practise as a tax agent. If one were of that view, cancellation would be the only appropriate order but, given that it is recognised that restoration to the register may be appropriate at some future date, the question then becomes whether there should be an order of suspension rather than a cancellation. The difference would appear to lie in this, namely, that an order as to suspension requires that the tribunal define the period of suspension and thereby implicitly assert a present capacity to make a judgment that, at some specific future date, either near or distant, the applicant will be a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. On the other hand, to presently order cancellation would reserve to the board the responsibility of deciding at some future date, whether near or distant, the question as to whether at that date, upon consideration of all that has occurred to that date, the applicant should then be judged to be "a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters".

  45  There may be circumstances in which the nature of the misconduct is such that one would be disposed to make a present judgment which would have the effect of restoring the applicant to the register at a particular future date. But in our view, care should be taken in the exercise of any claim to such seemingly prophetic judgment. In forming that view, we particularly bear in mind that the misconduct disclosed in these proceedings was quite deliberate, repeated, ongoing and extended over a prolonged period. We also bear in mind that, in considering restoration in status, it would be appropriate for the board to pay close attention to the conduct of the applicant, not only in the period from September 1985 to date, but in the period yet to come which will precede any application for restoration in status.

  46  That being so, we do not consider an order for suspension appropriate.

  47  The order of the tribunal will be that the decision of the respondent under the review shall be confirmed.