Logic Accountants & Tax Professionals Pty Ltd & Anor v Tax Practitioners Board

Tribunal:
Administrative Appeals Tribunal, Brisbane

MEDIA NEUTRAL CITATION: [2021] AATA 676

DK Grigg (Member)

INTRODUCTION

1. This matter concerns decisions made by the Tax Practitioners Board (" TPB ") to cancel the Applicants' tax agent registrations on the grounds that they breached various provisions of the Code of Professional Conduct (" Code ") contained within the Tax Agent Services Act 2009 (Cth) (" TASA ").

2. As a result of the alleged Code breaches, TPB contends that Mr Mina is not a "fit and proper person" as required by section 20.5 of the TASA and that, therefore, the Applicants are not eligible to be registered as tax agents.

BACKGROUND FACTS

3. Mr Mina has been a registered tax agent since 23 June 2000. Logic Accountants Pty Ltd (" Logic ") has been operating as a registered tax agent since 28 June 2009.^[1] Exhibit 1, T Documents, pages 49-51 and Exhibit 2, T Documents, T5, pages 38-40, MASCOT Search for Logic Accountants & Tax Professionals Pty Ltd. Mr Mina has been the sole director and controlling mind of Logic since its incorporation on 4 May 2009^[2] Exhibit 1, T Documents, T5, page 25 and Exhibit 2, T Documents, T5, page 20, TPB Submission to the Board Conduct Committee. and at all relevant times was the supervising tax agent.^[3] Exhibit 1, T Documents, T5, page 25 and Exhibit 2, T Documents, T5, page 20, TPB Submission to the Board Conduct Committee and see also Tax Agent Services Act 2009 (Cth) section 20-5(3)(d)(i).

Reviews and Audits of the Applicants' Affairs conducted by the ATO (2011 - 2018)

4. In May 2011 Logic was reviewed by the Australian Taxation Office (" ATO ") for failing to lodge business activity statements (" BAS ") for the period September 2010 to March 2011.^[4] Exhibit 1, T Documents, T5, pages 55-57, BAS Non-lodger Review Case Summary and Record of Contact 26 May 2011. Mr Mina was advised that he had until 9 June 2011 to lodge any outstanding BAS.^[5] Exhibit 1, T Documents, T5, pages 56-57, ATO Record of Contact 26 May 2011. Mr Mina lodged the outstanding BAS 5 days late on 14 June 2011.^[6] Exhibit 3, ST Documents, ST1, page 3, BAS Lodgement Summary Spreadsheet.

5. On 3 September 2012, the ATO issuing a garnishee notice to Logic's financial institution to recover an overdue Client Activity Centre (" CAC ") debt of $41,402.48 (" CAC Debt ").^[7] Exhibit 1, T Documents, T5, pages 58-61 and Exhibit 2, T Documents, T5, pages 126-129, Garnishee Notice dated 3 September 2012. As a result of the garnishee notice the ATO recovered $25,905.73, leaving $15,496.75 still owing.^[8] Exhibit 1, T Documents, T5, page 65 and Exhibit 2, T Documents, T5, page 133, Garnishee Successful Notice dated 6 September 2012.

6. On 19 September 2013, the ATO issued a garnishee notice to Mr Mina's financial institution to recover an outstanding debt totalling $30,716.12.^[9] Exhibit 1, T Documents, T5, page 273 and Exhibit 2, T Documents, T5, page 63, Garnishee Notice dated 19 September 2013; Garnishee notices may be issued pursuant to section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth). As a result of the garnishee notice the ATO recovered $2,333.39, leaving $28,382.73 still owing.^[10] Exhibit 1, T Documents, T5, page 280 and Exhibit 2, T Documents, T5, page 70, Garnishee Successful Notice dated 25 September 2013.

7. In August 2015, the ATO issued an amended income tax return (" ITR ") for Mr Mina for an Excess Concessional Contribution amount for the 2014 financial year.^[11] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 21. Mr Mina lodged an objection to the ATO's amended assessment.

8. On 3 September 2015, the ATO wrote to Mr Mina and confirmed that he had an overdue tax debt of $9,693.26 (for the 2014 financial year) that must be paid on or before 17 September 2015 and that failure to pay may result in legal action being commenced.^[12] Exhibit 1, T Documents, T5, page 281 and Exhibit 2, T Documents, T5, page 71, Overdue Tax Debt Notice dated 3 September 2015.

9. On 28 January 2016, the ATO wrote to Mr Mina again and confirmed that he still had an overdue tax debt of $9,693.26 that must be paid on or before 11 February 2016 and that failure to pay would result in the debt being referred to a collection agency.^[13] Exhibit 1, T Documents, T5, page 283 and Exhibit 2, T Documents, T5, page 73, Pre-referral Warning Notice dated 28 January 2016.

10. On 18 April 2017, the ATO wrote to Logic regarding its outstanding CAC Debt of $15,847.29 and confirmed that if the debt was not paid in full by 2 May 2017 the debt would be referred to a collection agency.^[14] Exhibit 3, ST Documents, ST7, page 29, Overdue Activity Statement dated 18 April 2017. Logic did not pay the CAC debt or make a payment arrangement with respect to the CAC debt before 2 May 2017.

11. As of 10 May 2017, Logic had an outstanding debt to the ATO of $29,078.05. Logic had been warned by the ATO in April 2017 that if the debt remained unpaid it would be referred for debt collection. On 10 May 2017 Logic applied for and entered into an arrangement to pay off the debt by monthly instalments of $10,000.

12. In May 2017, the ATO assessed Mr Mina as owing outstanding tax liabilities for the 2016 financial year totalling $17,439.^[15] Exhibit 1, T Documents, T5, page 285 and Exhibit 2, T Documents, T5, page 75, Notice of Assessment year ending 30 June 2016.

13. In June 2017, the ATO wrote to Mr Mina regarding an outstanding income tax debt of $12,439 and confirmed that the debt was not paid in full by 29 June 2017 the ATO would take legal action.^[16] Exhibit 3, ST Documents, ST16, page 214, Overdue Tax Debt Notice dated 15 June 2017.

14. In September 2017, Logic entered into a payment plan in relation to outstanding BAS totalling $155,168.22. The conditions of the payment plan were as follows:^[17] Exhibit 1, T Documents, T5, page 345 and Exhibit 2, T Documents, T5, page 179, Confirming Payment Plan Notice dated 7 September 2017.

CONDITIONS OF YOUR PAYMENT PLAN

• - Pay your instalments on time as per the schedule.
• - Make all other tax lodgement and payments by their due dates.

15. In December 2017, the ATO assessed Mr Mina as owing outstanding tax liabilities for the 2015 financial year totalling $3,661.48.^[18] Exhibit 1, T Documents, T5, page 291 and Exhibit 2, T Documents, T5, page 179, Notice of Assessment year ending 30 June 2015.

16. In January 2018, the ATO wrote to Mr Mina regarding his outstanding income tax debt of $3,992.43 and confirmed that the debt was not paid in full by 29 January 2018 the ATO would take legal action.^[19] Exhibit 3, ST Documents, ST17, page 216, Overdue Tax Debt Notice dated 15 January 2018.

17. On 31 May 2018, the ATO advised Logic that it had failed to comply with the conditions of the payment arrangement for the outstanding BAS and that an amount of $29,065 was still owing.^[20] Exhibit 1, T Documents, T5, page 349 and Exhibit 2, T Documents, T5, page 183, Default Arrangement Activity Statement dated 31 May 2018.

18. In June 2018, the ATO assessed Mr Mina as owing outstanding tax liabilities for the 2017 financial year totalling $13,049.25.^[21] Exhibit 1, T Documents, T5, page 296 and Exhibit 2, T Documents, T5, page 89, Notice of Assessment year ending 30 June 2017.

19. On 14 June 2018, Mr Mina entered into a payment arrangement with the ATO for the sum of $39,463.75 (re outstanding BAS). The conditions of the payment plan were as follows:^[22] Exhibit 1, T Documents, T5, page 351 and Exhibit 2, T Documents, T5, page 184, Confirming Payment Plan Notice dated 14 June 2018.

CONDITIONS OF YOUR PAYMENT PLAN

• - Pay your instalments on time as per the schedule.
• - Make all other tax lodgement and payments by their due dates.

20. On 23 October 2018, the ATO advised Logic that it had lodged its BAS for the period ending 31 July 2018 late and that in the event this occurred again a penalty may be applied.^[23] Exhibit 1, T Documents, T5, page 355 and Exhibit 2, T Documents, T5, page 184, Pre-referral Warning Notice dated 23 October 2018.

Reviews and Audits of the Applicants' Employee Obligations conducted by the ATO (2013 -2018)

21. On 5 February 2013 Logic was selected for audit by the ATO in relation to its compliance with superannuation guarantee (" SG ") obligations.^[24] Exhibit 3, ST Documents, ST2, page 4, Notification of Audit: Superannuation Obligations dated 5 February 2013. On 27 February 2013, having not received completed SG statements from Logic, the ATO advised that it would make default assessments of Logic's SG liability.^[25] Exhibit 3, ST Documents, ST3, page 8, Notification of Intention to Make Default Assessment of SGC dated 27 February 2013.

22. Following the SG audit the ATO determined that Logic:^[26] Exhibit 3, ST Documents, ST4, pages 11-19, Notification of Finalised Audit dated 30 April 2013.

• (a) had lodged its SG statements for the period 1 July 2009 to 30 September 2010 after the due date, and after being notified of the audit;
• (b) had not made SG payments by the required dates; and
• (c) would receive a 17% penalty for failing to lodge on time.

23. Logic was again notified by the ATO in June 2013 of a further audit of its employer obligations.^[27] Exhibit 3, ST Documents, ST5, page 20, Notification of Audit: Superannuation Obligations dated 14 June 2013. Following this audit, the ATO determined that Logic:^[28] Exhibit 3, ST Documents, ST6, pages 24-28, Notification of Finalised Audit dated 20 September 2013.

• (a) had not lodged activity statements of reported Pay As You Go ( " PAYG " ) amounts for the periods April to June 2013;
• (b) had not lodged PAYG withholding annual reports for the 2011/12 year;
• (c) had not met its SG obligations for the period 1 April 2011 to 30 June 2013; and
• (d) would receive a 17% penalty for failing to lodge on time.

24. In November 2017, Logic was again audited in relation to its SG obligations.^[29] Exhibit 1, T Documents, T5, page 83 and Exhibit 2, T Documents, T5, page 162, Notification of Audit: Superannuation Obligations dated 20 November 2017. In February 2018, the ATO determined that Logic had again failed to comply with its SG obligations.^[30] Exhibit 1, T Documents, T5, page 85 and Exhibit 2, T Documents, T5, page 164, Notification of Finalised Audit dated 7 February 2018. As a result a new SGC debt was raised totalling $9,375.52.^[31] Exhibit 1, T Documents, T5, pages 87-91 and Exhibit 2, T Documents, T5, pages 166-170, SG Statement of Account dated 8 February 2018. Logic was advised that this debt was due and payable by 26 February 2018.^[32] Exhibit 3, ST Documents, ST8, pages 31-32, Overdue Tax Debt Notice dated 12 February 2018. Logic paid this debt on 12 February 2018.

Failure to Lodge Tax Agent Renewal Application

25. On 21 July 2015, the TPB informed Mr Mina that Logic's registration as a tax agent had been terminated due to its failure to lodge its renewal application by the due date. The renewal application for Logic's tax agent registration was then lodged with the TPB on 5 August 2015 and approved on 21 August 2015. As a result of failing to lodge its registration renewal application on time, between 21 July 2015 and 20 August 2015 Logic was not registered to provide tax agent services. During this unregistered period Logic lodged 35 BAS and 668 ITRs on behalf of clients.^[33] Exhibit 1, T Documents, T5, pages 66-81 and Exhibit 2, T Documents, T5, pages 44-59, Lodgement Report dated 14 February 2019. Mr Mina told the TPB that the reason for his failing to lodge the registration application on time was an oversight and because his receptionist had not passed on the TPB's letters to him.^[34] Exhibit 1, T Documents, T5, pages 308-309, Response from Mr Mina’s Solicitor dated 5 April 2019.

Reviews and Audits of the Applicants' Clients conducted by the ATO (2011 - 2018)

26. On 5 July 2011, Mr Mina met with an ATO compliance manager who advised that Logic's clients would be subjected to increased penalties if, following audits, they were found to have incorrectly claimed work related expenses (" WRE ").

27. The ATO audited 84 ITRs of Logic's clients for the 2010/2011 financial year (" 2011 Client Audit "). Following the 2011 Client Audit, 84 of the ITRs had to be adjusted due to a variety of issues such as overclaimed WREs and overclaimed travel expenses. The ATO considered that these overclaims were due to Mr Mina, resulting from a misunderstanding of relevant tax laws, not making sufficient client enquiries of the claims made by the clients and not requiring substantiation of the expenses.^[35] Exhibit 3, ST Documents, ST10, pages 39-44, Notification of Outcome for Income Tax Amendments dated 5 July 2012.

28. In February 2014, the ATO advised Logic that it was satisfied appropriate strategies had been put in place to mitigate compliance risks and that no further action would be taken.^[36] Exhibit 1, T Documents, T5, page 102, Review of Work Practices Letter dated 13 February 2014.

29. In August 2014, Logic lodged an ITR on behalf of a particular client (" Dr V "), which claimed WRE for his motor vehicle of $3,250, WRE for self-education of $48,287 and other WRE of $6,787. Those WRE claims were disallowed by the ATO. Mr Mina then assisted his client to lodge an objection. The objection was only allowed in part^[37] Exhibit 3, ST Documents, ST20, page 226, Notice of Objection Decision dated 3 September 2015. and Dr V appealed to this Tribunal. The Tribunal found that Dr V was not entitled to the bulk of the WRE claimed because there was insufficient nexus to Dr V's income, and/or they could not be substantiated and/or they were not actually expenses incurred in the relevant financial year. The decision of the Tribunal can be found at
Vakiloroaya and Commissioner of Taxation (Taxation) [2017] AATA 95.

30. A further audit of 10 of Logic's clients' WRE claims for the 2014 financial year was conducted in 2015. The ATO determined that the WRE claims made by these clients were:^[38] Exhibit 1, T Documents, T5, pages 103-106, Audit Outcome Letter dated 9 April 2015 and Exhibit 3, ST Documents, ST14, pages 175-181, ATO Preliminary Enquires Letter dated 28 November 2018.

• (a) " greater that 98.3% of tax agents with similar numbers of clients and complexity in their tax affairs";
• (b) not fully substantiated or did not have sufficient nexus to be claimed; and
• (c) did not comply with relevant Taxation Rulings regarding the deductibility of self-education expenses and home office expenses.^[39] See TR 98/9 Income Tax: deductibility of self-education expenses; TR 93/30 Income Tax: deductions for home office expenses and PS LA 2001/6 Home Office Expenses: diaries of use and calculations of home office expenses.

  ("emphasis added")

31. In 2016 and 2017, the ATO conducted a further audit of 19 of Logic's clients' ITRs for the financial years ended 2014 and 2015. All of those clients' ITRs required adjustments because of over claims of deductions.

32. In March 2018, the ATO sent Mr Mina a summary of the audits it had conducted on Logic's clients which identified a total tax shortfall of $193,149.20 and penalties totalling $65,076.74 having been imposed. The ATO found that:^[40] Exhibit 1, T Documents, T5, pages 107-118, Summary of Income Tax Audits Outcome dated 7 March 2018.

• (a) WRE car expenses claimed were not work-related and that there were invalid, incomplete, or there were non-existent logbooks kept by the clients;
• (b) clients had claimed expenses for uniforms which were in fact private clothes;
• (c) WRE had not been appropriately calculated and inadequate records had been kept; and
• (d) rental deductions had been incorrectly claimed for private interest expenses.

33. On 7 March 2018, the ATO advised Mr Mina that based on the results of the audits undertaken it would be continuing to monitor the level of its clients' WRE deductions and claims.^[41] Exhibit 3, ST Documents, ST14, pages 182-193, Summary of Income Tax Audits: Post Lodgement Audit Plan, dated 7 March 2018.

34. The following table sets out the compliance activities in relation to Logic's clients regarding their WRE claims:^[42] Exhibit 1, T Documents, T5, page 39, Summary of Repeated Compliance Activities: WRE Claims.

35. As a result of its audit investigations, the ATO determined that:^[43] Exhibit 1, T Documents, T5, pages 46-47 and Exhibit 3, ST Documents, ST10, pages 39-43, ST13, pages 52-174, Reviews and Audits of the Applicants’ Clients conducted by the ATO 2011-2018.

• (a) some of the deductions and claims made by Logic's Clients in their ITRs were incorrectly claimed. The ATO found there was an insufficient nexus between the expenses claimed by the Clients as work related expenses;
• (b) Logic had prepared the ITRs of the Clients who had made WRE claims;
• (c) the Clients were required to amend their ITRs resulting in a tax shortfall;
• (d) penalties would be imposed on some of the Clients;
• (e) "Mr Mina moved clients from one tax agent number to another to possibly avoid Australian Taxation Office ("ATO") scrutiny"; and
• (f) a new registration number was obtained from the TPB for a company with the same name as Logic.

ATO Referral to TPB

36. As a result of its findings and determinations, the ATO referred the Applicants' to the TPB for potential misconduct.^[44] Exhibit 1, T Documents, T5, pages 46-47 and Exhibit 2, T Documents, T5, pages 35-36, Referral from ATO to TPB dated 19 May 2018.

37. On 28 November 2018, the TPB advised Mr Mina that as a result of the information it had obtained it was concerned that Logic may have breached sections 30-10(1), 30-10(7) and 30-10(9) of the Code. Mr Mina was given until 13 December 2018 to respond.^[45] Exhibit 1, T Documents, T4, page 18 and Exhibit 2, T Documents, T4, page 14, Notice of Alleged Breach dated 18 June 2019.

38. In December 2018, Mr Mina contended to the Tax Practitioners Board that:^[46] Exhibit 1, T Documents, T5, pages 135-139, Response from Mr Mina dated 17 December 2018.

• (a) the audits were a small percentage of his overall client base and did "not reflect the performance of [his and Logic's] practice nor the clients right to claim" WRE deductions;
• (b) following the audits, he had constantly liaised with the ATO to ensure compliance; and
• (c) he had completed 199 hours of continuing practice development.

Applicants' Conduct Following Referral to TPB

39. On 23 January 2019, the ATO advised Logic that it had lodged its BAS for the period ending 31 October 2018 late and that in the event this occurred again a penalty may be applied.^[47] Exhibit 1, T Documents, T5, page 357 and Exhibit 2, T Documents, T5, page 191, Warning: Failure to Lodge Activity Statement Letter dated 23 January 2019.

40. On 2 February 2019, Mr Mina entered into a payment arrangement for the outstanding sum of $16,414.66 (outstanding BAS). The conditions of the payment plan were as follows:^[48] Exhibit 1, T Documents, T5, page 359 and Exhibit 2, T Documents, T5, page 193, Payment Plan Notice dated 2 February 2019.

CONDITIONS OF YOUR PAYMENT PLAN

• - Pay your instalments on time as per the schedule.
• - Make all other tax lodgement and payments by their due dates.

41. On 21 February 2019, the ATO advised Logic that it's PAYG withholding payment summary annual report for 2018 was lodged after the due date and that in future a penalty may be applied.^[49] Exhibit 1, T Documents, T5, page 363 and Exhibit 2, T Documents, T5, page 197, Warning: Failure to Lodge PAYG Letter dated 21 February 2021.

42. On 1 March 2019, Mr Mina entered into a payment arrangement for the outstanding sum of $67,016.86 (outstanding BAS). The conditions of the payment plan were as follows:^[50] Exhibit 1, T Documents, T5, page 365 and Exhibit 2, T Documents, T5, page 199, Payment Plan Notice dated 1 March 2019.

CONDITIONS OF YOUR PAYMENT PLAN

• - Pay your instalments on time as per the schedule.
• - Make all other tax lodgement and payments by their due dates.

43. On 5 April 2019, the ATO advised Logic that it had lodged its BAS for the period ending 28 February 2019 late and that in the event this occurred again a penalty may be applied.^[51] Exhibit 1, T Documents, T5, page 369 and Exhibit 2, T Documents, T5, page 203, Warning: Failure to Lodge Activity Statement Letter dated 5 April 2019.

44. On 2 May 2019, Mr Mina entered into a payment arrangement for the outstanding sum of $91,286.05 (outstanding BAS). The conditions of the payment plan were as follows:^[52] Exhibit 1, T Documents, T5, page 371 and Exhibit 2, T Documents, T5, page 204, Payment Plan Notice dated 2 May 2019.

CONDITIONS OF YOUR PAYMENT PLAN

• - Pay your instalments on time as per the schedule.
• - Make all other tax lodgement and payments by their due dates.

TPB Investigation

45. On 22 February 2019, the TPB wrote to Logic and Mr Mina and advised it had commenced an investigation under Subdivision 60-E of the TASA about some of their conduct that may be in breach of the TASA.^[53] Exhibit 1, T Documents, T3, pages 13-14 and Exhibit 2, T Documents, T3, page 13, Notice of Decision to Investigate dated 22 February 2019.

46. On 18 June 2019, the TPB advised that, as a result of the information it had obtained it was concerned that Logic may have breached sections 30-10(2) and 20-5(1)(a) of the Code. Logic was given until 3 July 2019 to respond.^[54] Exhibit 1, T Documents, T4, page 14 and Exhibit 2, T Documents, T4, page 14, Notice of Alleged Breach dated 18 June 2019.

47. On 19 July 2019, the Applicants' lawyers submitted to the TPB that:^[55] Exhibit 1, T Documents, T7, pages 401-413 and Exhibit 2, T Documents, T7, pages 242 to 260, Reply to Notice of Alleged Breach dated 19 July 2019.

• (a) the failure of Logic and Mr Mina to lodge their ITRs and/or BAS on time, or at all, was due to Mr Mina's personal circumstances, not tax evasion;
• (b) Mr Mina's personal circumstances included the breakdown of Mr Mina's marriage in 2009; his children's health (one son required a significant operation in 2012 and the other required psychological therapy from 2014; loss of family members in 2011; concerns for his family in Egypt, his father's stroke in 2013 (this required Mr Mina to return to Egypt - he tried to manage his practice from overseas for 4 weeks), the death of his father in 2014; death of his cousin in 2018; and his own mental health (depression) and physical health) (" Personal Circumstances ");
• (c) the Personal Circumstances have been resolved;
• (d) the Applicants have applied systems to ensure this conduct will not reoccur and Logic will meet its tax obligations;
• (e) payments were made on time in accordance with the ATO payment plan;
• (f) SG and other employee obligations failures occurred as a result of financial and personal difficulties during 2010 to 2013;
• (g) Mr Mina has now complied with the employee obligations;
• (h) in relation to the ATO audits of the Clients, there was no deliberate attempt by Logic's clients to avoid tax. The "errors were attributable to an alternative interpretation of taxation laws , and an unfortunate failure to verify information provided by their clients by either sighting documentary evidence or contacting third parties" ("emphasis added");
• (i) the ATO compliance visits in 2012 and 2013 were of an educational and cautionary nature with no action being taken;
• (j) in relation to the ATO compliance visit in March 2015, the ATO identified "common errors" in the WRE claims of the Clients and provided the Applicants with guidance on calculating deductions and establishing a nexus between the expense claimed;
• (k) in relation to Dr V:
  • (i) Dr V instructed them to claim the deductions; and
  • (ii) although the deductions claimed for self-education expenses were high, more than $47,000, the ATO allowed those deductions in the following year;
• (l) they did not knowingly or deliberately obstruct the proper administration of taxation laws;
• (m) in relation to failing to lodge Logic's taxation agent registration on time:

  46. It is alleged that our clients lodged 35 BASs and 668 ITRs while unregistered.

  47. Our Clients refer to paragraphs 28 to 31 of the Response and note Mr. Mina became aware of the expiration of the Company's registration only after the fact, and upon becoming so aware, took steps to rectify the issue immediately.

  48. The Company's registration was subsequently renewed by the Board.

  49. Mr Mina has ensured that such a lapse in his or the Company's registration has not occurred again.

  50. The decision of the Board to renew the Company's registration indicates the Board's determination that the Company satisfied the conditions of registration and as such Mr. Mina, as a director of the Company, was a fit and proper person and an individual of good fame, integrity and character.

  51. This was an incident, caused by oversight, which has not and will not be repeated.

• (n) non-compliance issues concerning employees have been rectified, the employees have suffered no detriment;
• (o) Logic and Mr Mina accept they have not complied with personal tax obligations but deny it means that are not fit and proper, given their special circumstances;
• (p) they have implemented new practices and policies including:
  • (i) hiring an office manager;
  • (ii) allocating more responsibility to senior staff;
  • (iii) introducing policies to increase verification of clients' claims;
  • (iv) seeking clarification with the ATO if doubts; and
• (q) termination of his tax agent registration would have a "devastating effect" on Mr Mina, his family and his employees.

48. The TPB considered the matter and found that (" Logic Decision "):^[56] Exhibit 1, T Documents, T10, pages 440-444, Decision Letter dated 8 August 2019.

• (a) Logic failed to comply with section 30-10(2) of the Code by:^[57] Exhibit 1, T Documents, T9, pages 435-439, TPB Committee Minutes meeting 1 August 2019.

  • a. Failing to lodge monthly and quarterly activity statements by the due dates;
  • b. Failing, before 3 September 2012, to pay an overdue CAC debt that was at least $41,402.48, resulting in the ATO issuing a garnishee notice to Logic's financial institution;
  • c. Failing, as at 30 April 2013, to meet the following obligations arising under the superannuation guarantee (SG) provisions:
    • i. lodging SGC statements for the period 1 July 2009 to 30 September 2010 by the due dates; and
    • ii. not making SG payments to complying funds on behalf of employees by the required cut-off dates;
  • d. Failing, as at 20 September 2013, to meet the following obligations arising under the SG and PAYG provisions:
    • i. lodging activity statements or reporting PAYG amounts withheld for the monthly tax periods for April, May and June 2013;
    • ii. not lodging PAYG withholding annual reports for the 2011/12 financial year; and
    • iii. not making SG payments to complying funds on behalf of employees by the required cut-off dates.
  • e. Failing, before 2 May 2017, to pay or make arrangements to pay a CAC debt of $15,847.29;
  • f. Failing, as at 7 February 2018, to meet the following obligations arising under the superannuation guarantee (SG) provisions:
    • i. lodging SGC statements for the period 1 July 2015 to 30 June 2016 by the due dates; and
    • ii. not making SG payments to complying funds on behalf of employees by the required cut-off dates;
  • g. Defaulting on payment arrangements to repay their CAC debt made on the following dates:
    • i. 7 September 2017 (defaulted on 21 November and 21 December 2017);
    • ii. 14 June 2018 (defaulted on 21 August 2018);
    • iii. 2 February 2019 (defaulted on 21 February 2019);
    • iv. 1 March 2019 (defaulted on 21 March 2019); and
    • v. 2 May 2019 (defaulted on 21 May 2019).

• (b) Logic failed to comply with section 30-10(7) of the Code by:^[58] Exhibit 1, T Documents, T9, pages 435-439, TPB Committee Minutes meeting 1 August 2019.

  • a. Repeatedly lodging clients' ITRs with excessive or incorrect deduction claims with no supporting substantiation or with no nexus with clients' income producing activities despite numerous ATO compliance activities from 5 July 2011 to 7 March 2018;
  • b. Lodging the 2013/14 ITR for Dr Vahid Vakiloroaya in particular, where the Administrative Appeals Tribunal found that Mr. Mina (on behalf of Logic) overclaimed WRE deductions in the amount of $58,324.

• (c) Logic failed to comply with section 30-10(10) of the Code in that it:^[59] Exhibit 1, T Documents, T9, pages 435-439, TPB Committee Minutes meeting 1 August 2019.

  failed to take reasonable care to ensure the taxation laws were applied correctly to the circumstances in relation to which you are providing advice to a client in relation to the repeated lodgement of clients' ITRs with excessive or incorrect deduction claims with no supporting substantiation or with no nexus with client' income producing activity despite ATO compliance activities from 5 July 2011 to 7 March 2018.

49. Following its investigation, the TPB advised Logic on 8 August 2019 that it had decided that Logic had failed to comply with the Code.^[60] Exhibit 1, T Documents, T10, pages 441-444, Decision Letter dated 8 August 2019. As a result of that decision the TPB decided to terminate Logic's registration as a tax agent pursuant to section 40-15(1)(b) of the TASA.^[61] Exhibit 1, T Documents, T1, page 7, Decision Letter dated 8 August 2019. The termination was to take effect from 6 September 2019. The effect of the termination is that Logic must not provide any tax agent services or it may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA.

50. The TPB also advised Mr Mina on 8 August 2019 that it had decided that:^[62] Exhibit 2, T Documents, T9, pages 265-268, Decision Letter dated 8 August 2019.

• (a) Mr Mina failed to comply with section 30-10(2) of the Code by:
  • (i) failing, to lodge four ITRs and 27 BAS by their respective due dates;
  • (ii) failing, before 19 September 2013, to pay a CAC debt that was at least $30,716.12, resulting in the ATO issuing a garnishee notice to his financial institution;
  • (iii) failing, before 17 September 2015, to pay or make a payment arrangement for an IT debt of $9,693.26;
  • (iv) failing, before 11 February 2016, to pay or make a payment arrangement for an IT debt of $9,693.26;
  • (v) failing, before 6 June 2017, to pay or make a payment arrangement for an IT debt of $17,439;
  • (vi) failing, before 29 June 2017, to pay or make a payment arrangement for an IT debt of $12,439;
  • (vii) causing Logic, as its director, to contravene the unregistered agent provisions of the TASA by failing to apply for renewal of Logic's registration by the renewal date; and
  • (viii) failing, as director and supervising agent, to ensure Logic complied with the taxation laws, particularly in respect of SG, PAYG withholding and GST provisions and the claiming of WRE deductions.

51. As a result of its findings the TPB determined that Mr Mina no longer met the tax practitioner requirements for registration as he was not a "fit and proper person" as required by section 20-5(1)(a) of the TASA.^[63] Exhibit 2, T Documents, T1, pages 7-10, Decision Letter dated August 2019. The TPB decided to terminate Mr Mina's registration as a tax agent pursuant to section 40-5(1)(b) of the TASA (" Mina Decision "). The termination was to take effect from 6 September 2019. The effect of the termination is that Mr Mina:

• (a) must not provide any tax agent services or he may be subject to civil penalties pursuant to sections 50-5, 50-10, and 50-15 of the TASA; and
• (b) may not apply for registration under the TASA for a period of 2 years pursuant to subsection 40-25(1) of the TASA.

52. On 3 September 2019 the Applicants applied to this Tribunal for review of the Mina Decision and Logic Decision.^[64] Exhibit 1, T Documents, T1, pages 1-11 and Exhibit 2, T Documents, T1, pages 1-6, Applications’ for Review dated 3 September 2019.

53. Prior to the final hearing the Applicants applied for a stay of the TPB's decisions pending the Tribunal's final determination. On 9 December 2019, the Tribunal ordered a stay of the TPB Decisions subject to the conditions that, among other things:

• (a) the Applicants could only continue to provide tax agent services to 11 of its 5,500 clients (as those clients were being audited by the ATO); and
• (b) the Applicants remain in compliance with their obligations as tax practitioners in the conduct of their personal affairs including with any payment arrangements entered into with the ATO.

54. The Tribunal has jurisdiction to review the Logic Decision and Mina Decision pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (" AAT Act ") and section 70-10(e) of the TASA.

55. Both applications were heard together.

LEGISLATIVE BACKGROUND

56. The object of the TASA, as stated in section 2-5 is "to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct".

57. The TASA establishes the TPB and provides for the registration and regulation of tax agents. Part 3 of the TASA sets out the Code which applies to registered tax agents. Pursuant to section 60-95, the TPB is authorised to investigate a registered tax agent's conduct that may breach the TASA.

58. Section 20-5(1)(a) of the TASA provides that an individual is eligible for registration as a registered tax agent, BAS agent or tax (financial) adviser if the TPB is satisfied that the individual is a "fit and proper person". Being a "fit and proper person" is a requirement of registration and is what is referred to in the legislation as a "tax practitioner registration requirement". The term "tax practitioner registration requirements" is defined in the dictionary in section 90-1 of the TASA and means "the matters about which the Board must, under Subdivision 20-A, be satisfied before the Board is obliged to grant an application for registration under this Act". One of the matters that the TPB must be satisfied about is of the fit and proper person requirement in section 20-5 of the TASA.

59. In determining whether a person is a fit and proper person to be registered as a tax agent, the TPB must, pursuant to section 20-15(a) of the TASA, have regard to whether the individual "is of good fame, integrity and character".

60. Pursuant to section 40-5 of the TASA a practitioner may have their registration terminated if they fail to meet a tax practitioner requirement.

61. Explanatory Paper TPB(EP) 02/2010: "Fit and proper person" (" Explanatory Paper 02/2010 ") provides guidance to agents regarding the TPB's interpretation of the fitness and proprietary requirements of the TASA.

62. The Tribunal is not bound to apply the Explanatory Paper 02/2010, but it may, and it should, apply it in exercising its discretion unless it is unlawful or "tends to produce an unjust decision".^[65] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640 .

63. Brennan J explained the relevance of an adopted policy to decision-making in
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640:

Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.

64. The Tribunal is not aware of any cogent reason for not following the Explanatory Papers.

65. Paragraph 84 of Explanatory Paper 02/2010 explains that:

A failure by a tax practitioner to discharge their responsibilities on behalf of clients could reflect adversely on the tax practitioner's fitness and propriety for registration where it amounts to unsatisfactory or unreasonable failure in the tax practitioner's circumstances and all the surrounding circumstances of the case.

66. Paragraph 86 of Explanatory Paper 02/2010 sets out specific examples of a failure to properly maintain client relationships that may in the circumstances reflect adversely on fitness and propriety for registration. One of those examples is:

• • lacking the requisite knowledge and skills to provide services to a professional and competent standard

67. Section 30-10 of the TASA sets out the Code that registered tax agents must comply with to maintain their registration. The following subsections of section 30-10 of the TASA are relevant here:

• (a) section 30-10(2) provides that a registered tax agent:

  "…must comply with the taxation laws in the conduct of your personal affairs".

• (b) section 30-10(7) provides that a registered tax agent:

  "…must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently."

• (c) section 30-10(9) provides that a registered tax agent:

  "…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."

• (d) section 30-10(10) provides that a registered tax agent:

  "…must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client."

68. Explanatory Paper TPB(EP) 01/2010: "Code of Professional Conduct" (" Explanatory Paper 01/2010 ") provides guidance in relation to general principles and matters relating to the Code that may be relevant to the professional practice of registered tax agents. It provides the following in relation to what is "reasonable care" in ascertaining a client's affairs:

What is 'reasonable care in ascertaining a client's state of affairs'?

121. It is considered that ' more is expected of a registered tax practitioner than a taxpayer completing his or her own return '. This higher standard of care is a reflection of a registered tax practitioner's knowledge, education, experience and skill.

122. It should be noted at the outset that this requirement under the Code does not create a requirement that a registered tax practitioner effectively 'audits' all of the registered tax practitioner's clients before providing tax agent services to avoid breaching the Code.

123. Rather, this requirement is a duty of registered tax practitioner to take care beyond placing complete reliance on the accounts prepared, or work done, by a person without considering their level of knowledge and/or understanding of the taxation laws and the correctness of their work to ensure that the information upon which the provision of the tax agent services is based is accurate.

124. In most cases, this will require that a registered tax practitioner ask the client appropriate questions , based on the registered tax practitioner's professional knowledge and experience, to ascertain the accurate factual basis upon which the tax agent services are provided and, where appropriate, to obtain supporting documents and records evidencing these facts .

125. The requirement to take reasonable care relates to the services that are to be provided and is therefore subject to the agreed scope of the engagement with the client. A registered tax practitioner would not be required to make further enquiries and it would be reasonable to rely on information or advice, if the scope of the tax agent services excludes the examination of information provided by the client or requires the registered tax practitioner to rely on the information or advice of another expert. These observations must also be considered in light of other paragraphs in this section and with the obligations under the TASA, which must be complied with.

126. Taking reasonable care will in many cases require that a registered tax practitioner ask questions based on their professional knowledge and experience in seeking information. Where there are grounds to doubt the information provided by a client, the registered tax practitioner must take positive steps and make reasonable enquiries to satisfy themselves as to the completeness and/or accuracy of that information .

127. Where a statement provided by a client seems plausible and is consistent with previously established statements and the registered tax practitioner has no basis on which to doubt the client's reliability or the veracity of the information supplied, the registered tax practitioner may discharge their responsibility by accepting the statement provided by the client without further checking.

128. However, if the information supplied by a client seems implausible or inconsistent with a previous pattern of claim or statement, further enquiries would be required.

129. Again, whilst there is no requirement to audit, examine or review books and records or other source documents supplied by a client, a registered tax practitioner does not discharge their responsibility in such a case by simply accepting what they have been told .

("emphasis added")

69. If, having conducted an investigation of a registered tax agent, the TPB is satisfied that the tax agent has failed to comply with the Code, the TPB may terminate the registered tax agent's registration pursuant to section 30-30 of the TASA. The termination of a registered tax agent's registration takes effect on the day specified in the notice provided by TPB of the decision to terminate the registration.

ISSUE FOR THE TRIBUNAL

70. The issue for the Tribunal is whether to terminate the Applicants' tax agent registrations.

71. This will involve a consideration of whether:

• (a) the Applicants breached section 30 - 10(2) of the Code in failing to comply with their own taxation obligations;
• (b) the Applicants failed to ensure they provided competent tax agent services in breach of section 30 - 10(7) of the Code;
• (c) the Applicants failed to take reasonable care in ascertaining their clients' financial affairs in breach of section 30 - 10(9) of the Code;
• (d) the Applicants failed to take reasonable care to ensure taxation laws were complied with in breach of section 30 - 10(10) of the Code; and
• (e) Mr Mina is a "fit and proper person" as required by section 20.5(1)(a) of the TASA.

CONSIDERATION

Conduct in relation to Logic's and Mr Mina's tax affairs (section 30 - 10(2), Code)

Failure to Comply with Tax Obligations

72. The section 30-10(2) breaches regarding the Applicants' tax affairs comprise:

• (a) the failure of the Applicants to lodge BAS by their due dates;
• (b) the failure of Mr Mina to lodge four of his personal ITRs by their due dates; and
• (c) the failure of the Applicants to ensure that Logic's tax agent registration did not lapse.

"Late Lodgements"

73. The table below sets out the details of the 75 BAS, spanning the period between 2010 and 2019, that were not lodged by Logic by their due dates:^[66] Exhibit 1, T Documents, T5, pages 29-33; Exhibit 2, T Documents, T5, pages 27-32, BAS Records and Exhibit 3, ST Documents, ST-1, pages 1-3, Lodgement Summary.

74. Mr Mina failed to lodge 27 BAS for the following periods between June 2010 and September 2018 by their due dates:^[67] Exhibit 1, T Documents, T5, page 270 and Exhibit 2, T Documents, page 60, Lodgement Summary.

75. Mr Mina failed to lodge four personal ITRs, for the 2012 to 2016 financial years, by their due dates as follows:^[68] Exhibit 1, T Documents, T5, page 272, Exhibit 2, T Documents, T5, page 21, Summary of Mr Mina’s ITR Lodgement.

76. The Applicants do not dispute the Late Lodgements.^[69] Exhibit 25, Applicants’ Amended Statement of Issues, Facts and Contentions, para 38; Transcript, page 71.

Failure to Keep Logic's Registration Up to Date

77. Mr Mina, as sole director of Logic, also failed to ensure that Logic did not contravene the unregistered agent provisions of the TASA, by failing to apply for renewal of Logic's tax agent registration by the renewal date. This is not disputed by Mr Mina.^[70] Exhibit 25, Applicants’ Amended Statement of Issues, Facts and Contentions, para 31. Mr Mina blamed a receptionist for not passing on letters from the TPB reminding him to renew.^[71] Exhibit 1, T Documents, T5, pages 308-309, Response from Mr Mina’s Solicitor dated 5 April 2019. This is a poor excuse to raise for what was Mr Mina's personal obligation. It was not the obligation of a junior staff member to ensure Logic's tax registration was valid and in force. Mr Mina's excuse does not explain why he needed to be reminded of such an important activity.

Do Mr Mina's Personal Circumstances Account for his failure to comply with his taxation obligations?

78. Mr Mina's says that the following factors contributed to his failure to comply with his own tax affairs and his failure to ensure Logic complied with its taxation affairs.^[72] Exhibit 6, Affidavit of Mr Mina dated 18 November 2011, paras 17-18.

79. Mr Mina says there were "an extraordinary constellation of personal factors [which] caused lapses by him as an individual Tax Agent during the relevant period" and that "there were so many factors that even the most stoic individual would have been most sorely tested". Mr Mina says these circumstances include (" Personal Circumstances "):^[73] Exhibit 25, Applicants’ Amended Statement of Issues, Facts and Contentions, paras 36-37.

• • the breakdown of his 16-year marriage in 2009 and subsequent Family Court proceedings;
• • "crippling financial burdens";
• • his children's health (one son required a significant operation in 2012 and the other required psychological therapy from 2014);
• • death of his brother-in-law in "about 2013";
• • concerns for his family in Egypt;
• • his father's stroke in 2013 (this required Mr Mina to return to Egypt - he tried to manage his practice from overseas for 4 weeks);
• • legal dispute with former staff who attempted to poach Logic's clients;
• • lack of replacement qualified staff;
• • the death of his father in 2014;
• • death of his cousin in 2018; and
• • his own mental health (depression) and physical health.

80. Mr Mina was cross-examined at the hearing about these Personal Circumstances and their purported impact on his ability to comply his and Logic's tax affairs. There was no suggestion that these events did not take place. However, the Respondent contends that they do not explain Mr Mina's conduct.

81. Mr Mina disputed that the death of his brother-in-law in 2013 did not affect lodgement. However, in the months following the death of Mr Mina's brother-in-law, Mr Mina was able to lodge two of his BAS on time.^[74] Transcript, page 84. The lodgement dates do not support Mr Mina's contention. Mr Mina says his inconsistent lodgements show that he was emotionally unstable. There is simply a lack of corroborative evidence (such as medical evidence) to support this. At the hearing Mr Mina said he tried to call the ATO to request extensions of time, but this was not referred to in his affidavit or in his explanation to the TPB on 19 July 2019 (see paragraph 47 above). There is no corroborating evidence.^[75] Transcript, pages 92-93.

82. During cross-examination Mr Mina was taken to various ATO records which show the dates on which the Applicants' ITRs and BAS were lodged. In some instances, the Applicants had still been able to comply with their taxation obligations following the date a Personal Circumstance had occurred. It was not demonstrated that there was any correlation between the Personal Circumstances and the overdue lodgements.

83. The Tribunal notes that on 24 June 2013 Mr Mina was asked by an ATO compliance officer whether there were specific circumstances, such as illness, impacting on Mr Mina's ability to manage his lodgements. The officer recorded in his report that Mr Mina said no.^[76] Exhibit 3, ST Documents, ST18, page 221, Field Visit Report date of visit 24 June 2013.

Financial Circumstances

84. In relation to his financial circumstances Mr Mina states in his affidavit that he paid large sums in legal fees for his Family Court proceedings, he was making payments to his wife and paying for his children, paying mortgages on 4 properties, and making payments for two vehicles.^[77] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 17. These types of expenses are commonly incurred by people in their day to day lives. Mr Mina does not explain why he did not relieve himself of some of his assets in order to alleviate his financial position. The Tribunal is not sure why this is relevant to whether Mr Mina lodged his documents on time or for why he did not immediately enter into a payment arrangement with the ATO.

85. No personal bank accounts were tendered to demonstrate Mr Mina's "crippling financial circumstances". Even if he was suffering financially, it does not explain why he did not lodge BAS which he says were Nil returns. It also does not explain why he did not immediately discuss his financial situation with the ATO.

Marriage Breakdown

86. In relation to Mr Mina's marriage breakdown there was some discrepancy in his evidence. In Mr Mina's affidavit he says the difficulties with his wife started in December 2009^[78] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 15(a). but at the hearing he said the difficulties began in February 2007.

87. There was no nexus demonstrated to exist between the marriage breakdown of Mr Mina and the failure of the Applicants to attend to their tax affairs.

The departure of three employees

88. After three employees left Logic to start their own practice, Mr Mina says that between August 2014 and June 2015 he had to service all of the clients with only 50% of his staff.^[79] Transcript, page 80. Mr Mina said he promoted an employee, Mr Carlo Tooma, in September 2015 to assist with the workload but that Mr Tooma's promotion did not assist with the workload.^[80] Transcript, pages 77-78. Mr Mina told the Tribunal that everything was lodged late because he had to look after his clients. As the Tribunal noted in
Re Adamec v Tax Agent's Board of Victoria [2005] AATA 913, at [78] (" Adamec ") "It is insufficient for the applicant to state that he disregarded his own obligations because he was giving priority to his clients". The Tribunal in Adamec found that a "repeated failure of the applicant to lodge his own income taxation returns [called] into account his fitness to practise as a tax agent".

89. It was illustrated by the Respondent through cross-examination, that following the employees' departure, Mr Mina lodged the December 2014 BAS early, one BAS on time and two BAS late.^[81] Transcript, pages 80-81. It is not demonstrated on the available evidence that the departure of these employees is what caused the Applicants' failure to comply with their taxation obligations. There is an inconsistency of BAS lodgement dates that does not enable the Tribunal to find the employees leaving was a cause of the Applicants' conduct.

Other excuses proffered by Mr Mina

"too busy"

90. Mr Mina told the Tribunal that he was too busy to call the ATO to say his BAS were nil returns and he was too busy to pay the ATO.^[82] Transcript, pages 79-80. This excuse was not referred to in his affidavit and is inconsistent with Mr Mina's earlier evidence that he did attempt to contact the ATO.^[83] Transcript, pages 92-93. Being "too busy" is not a sufficient excuse for failing to comply with taxation obligations. Compliance with taxation obligations should be a priority, particularly for a registered tax agent.

Didn't believe he had to lodge BAS

91. Mr Mina also gave evidence that, in his view, if his GST registration was cancelled, he did not have to lodge BAS.^[84] Transcript, page 81. In his affidavit Mr Mina said it was his Personal Circumstances that impacted his ability to comply with his tax obligations. At the hearing he said that they were not lodged because he did not believe he had to lodge them. This evidence is contradictory and appears to be Mr Mina's attempt to raise as many reasons as he can for his conduct.

92. Mr Mina's evidence is that, with respect to the BAS, he telephoned the ATO on or about 4 October 2013 and requested that they cancel his BAS, but that it was not done. Mr Mina blamed the ATO.^[85] Transcript, page 115. On 4 October 2013, the ATO confirmed that Mr Mina's GST registration had been cancelled with an effective date of 31 December 2012 and that he no longer needed to report GST. Although the cancellation of the GST was backdated, it does not explain why Mr Mina did not continue to lodge his BAS statements as required until confirmation of cancellation. It also does not explain the late lodgements in 2010, 2011 and 2012.

93. For an eight-year period, between September 2010 and March 2018, Mr Mina's BAS were for NIL returns. Mr Mina had an ABN but was not personally operating a business. Pursuant to the A New Tax System (Australian Business Number) Act 1999 (Cth) (" ABN Act "), if you cease operating a business the Registrar must be informed within 28 days.^[86] A New Tax System (Australian Business Number) Act 1999 (Cth), s14. Mr Mina failed to notify the Registrar.^[87] Transcript, page 82.

Logic's BAS were "complicated"

94. In relation to Logic's BAS, Mr Mina said at the hearing that another reason they were lodged late was because they were complicated.^[88] Transcript, pages 90-91. This was not referred to in his affidavit or his response to the TPB in July 2019 nor did he explain what he meant. Mr Mina admitted the NIL BAS were not complicated.

Children's Medical Conditions

95. No corroborating evidence regarding Mr Mina's children's' medical conditions was before the Tribunal and there is insufficient evidence to demonstrate a causal nexus to his conduct as a tax agent.

Conclusion

96. Despite Mr Mina's Personal Circumstances, there was no evidence that Logic (and Mr Mina), were unable to prepare and lodge their clients' ITRs and BAS on time, including during the three-week period in 2015 when Logic was unregistered.

97. Mr Mina downplayed the Applicants' conduct describing it as "relatively minor" and suggested that the failure to lodge 27 BAS should not be viewed so seriously because they were Nil returns.^[89] Exhibit 25, Applicants’ Amended Statement of Issues, Facts and Contentions, para 38; Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 19.

98. A registered tax agent should know what his/her tax obligations are and comply with them.

99. Based on the above conduct, the Tribunal finds that the Applicants were in breach of section 30-10(2) of the Code.

Failure to Pay Debts

100. As outlined in paragraphs 4 to 20 both Mr Mina and Logic failed to pay debts owed to the ATO when required. On numerous occasions they had to be reminded to pay those debts and this resulted in the ATO sending garnishee notices to the Applicants' bank in an attempt to recover the monies.

101. In some instances, the Applicants entered into payment arrangements with the ATO. These arrangements were not always complied with. The payment arrangements Logic entered into with the ATO to repay the CAC debt required that Logic meet all of its tax lodgements and payments by their due dates. Yet, between September 2017 and May 2019 Logic failed to meet 6 tax lodgement dates as follows (despite being aware of the ATO's audit and referral to the TPB):^[90] Exhibit 1, T Documents, T5, page 29 and Exhibit 2, T Documents, T5, page 27, Payment Default Summary.

102. Mr Mina does not dispute that:^[96] Exhibit 25, Applicants’ Amended Statement of Issues, Facts and Contentions, para 30-31.

• (a) he failed to pay the 2013 CAC debt which resulted in the Garnishee Notice being issued by the ATO;
• (b) Logic failed to pay its overdue 2012 CAC debt which resulted in the Garnishee Notice being issued by the ATO pursuant to section 260-5 of the Taxation Administration Act 1953 (Cth);^[97] Exhibit 1, T Documents, T5, pages 58-65 and Exhibit 2, T Documents, T5, pages 126-133, Garnishee Notice dated 3 September 2012 and Garnishee Successful Notice dated 6 September 2012.
• (c) Logic failed to pay or enter into a payment arrangement regarding its overdue 2017 CAC debt; and
• (d) he failed to pay or enter into a payment arrangement with respect to his income tax debts of approximately $40,000 in the 2015 to 2017 financial years (see paragraphs 8-9 and 12-13 above re $9,693.26, $17,439, $12,439).

103. The excuse given by Mr Mina for the failure to pay his income tax debt for the 2014 financial year is that he had lodged an objection to the ATO's assessment.^[98] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 21 and Transcript, pages 96-97. Mr Mina says in his view he was not required to pay the tax debt until the objection process was complete.^[99] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 21. Mr Mina told the Tribunal that he contacted the ATO by telephone requesting not to pay this debt until his objection had been finalised. When pressed during cross-examination about when he contacted the ATO, Mr Mina initially said he contacted the ATO the same day he received the ATO's letter of demand dated 3 September 2015. Then he said it was the next day. He also said it was within a couple of days or within one week of receiving the ATO's letter of demand.^[100] Transcript, page 99. The evidence on this was confusing. Mr Mina told the Tribunal the ATO agreed to his request for an extension of time. There is no corroborating evidence of Mr Mina contacting the ATO and no mention was made of this in his affidavits which were filed prior to the hearing.^[101] Transcript, page 99.

104. This evidence was not convincing, particularly given that the ATO sent a further letter of demand on 28 January 2016. When this was pointed out to Mr Mina he then said the ATO had originally only given a three month extension and that he contacted them again for a further extension. Mr Mina's evidence lacks credibility. It was put to Mr Mina on several occasions that he did not have an arrangement with the ATO and that there was no reference to any arrangement in the letters of demand. Mr Mina eventually said, "no comment".

105. Mr Mina evidence was as follows:^[102] Transcript, page 101.

Mr Mina, my question is this document [ATO letter of demand dated 3 September 2015] does not refer to any arrangement with the tax office about not paying the tax until the objection is determined, correct?--No comment.

Show me where in this document it refers to you lodging an objection?---The first form it was deferred for a period of three months till the objection is finished. Objection did not finish in three months, that's why I received the second letter. I report again and have the same arrangements, be deferred for another period. The tax office cannot deferred that amount until a certain action has happened but they can defer that amount for a certain period and that's what's happened.

and:^[103] Transcript, pages 96-97.

… So what you're saying…is that the tax office amended your return and that you objected to the amount, and until the objection was finalised it was not in your view - or you were not, in your view, required to pay the tax debt until after the objection process completed?---Yes.

Yes?---Can I explain?

Just let me ask some questions first, Mr Mina?---I knew that sentence but - okay.

Right. So, Mr Mina, as part of being a tax agent, you don't only lodge tax returns for your clients, you do from time to time lodge objections?---Yes.

And do you from time to time appear in the tribunal on review proceedings under part IVC of the Taxation Administration Act?---Yes.

And you're aware of the policy in Australia that notwithstanding any appeal or review the tax gets paid?---Yes.

So why in paragraph 21 - I'm sorry, I'll withdraw that. So in light of what you've just mentioned you've stated at paragraph 21 that you took the view that you weren't required to pay the tax until the objection was finalised?---Yes, can I explain?

Yes?---Initially within the first 28 days of the new financial year I paid my super for the (indistinct), but (indistinct) updated my super for the new year. There wasn't (indistinct) of $25,000 and I was trying to explain to the tax office that it's not the two financial years, but the officer of the tax office had combined both and he requested me to pay the super charge for contribution which was that amount of $9693.26. I do understand the obligations but at the same time at the time I had a valid case to explain which was not accepted by the tax office , and I requested that it was my option because I couldn't hand the form, I requested not to take it further. I could have taken it to the tribunal and fight it again but I requested not to take it to them.

But you're aware that none of that - none of what you've just said affects your obligation to pay the tax?--- That's true, but at the same time I have a valid point to fight and if it's accepted that amount could be credit for me , so at the time I was fighting the matter to say it's not - two different financial years but the officer insists it was under employer of under (indistinct) of the company, insisted combining both of the amounts as one financial year.

Yes. And with - if you go down to the next paragraph, 22, there you're responding to (d) in paragraph 16 and you say the same thing again, that it's in your view that you didn't have to pay the tax until the objection process was complete, knowing that your obligations as a tax payer in this country are to pay the tax when it's due, notwithstanding any dispute?---I have to go back to know what the 2016 tax return was about to answer that question. I need to go to the actual point.

Well, Mr Mina, you don't, because I have asked you a question and you have said you're aware that in Australia you have to pay the tax, notwithstanding any appeal or review, you have accepted that?--- I do accept that but I need to know why I was late for that one because technically I have a good reason . (indistinct) always trying to apply the law. So if something happened like that, definitely, I have another reason. I need to see what happened on that year, if - probably (indistinct) and go to that point and (indistinct).

Mr Mina, in this situation it's quite simple though, there is no reason. You've been assessed to tax, the tax is due and payable, notwithstanding that you want to dispute the tax, you have to pay it on time and you're a tax agent, sir?--- I think I still have the right to defend myself and I will need to go back to that one (indistinct).

Well you certainly do, but the tax must be paid when it's due and payable, you accept that?---You can't - you accept that, yes?---I do.

And you can't unilaterally decide that you don't want to pay the tax until the objection is decided?---(Indistinct), definitely I have (indistinct) then when the (indistinct) comes, then I have to pay. And at the moment when the (indistinct) payable, I paid them full. But after it is finished, its same like any other client.

("emphasis added")

106. At the hearing the Tribunal noted the following in the absence of Mr Mina:

MEMBER: The difficulty I think that we're all experiencing here is that [Mr Mina is] not answering the questions that are being asked of him directly. The first notice he was asked about, he gave an explanation that he had contacted the tax office and that they'd agreed to a deferment of his payment. There was no - he did not say that he had to ring them several times and arrange a separate thing but the reality is he didn't answer the question. The question was there was nowhere in [the ATO's letter of demand] which refers to your arrangement. That question hasn't actually been answered.^[104] Transcript, page 101.

107. There is nothing to corroborate Mr Mina's evidence. Mr Mina said he did not refer to his arrangement with the ATO in his affidavit because he was "emotionally disturbed" when he prepared his affidavit but that now he has "more vision".^[105] Transcript, page 104.

108. The Tribunal finds Mr Mina's evidence that the ATO permitted him to delay paying his tax until his objection application had been determined implausible.

109. It should come as no surprise to a tax agent that simply because an objection has been lodged to an income tax assessment, this does not mean that the tax debt imposed must not be paid. The tax is payable pending the objection decision.^[106] Deputy Federal Commissioner of Taxation v Australian Machinery and Investment Co (1945) 8 ATD 133 at 133-4 ; Deputy Commissioner of Taxation v Mackey (1982) 45 ALR 284 at 287 and Deputy Commissioner of Taxation v Niblett (1965) 8 FLR 134 .

110. As the above evidence demonstrates, Mr Mina considers that he was not obligated to pay the tax debt pending the outcome of the objection and that his conduct was excusable because he had a right to defend himself. Sections 14ZZM and 14ZZR of the Taxation Administration Act 1953 (Cth) specifically provide that "the fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending ." ("emphasis added")

111. Mr Mina was not able to point to any law or authority to support his belief. This is of concern to the Tribunal. The primary issue before this Tribunal is Mr Mina's fitness to be a registered tax agent. If he does not know how the tax law applies in relation to something as mundane as an objection, how can the TPB have confidence that Mr Mina will give his clients appropriate advice on their own assessment rights? The Tribunal believes that Mr Mina does in fact know that he was obligated to pay his tax and that he chose not to. This calls into question his fitness to practice as a registered tax agent.

112. In relation to the outstanding tax liabilities for the 2016 financial year totalling $17,439,^[107] Exhibit 1, T Documents, T5, page 285 and Exhibit 2, T Documents, T5, page 75, Notice of Assessment dated 29 May 2017. Mr Mina says he paid $5,000 towards it on 24 May 2017 but after that he had insufficient funds due to Logic being in "its low season".^[108] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 23. Mr Mina told the Tribunal he telephoned, faxed, and emailed the ATO requesting extensions of time to pay. There is no corroborating evidence of these communications. No bank records were supplied to evidence Mr Mina's financial circumstances at the relevant periods.

113. A condition of the stay order was that the Applicants are compliant with their taxation obligations. However, Mr Mina failed to lodge BAS for the March, June, and September 2020 quarters.^[109] Exhibit 16, Client Lodgement Summary for March, June and September 2021 quarters, pages 1-3. Mr Mina said he did not have to lodge these BAS because his ABN was cancelled. But Mr Mina did not apply to have his ABN cancelled until December 2020. Mr Mina should have lodged his BAS until he had filed his cancellation application. Mr Mina arranged for the cancellation of his ABN to be backdated to 31 March 2020 on 7 December 2020 (which happened to be day one of the hearing).^[110] Transcript, page 115.

114. In written submissions the Applicants acknowledged that "complying with taxation obligations is a fundamental duty of a tax agent and that there has been a failure to comply with this essential duty."^[111] Exhibit 4, Applicants’ Outline of Submissions dated 17 March 2020, para 21.

115. Based on the above conduct, the Tribunal finds that the Applicants were in breach of section 30-10(2) of the Code.

Conduct in relation to Logic's employee obligations (section 30 - 10(2), Code)

116. Following the ATO audits, it was apparent that Logic was not complying with its SG obligations. This resulted in the ATO issuing default assessments and imposing penalties. It was also discovered that Logic had failed to comply with its PAYG withholding obligations. See paragraphs 21-24 above.

117. Logic accepts that it failed to meet its SG obligations. Mr Mina accepts that as sole director and controlling mind of Logic, it was his responsibility to ensure that Logic complied with its employee obligations.^[112] Exhibit 25 Applicant’s Amended Statement of Facts, Issues and Contentions, para 30.

118. Logic admits that it failed to pay PAYG withholding amounts but denies that it failed to lodge its PAYG withholding report for the 2012 financial year.^[113] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, para 34. Mr Mina said he attempted to fax the report on three occasions in August 2012. There was no corroborating evidence of Mr Mina's purported attempts to lodge the report with the ATO by the due date. The only evidence submitted in support is a fax cover sheet indicating the PAYG withholding report was faxed to the ATO on 26 June 2013.^[114] Exhibit 6, Affidavit of Mr Mina dated 18 November 2019, annexure C. Mr Mina acknowledged there is no supporting evidence of his attempts to fax the document three times earlier in August 2012.^[115] Transcript, page 108. In any event, Mr Mina did not claim to have lodged the PAYG withholding report until after the ATO's audit commenced. Therefore, it still would have been lodged late even if it had been successfully faxed as Mr Mina deposes.

119. Even if it was accepted that attempts to lodge had been made, the PAYG withholding report for the 2012 financial year was not received by the ATO until after its due date.^[116] Exhibit 3, ST Documents, ST6, page 24, Completion of Employer Obligations Audit letter dated 20 September 2013.

120. Based on the above conduct, the Tribunal finds that the Applicants were in breach of section 30-10(2) of the Code.

Conduct in relation to the Clients' Work Expenses Claims (section 30 - 10(7), section 30 - 10(9), section 30 - 10(10), Code)

121. Following compliance reviews and audits of Logic's clients over a nine-year period between 2009 and 2018, the ATO found that incorrect and excessive WRE and other expense claims had been repeatedly made by Logic's clients. The income tax assessments of the Clients' concerned had to be adjusted and in many instances, penalties were imposed.

122. The findings of the ATO were that it was the Applicants' error that resulted in these expense claims being made either because they had misapplied relevant taxation rulings or because they had not sought proper clarification and substantiation from the clients.

123. By way of example, the Respondent summarised the results of the audit results of clients during the 2018 period as follows:

124.

125. There was no substantiation, or insufficient substantiation, by the Clients of the claimed WRE. The Applicants' conduct in not insisting on supporting documentation may, depending on the circumstances with those Clients, constitute a fundamental breach of their duties as registered tax agents.

126. The Clients were entitled to rely on the Applicants for advice and guidance.

127. Logic was reviewed in relation to clients' WRE claims by the ATO on numerous occasions.^[117] Exhibit 1, T Documents, T5, page 107, Summary of Income Tax Audits dated 7 March 2018, page 107. In one instance the ATO advised Logic to implement improvements to verify and substantiate clients' deduction claims to eliminate some errors that had been found. In 2017 Logic was contacted again by the ATO regarding some "unusually high" WRE claims made by its Clients. The ATO informed Logic it would be monitoring any ITRs lodged and would consider further action if claims continued to be substantially higher than expected.^[118] Exhibit 1, T Documents, T5, page 107, Summary of Income Tax Audits dated 7 March 2018, pages 107-118.

128. Overall, the Clients were unable to provide the ATO with sufficient records to substantiate the deductions claimed.

129. Mr Mina said he has no control over whether a client has lied and had no power to verify a client's instructions.^[119] Transcript, page 119. Mr Mina also claimed that he could not make a client challenge the view of the ATO and that if the client does not lodge an objection to the ATO's assessment, this does not mean that the client was not correct in his/her claims.^[120] Transcript, page 120. Mr Mina rejected the notion that it was tax agent error. Mr Mina, even now, takes no responsibility for the incorrect ITRs he lodged on his client's behalf.

130. Despite compliance reviews over a ten year period (in 2009, 2012, 2015 and 2018)^[121] Exhibit 1, T Documents, T5, page 39, TPB Submission to Committee and Exhibit 3, ST Documents, ST9, page 33, Tax Agent Compliance Strategy – Preliminary Analysis , advice from the ATO, and repeated adjustments needed to be made for the same type of WRE claims, Logic has continued to file inaccurate ITRs on behalf of its clients.

131. In 2009, 625 of 646 clients audited (that is, 96.7%) required adjustments to be made to their ITRs due to incorrectly made spouse offset amendments and work-related expenses.^[122] Exhibit 3, ST Documents, ST9, page 38, Tax Agent Compliance Strategy – Preliminary Analysis.

132. In 2012, 84 of 85 clients audited required adjustments to be made to their ITRS due to incorrectly made work-related expenses.^[123] Exhibit 3, ST Documents, ST10, page 40, Summary of Outcome Tax Amendments dated 5 July 2012.

133. In 2015, the ATO found that the income tax returns lodged by the applicants contained WRE deduction claims that were 98.3% greater than similar tax agents and that the deductions were not substantiated, or insufficient information was obtained, and/or there was insufficient nexus between the client's income and the expenses claimed.^[124] Exhibit 1, T Documents, T5, page 103, Audit Outcome Letter dated 9 April 2015.

134. In 2018, all of the 19 audited taxpayers had compliance issues.^[125] Exhibit 1, T Documents, T5, page 107, Summary of Income Tax Audits Outcome dated 7 March 2018.

135. Based on the above, the Tribunal finds that the Applicants have failed to provide tax agent services competently and have failed to take reasonable care that taxation laws are applied correctly. As a result, the Tribunal finds that the Applicants are in breach of sections 30 10(7) and 30-10(10).

136. It is the Applicants responsibility to know what is claimable and what is not and to advise their clients accordingly.

137. The Tribunal is concerned about the extent of Mr Mina's understanding of the required nexus for WRE deductions and the lack of verification and quality control measures that have been implemented.

FINDINGS RE CODE BREACHES

138. Given the above, the Tribunal finds that the Applicants breached sections 30-10(2), 30-10(7), 30-10(9) and 30-10(10) of the code. The Applicants have admitted most of these breaches.

139. Given these findings, the question is whether Mr Mina is a fit and proper person and therefore eligible for registration. The issue of whether the two year prohibition on registration imposed on Mr Mina by the TPB is an appropriate sanction in the circumstances has also to be decided.

IS MR MINA A "FIT AND PROPER PERSON" (SECTION 20-5(1)(A), TASA)

140. Davies J in
Re Su and Tax Agents' Board of South Australia (1982) 61 FLR 1 set out what is required for a person to be considered fit and proper person to handle the income tax return affairs of a client:

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 .

("emphasis added")

141. In
Stasos v Tax Agents' Board of NSW (1990) 21 ATR 974 Hill J held (at 983) that in determining whether a person is fit and proper, it is also "relevant whether the person has understood the error of his ways".

142. Further, Hill J (at 984) found that a tax agent "must keep up to date" with income tax legislation. Hill J explained that this obligation and responsibility "comes with the privileged position" of being entrusted to prepare tax returns in return for a fee.^[126] Stasos v Tax Agents Board of NSW (1990) 21 ATR 974 . Hill J went on (at 985):

…a person who has been shown to be other than fit and proper to be registered must satisfy the tribunal considering his registration or cancellation of his registration as the case may be that he appreciates the significance of his wrongdoing and that he regrets it…and that it is truly unlikely that there will be any lapse in the future of the standards which are required of him.

("emphasis added")

143. The TPB also referred the Tribunal to the decision of Deputy President McDonald in
Proh v Tax Agents' Board of Victoria (2010) 78 ATR 663 who noted that:

[15] It is generally accepted, and the Tribunal accepts, that a failure of an agent to attend to his/her own taxation affairs demonstrates a lack of suitability, rendering the agent unfit to handle the affairs of those who may seek to utilise his/her services.

144. Mr Mina expressed no acknowledgement that the Applicants' failure to take reasonable care had impacted its clients. Those Clients went through ATO audits all of which resulted in their having to pay additional tax and penalties. No regret or remorse has been shown by the Applicant for those clients. Instead, the Applicant sought to blame the honesty of the clients or disputed whether the WREs were in fact incorrectly claimed. There was no admission by Mr Mina that the ATO's assessments were correct.

145. The Tribunal is unsatisfied with the lack of detail and evidence of the alleged further education and training purportedly undertaken by the Applicants and their staff following the monitoring by the ATO. Such education and training would be required to ensure that there would be no further lapse in standards.

146. Taxpayers have a right to expect that the advice and service they are receiving from their tax agents is competent and that they are not being led into danger of breaching their tax obligations by claiming deductions which cannot be maintained.

147. The breaches of the Code by the Applicants raise significant and serious concerns about Mr Mina's fitness to practice as a registered tax agent. The Code breaches outlined above, spanned a 10-year period. Numerous excuses were proffered to the TPB by Mr Mina, without any corroborating evidence or nexus to the breaches. New reasons were given by Mr Mina at the hearing when pressed on cross-examination, to explain away the conduct, including the claim that Mr Mina had arrangements with the ATO. None of these claims were substantiated. There was no evidence given by Mr Mina that he had a genuine understanding of his errors. Rather, Mr Mina attempted to justify and downplay his conduct. This conduct is not fit and proper.

148. In addition to the conduct concerning their own tax obligations, the Tribunal is concerned that Mr Mina's technical knowledge regarding WRE claims falls short of what is necessary and expected and justifies a finding that he is not fit and proper person.

149. The Tribunal finds that Mr Mina is not a fit and proper person as required by section 20.5 of the TASA.

"New Logic"

150. Following the TPB's decisions, a part of Logic's customer base was taken over by Logic Accountants Pty Ltd (" New Logic "). New Logic is controlled by Mr Carlo Tooma, an employee of Logic.^[127] Exhibit 20, Affidavit of Mr Brendan Walker-Monroe: Attachment C, ASIC Search, affirmed 20 November 2019. The establishment of this new company and tax agent business happened within mere moments of the TPB Decisions being made. The Applicants were notified of the TPB decisions on 8 August 2019 and New Logic established its principal place of business as that of Logic's, with Mr Tooma as director and secretary, on 13 August 2019.

151. New Logic operates with Mr Mina's approval^[128] Transcript, page 125. at the same premises as Logic, uses Logic's website, email addresses, telephone numbers and employs the same staff as Logic. Many of Logic's clients are now being serviced by New Logic, also with Mr Mina's approval.

152. At the stay hearing Mr Mina and Mr Tooma were questioned by TPB's Counsel about the new arrangement. Mr Mina denied that there was any agreement between the Applicants and Mr Tooma regarding Logic's clients.^[129] Stay Transcript, pages 42-43. Mr Mina denied doing any work for New Logic and denied that Mr Tooma ran things by him since setting up New Logic.^[130] Stay Transcript, page 46.

153. The total number of Logic clients prior to the TPB decisions being made, was 5,500. Of those clients, 288 transferred to New Logic by the time of the stay hearing.^[131] Stay Transcript, page 42. Mr Mina says he explained the repercussions of the TPB's decision and gave them the option of transferring to New Logic.

154. The Respondent's Counsel spent considerable time identifying how Mr Mina's and Mr Tooma's evidence was contradictory, as follows:^[132] Exhibit 15, Respondent’s Outline of Submissions, dated 24 March 2020, para 70-88.

155. The Tribunal notes there was certainly inconsistency in Mr Mina's and Mr Tooma's evidence at the stay hearing as noted above. By the time of the final hearing their evidence had, in some instances changed and was now consistent. This indicates that the evidence about these issues is unreliable. There was no explanation given for the inconsistencies.

156. The majority of these issues have now been admitted by the Applicants. New Logic originally occupied the top floor of Logic's premises, while Logic remained on the ground floor. Later, New Logic also occupied a room downstairs. Mr Tooma gave evidence that his business was expanding as he had more employees and because, due to the COVID-19 19 pandemic, social distancing had to be maintained.^[159] Transcript, page 209.

157. What is of concern is that the time of the stay application, neither Mr Mina nor Mr Tooma deposed to the establishment of New Logic or the intention of taking over Logic's clients and employees pending the outcome of this matter.^[160] See Exhibit 7, Affidavit of Mr Mina dated 19 November 2019 and Exhibit 8, Affidavit of Mr Tooma dated 19 November 2019. If the Applicants had no ongoing involvement with the clients, as required by the stay, why would this not be disclosed?

158. The TPB contends this conduct gives rise to a further basis for finding that Mr Mina is not a fit and proper person because New Logic and Logic are essentiality the same entity. The TPB considers that Mr Mina orchestrated New Logic to circumvent the TPB Decisions.

159. At the time New Logic applied for tax agent registration, the TPB made enquiries of Mr Tooma regarding the arrangement with Logic. Mr Mina paid Mr Tooma's legal expenses (incurred to respond to the TPB enquires). Mr Mina said he covered Mr Tooma's legal expenses because, but for the TPB decision, Mr Tooma would not have been subjected to the enquiries of the TPB.

160. Mr Mina accepts that he gave New Logic and Mr Tooma permission to establish New Logic and service its clients but he says he had no access to New Logic's files or system.^[161] Transcript, page 127.

161. Since New Logic commenced business at Logic's premises, approximately 800 of Logic's former clients have now transferred their business to New Logic.^[162] Exhibit 4, Tender bundle.

162. Mr Mina paid for some of new Logic's expenses such as its professional indemnity insurance on 19 August 2019.^[163] Transcript, pages 170 and 172. Mr Mina said he lent this money to New Logic and it was repaid by instalments.^[164] Transcript, pages 170 and 172. This was confirmed by Mr Tooma.^[165] Transcript, page 225.

163. Some employees appear to work for Logic and New Logic. For example, Nancy Abedou Mr Mina explained:^[166] Transcript, pages 168-169.

Nancy, she works under my company but she still serve the other company because of the mail, and email, and phone calls. She cannot differentiate phone calls for the same line.

So Nancy's function, as at November 2019, involved working - you say she was paid by you but she worked for you and for Mr Tooma?---Exactly. That's part of the arrangement because reception, you cannot split reception.

But that's part of the - there are two receptions, one paid by me, one paid by Carlo, so one set of lines. The mailbox - there's only one mailbox so both receptions, they work for both of us. And that's - - -

Did you just say that Mr Tooma pays Nancy as well?---No.

But this email suggests that Nancy works at Logic Accountants Proprietary Limited?---Nancy - that's part of the arrangement, for the phone line and the mail and the email, it's exactly the same

164. Mr Mina would, if asked, give New Logic advice on client matters.^[167] Transcript, page 176. While the Respondent contended that the facilitation of the New Logic arrangement, was structured in order to avoid the intended effect of the stay orders, there was no allegation by the Respondent that this would amount to a breach of the stay orders.

165. At the hearing, the Tribunal expressed its concerns regarding inferences that it was going to be asked to draw. The exchange with counsel is as follows:^[168] Transcript, page 143 and 148.

MEMBER: I'm just getting a bit concerned about obviously the inferences that I'm going to be asked to draw later and the confusing way in which the new Logic has been established and so on. I mean in and of itself Mr Mina was told that his registration was going to be terminated as was his company's. I presume an interim stay was in place at some point once he filed the stay application, and so he doesn't know when he'll be able to go back. So in one sense is it not understandable that a new company was formed and his clients went there? The issue was whether or not he's continued to work for those clients or whether or not the applicant company was in essence still - was acting in breach of the stay. Is that right? Is that what you're trying to establish?

MR JOSIFOSKI: At the end of the day the proposition I'll be putting to the tribunal is these are two distinct legal entities but economically there's one Logic Accountants and the effect of what they've done in arranging their affairs in this way is to get around the decisions that are under review and to also - so that's a concern the board but also of concern to the tribunal is to get around the stay, and whatever decision the tribunal might come to on the decision under review

…

MEMBER: I thought the allegation was really in 67 that the new Logic arrangement was structured in a way to avoid the (indistinct) affected the decision. That's the allegation isn't it? And then the paragraphs before that particularise the basis upon saying where they get to that allegation. So the fact that they've got the same address, the fact that they're using the same websites, the fact that the employees are the same. So the respondent - this is how I took it and Mr Josifoski will correct me, is that the allegation is that all of those steps have been done solely to avoid the impact of the decisions and that therefore I can take that into account. I'm not saying I agree with it but the respondent surely is able to put that those particular factors go to whether or not Mr Mina is a fit and proper person. Similarly, you will be telling me that they are not relevant to that and that there is nothing untoward about that conduct given that the TPB approved it.

166. The Respondent accepted that the criticism of Logic which resulted in the termination of its tax agents registration had nothing to do with the other staff members of Logic who then went to work for New Logic.^[169] Transcript, page 355.

167. It is clear from the evidence that but for the TPB's decision and stay orders New Logic would not have been established. This, in and of itself, does not make Mr Mina unfit. It is understandable that he would attempt to retain his client base through an associate company until he was again able to practice. The TPB approved New Logic as a registered tax agent. When it becomes improper or relevant to Mr Mina's fitness, is if he still has involvement with the clients and if he is still providing tax agent services, contrary to the stay orders. This is denied by the Applicants and there is no evidence that he has done so. It is open to the TPB to investigate New Logic and Mr Tooma if they have engaged in conduct contrary to the Code. There is no suggestion that they have done so. The decisions under review, and the stay orders, do not have the reach, to stop this arrangement. In these circumstances it would be unfair for the Tribunal to conclude Mr Mina was not fit and proper on that basis alone. It is understandable that Logic's employees were moved to New Logic. Logic is not generating sufficient income to continue paying them. This kind of arrangement may give rise to an adverse finding of fitness in another matter but in this instance, the Tribunal is not satisfied that the evidence goes far enough.

IS THE SANCTION IMPOSED APPROPRIATE IN THE CIRCUMSTANCES?

168. Where the TPB determines that an agent has breached the Code, the following sanctions may be imposed:

30-15 Sanctions for failure to comply with the Code of Professional Conduct

• (1) This Subdivision applies if the Board is satisfied, after conducting an investigation under Subdivision 60-E, that you have failed to comply with the *Code of Professional Conduct.
• (2) The Board may do one or more of the following:
  • (a) give you a written caution;
  • (b) give you an order under section 30-20;
  • (c) suspend your registration under section 30-25;
  • (d) terminate your registration under section 30-30.

169. The types of orders that may be imposed, set out in section 30-20(1) of the Code, include "but [are] not limited to, the following" ("Orders"):

• (a) completing a course of education or training specified in the order;
• (b) providing *tax agent services for which you are registered only under the supervision of a *registered tax agent or BAS agent specified in the order;
• (c) providing only those tax agent services that are specified in the order.

170. Time periods within which Orders are to be complied with may also be imposed (section 30-20(2)).

171. If an agent's registration is terminated under section 30-30 of the Code the TASA sets out what sanctions may be imposed. Pursuant to section 40-25:

(1) If the Board terminates your registration, the Board may also determine a period, of not more than 5 years, during which you may not apply for registration

172. In this instance the TPB has determined that termination is an appropriate sanction and has imposed a two year period during which the Applicants may not reapply for registration.

173. As this Tribunal said in
Yvonne Anderson and Associates Pty Ltd and Tax Practitioners Board (Taxation) [2020] AATA 1881:

[79]…Deregistration of tax agents is a step taken by the TPB to protect the public; it is not a punishment.^[170] See Stasos v Tax Agents’ Board of New South Wales (1990) 21 ATR 974 , at 978. The TPB's focus is on ensuring that taxpayers can have confidence that they are obtaining competent services.

174. Deregistration also acts as a deterrence to the agent under investigation and to other agents. In
Kishore and Tax Practitioners Board [2017] AATA 271 where Deputy President Frost said:

[18] The imposition of a sanction is not for the purpose of punishing the individual, but for the protection of the public and the maintenance of proper standards within the regulated industry. A sanction may also serve the purpose of personal deterrence (to encourage the individual to comply with standards in the future) or general deterrence (to encourage others to comply).

175. The Applicants contend that, although they have engaged in breaches of fundamental duties owed by tax agents, there are mitigating circumstances, and the breaches "are not of a level of seriousness which would warrant either suspension or termination".^[171] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 4, para 22. The Applicants say "Logic has worked with the ATO to bring down the level of work-related expenses. In 2018, the ATO advised Mina that he had put into effect work practices to mitigate compliance risks".^[172] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 5, para 30.

176. The Applicants submitted:

• (a) The Applicants do not resile from their broad submission that their transgressions were relatively minor ; the word relatively has significance. All transgressions by a tax agent are matters of concern. What it is submitted is necessary is to make a balanced and nuanced decision as to relative seriousness of the transgression in relation to other transgressions in other cases. ^[173] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 6, para 34.
• (b) Some of the periods in which BAS were lodged late were "extremely short" or at least "not significantly late".^[174] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 7, para 37.
• (c) all of their taxation lodgements and payments are now up to date and there is no ongoing non-compliance in relation to their taxation obligations;^[175] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 7, para 37.
• (d) Mr Mina also contends that although he lodged four ITRs late, two involved refunds and they were lodged within short period of the due date.

  ("emphasis added")

177. While some of the Late Lodgement periods were short, there were 102 BAS lodged late. This demonstrates a complete disregard for taxation laws and registered tax agent obligations. It is not for Mr Mina or Logic to decide when they will or should lodge documents with the ATO. Mr Mina did not request an extension of time to lodge the BAS, he had to be repeatedly chased, he did not pay debts on time and in some instances failed to comply with generous payment arrangements. At the hearing the Applicant's counsel, Mr Young, acknowledged that there had been "a long history of non-compliance with both reporting and at times payment requirements in relation to the lodging of returns of various kinds and also in relation to payment".^[176] Transcript, page 4. Mr Young also acknowledged the breaches were "matters of considerable significance".^[177] Transcript, page 5.

178. While such an infraction may seem minor for a lay person, more is expected of a registered tax agent.^[178] Proh v Tax Agent’s Board of Victoria (2010) 78 ATR 125 . What if every taxpayer decided a little bit late was alright or that it was acceptable to wait for the ATO to send reminders and letters of demand. What a drain that would be on the ATO's resources and the Australian economy. It is for that reason that penalties and higher rates of interest are imposed for such conduct. The Tribunal finds Mr Mina's downplaying of the importance of complying with due dates in relation to his personal tax obligations, alarming, disrespectful of the Australian public, and cavalier.

179. The Applicants say there is no risk of any repetition that the events that led to the termination of their registrations, and that strategies have been implemented to ensure that it is the case.^[179] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 6, para 36. The Applicants submit that they have implemented the following strategies:^[180] Exhibit 25, Applicants’ Amended Statement of Facts, Issues and Contentions, paras 48-49.

• a. Addressing high level of Work-Related Expenses;
• b. Working closely with Specialised Taxation Advisors;
• c. The Company has undertaken to outsource all the Specialised Taxation Advisors;
• d. Communicating with Clients in relation to the new requirements of Single Touch Payroll;
• e. Communicating with the Clients with diverse backgrounds in relation to lodging deadlines;
• f. The Company has a valued place in assisting recent arrivals in Australia often being the first interaction with the taxation system;
• g. The proposition to retain the Corporate Licence for the Company is to ensure continuity for vulnerable and less educated clients who upon receiving initial notification from the Company were confused and did not understand the implications of the suspension;
• h. The Company have already committed to attend the following course in early 2020 as a condition of ongoing CPE requirements;
• i. The Company and Mr. Mina have taken a better manner and have been taking active steps to improve the practice;
• j. The Company have undertaken formal engagements with third parties in the areas of taxation advisory, audit, self-managed super funds and planning, insolvency, legal and law firms;
• k. The Company has implemented for each week that there be a process of communications, identification of issues and training that has been lacking. This formal management meeting commenced on a monthly basis;
• l. The Company has moved to exclude any clients who refuse to comply with reporting, documentation, and substantiation. Where a client has refused to participate in the compliance expectations of the Company they are terminated as a client.
• m. Mr. Mina and the Company have prioritised the lodging of tax returns for his own, the business, and the clients.
• n. During 2018-2019 financial year, there has been a push for electronic logbooks and communications. During the 2019- 2020 financial year, approximately 75% of clients are moving towards electronic logbooks.

180. There is no corroborating evidence or sufficient detail about the strategies - what do these strategies mean in practical terms? It is unclear. There was insufficient evidence before the Tribunal to assess whether these strategies are sufficient to alleviate the risk that the Applicants' past conduct will not be repeated.

181. Mr Mina says since 1 July 2018 Logic has conducted third-party checks of clients' claims. However, Mr Mina does not believe he should be allowed to check with clients' employers to verify their claims. He said, "it's not written anywhere… that the tax agent… must do that". While there is no specific instruction for a tax agent to contact clients employer directly, Explanatory Paper 01/2010 (see paragraph 68above) makes it clear that in order to fulfil a tax agent's duty to take reasonable care in ascertaining a client's affairs that where there are grounds to doubt information provided by a client, the registered tax practitioner must take positive steps and make reasonable enquiries to satisfy themselves as to the completeness and accuracy of that information, and that they do not discharge this responsibility by simply accepting what they've been told.

182. In the circumstances the Applicants say an appropriate sanction would be the "appointment of an approved external tax agent to manage the lodgement of their own taxation returns and statements".^[181] Exhibit 4, Applicants’ Outline of Submissions, dated 17 March 2020, page 7, para 38. Given the extent of the breaches, this sanction is inappropriate and further does not address the issues concerning the clients' WRE claims.

183. This matter was originally scheduled to be heard in March 2020. However, because of the pandemic (and the parties' original desire the matter to be heard in person) the matter was unable to be heard until December 2020. As a result of this delay, the Applicants have been subject to the stay conditions for a longer period than would normally have been the case. The Applicant contends that this should be taken into account in determining an appropriate sanction period. While the stay conditions have been in place for longer than the Applicants may have anticipated, no application was made for a further unconditional stay in light of COVID-19 prior to the hearing. There is also no basis to submit that if such an application had been made that the outcome would have been any different that the first stay application.

184. The Applicants refer the Tribunal to other Tribunal decisions as examples of the types of conduct in which various sanctions have been imposed for example see
Ridden v Tax Practitioners Board [2020] AATA 422 ("Ridden") and
Delis v Tax Practitioners' Board [2015] AATA 820 ("Delis") and
Re Cowlishaw & Ors v Tax Agents' Board of Queensland (1999) 42 ATR 1038 ("Cowlishaw").

185. In Cowlishaw the applicant was found to be not a fit and proper person in circumstances where the ATO found that deductions had been claimed that were significantly higher than those claimed by other taxpayers in the same position.

186. In Delis, Mr Delis' tax agent registration application was refused by the TPB on the grounds that it was not satisfied that Mr Delis was a fit and proper person. The Tribunal found that Mr Delis had entered into a pattern of conduct in respect of their taxation obligations which included failing to pay tax assessments on time, defaulting on payment arrangements, and failing to lodge BAS when they became due. The Tribunal found that this history of non-compliance disclosed a pattern of behaviour over a 14 year period likely to continue in the future. In addition to outstanding personal tax liabilities, there was also outstanding superannuation guarantee liabilities and a history of non-compliance in the lodgement of BAS. In his defence Mr Delis contended that his health and financial circumstances had adversely affected his ability to comply with his taxation obligations. As in this matter, Mr Delis did not produce all relevant medical or financial evidence to the Tribunal at the hearing. The Tribunal found that, amongst other things, the failure to make the required statutory superannuation guarantee payments was inexplicable and upheld the decision of the TPB. The Tribunal finds this case is similar to the conduct of Mr Mina and Logic and finds that a decision to deregister the Applicants would be consistent with a decision made in Delis and is the appropriate sanction.

187. Each matter must be assessed objectively based on its own facts. Deputy President McCabe cautioned in Ridden, at [40] that "[t]here is some danger in rifling through reported cases in search of comparisons". The Tribunal agrees with this notion to the extent that other cases should not be slavishly followed. The Tribunal must exercise independent discretion based on the unique facts before it. However, it is also important that there is consistency in Tribunal decisions. Although the Tribunal is not bound by other decisions, it can be guided by them, with a view to ensuring that parties are treated equally and fairly and providing a form of precedence that the public can take notice of. In
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 Brennan J (as President of the AAT) noted (at 643) that consistency with comparable cases and decisions is "[o]ne of the factors to be considered in arriving at the preferable decision".^[182] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 643 .

Conclusion

188. In determining the appropriate sanction, the primary importance is the protection of the public and the upholding of tax agents professional and ethical standards.^[183] Objects of the TASA set out in section 2.5. See also Kolya v Tax Practitioner’s Board [2011] 85 ATR 635 , at [10]. The Tribunal is not convinced that the pattern of conduct of the Applicants will not continue. A two year ban on applying for registration is not the maximum ban that could be imposed.

189. Here there are repeated failures over a long period of time to lodge BAS, ITRs, comply with employee obligations to the detriment of employees, failure to pay tax debts resulting in several garnishee notices having to be issued, failing to comply with payment arrangements entered into with the ATO, and numerous occasions of clients making unsubstantiated WRE claims. In addition, there is a lack of evidence to corroborate Mr Mina's assertions of purported extensions of time and his misguided belief regarding his obligation to pay tax during objection proceedings. Mr Mina also takes no responsibility for and indeed makes no admission for his failure to check and substantiate clients WRE claims.

190. In the circumstances, the Tribunal considers that the sanctions imposed by the TPB are appropriate.

191. Tax agents have a duty to take reasonable care in the provision of their services. Clients trust that their tax agent has the requisite level of training and knowledge to advise them appropriately. Mr Mina does not demonstrate the requisite level of knowledge and competence that a member of the public would expect of a registered tax agent.

192. The Tribunal is not satisfied that Mr Mina is a fit and proper person as required by section 20.5 of the TASA.

DECISION

193. The decisions under review are affirmed.