Nick Cooper

nick.cooper@oracleis.com.au

An accountant whose tax agent registration had lapsed, but continued to lodge tax returns for a fee, has been fined $80,000 by the Federal Court and sentenced to imprisonment for 10 days.

 

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The Tax Practitioners Board (“TPB”) recently commenced legal proceedings against a South Australian accountant on the basis that he had prepared and lodged tax returns for taxpayers for a fee – after his registration as a tax agent had lapsed, in contravention of the Tax Agent Services Act 2009 (the “TAS Act”).

 

He would lodge the tax returns by obtaining the MyGov login details of his clients and completing their tax returns online.

 

His registration had lapsed in December 2018, but between July 2019 and September 2020, he lodged one or more tax returns for 51 taxpayers, charging fees that ranged between $50 and $400. The total amount charged during this period was approximately $7,300, with a total estimated 73 returns being lodged.

 

The TPB initially commenced investigations following complaints received from clients that claimed he had received their tax refunds but had not promptly refunded the money between August 2017 and January 2018.

 

The TPB then found that the accountant was providing his services without being registered, and initially issued him with a ‘cease and desist’ notice, which he acknowledged, however, continued to operate unregistered.  Following this, an injunction was imposed by the Federal Court in June 2021, which precluded him from preparing and lodging returns for clients for a fee whilst unregistered.

 

He was found to have prepared and lodged 7 tax returns for 4 different clients in July 2021, which was a direct contravention of the injunction.  Consequently, the Court has now found the accountant in contempt of the injunction and 10 days imprisonment was imposed against him, in conjunction with a fine.  In imposing the term of imprisonment, Charlesworth J of the Federal Court stated:

 

“The deprivation of personal liberty is a serious consequence, and it is for that reason that I consider the term of imprisonment should be short, but nonetheless sufficient to impress upon Mr Williams the importance of compliance with orders made under the TAS Act that buttress the regime, and to discourage conduct that undermines the court’s authority more generally.”

 

With respect to the monetary penalty imposed, the Court fined him $80,000, finding that his actions were not a result of a “mere lapse of judgment”, but instead a conscious disregard of the requirements of the TAS Act even after the TPB had made his contravention known to him.

 

Charlesworth J noted that the fine needed to express the severity of the contravention, and to impress upon the accountant that contravening the TAS Act was not a solution to his financial difficulties, but rather, “will only serve to exacerbate them”.

 

Concerningly, Charlesworth J noted that the case showed that there was a class of people who were prepared to take considerable risks in contravening the law, even when the chance of detection is high.

 

In addition to the penalties of imprisonment and the fine, the Federal Court imposed a permanent injunction against the accountant from providing tax agent services for a fee, and he is unable to apply to vary or revoke the order for a minimum of 10 years.

 

Following the Court’s ruling, the TPB has warned that using an unregistered tax agent can put taxpayers at risk and has further warned against taxpayers providing their personal MyGov login details.