Cerrah and Tax Practitioners Board (Taxation)

[2022] AATA 7

Cerrah and Tax Practitioners Board (Taxation) [2022] AATA 7 (6 January 2022)

Division:TAX AND COMMERCIAL DIVISION

File Number:          2020/8505

Re:Feride Cerrah

APPLICANT

Tax Practitioners BoardAnd  

RESPONDENT

DECISION

Tribunal:Member Reitano 

Date:6 January 2022

Place:Melbourne

The Tribunal affirms the decision dated 18 December 2020 so far as it terminated the registration of the applicant but varies it so that the applicant is prohibited from applying for registration for a period of four years rather five years.

......[sgd]..................................................................

Member Reitano

Catchwords

TAX AGENT REGISTRATION – termination of registration as a tax agent – applicant prohibited from applying for registration for a period of five years – contravention of the Code of Professional Conduct – applicant failed to manage personal tax affairs – applicant failed to complete supervised training - whether action should be taken against the applicant – whether five year ban was appropriate – decision varied

Legislation

Tax Agent Services Act 2009 (Cth)
Tax Agent Services Regulation 2009 (Cth)

Cases
Ridden and Tax Practitioners Board [2020] AATA 422

Secondary Materials

TPB(EP) 04/2012 Continuing professional education policy requirements for registered tax and BAS agents from 30 June 2014

REASONS FOR DECISION

Member Reitano

6 January 2022

BACKGROUND

1. On 7 December 2020, the Tax Practitioners Board (Board) decided to terminate Ms Feride Cerrah (Ms Cerrah) registration as a tax agent under the Tax Agent Services Act 2009 (Cth) (Act) because the Board was, amongst other things, not satisfied that she was a fit and proper person to be a tax agent. The Board also decided that Ms Cerrah should be precluded from applying for registration for a period of five years.

2. The Board’s opinion that Ms Cerrah was not a fit and proper person to be a registered tax agent was formed because the Board had found Ms Cerrah had failed to comply with various of her professional obligations in respect of honesty and integrity, conducting her own affairs in accordance with tax laws and maintaining her professional skills and knowledge.

3. This case deals with Ms Cerrah’s application for a review of the Board’s decision in which I have decide to affirm, so far as termination of Ms Cerrah’s registration is concerned but have varied that decision so that she is precluded from applying for re-registration for four years rather than the five-year period the Board decided upon.

4. What follows are my reasons for that decision.

   THE REGULATORY SCHEME

5. The objective of the Act is to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. This is in large achieved by the establishment of the Board under s 60-5 which has responsibility for administering the system of registration of tax agents, the investigation of applications for registration and conduct related to breaches of the Act and the imposition of administrative sanctions on tax agents for breaches of the Act.

6. Section 30-10 of the Act legislates a Code of Professional Conduct (Code) which prescribes standards of conduct that are to be complied with by registered tax agents. It is not necessary to set out here all of those standards as only three of them are particularly relevant to this matter. Sub-section 30-10(1) requires that tax agents must act with honesty and integrity. Sub-section 30-10(2) requires tax agents to comply with tax laws in relation to their own affairs. Sub-section 30(8) requires tax agents to maintain knowledge and skills relevant to their provision of tax agents’ services.

7. The first two of the requirements are readily understandable so not much needs to be explained about what is involved in being honest and acting with integrity or what is required of someone to comply with taxation laws in relation to their own affairs, although I will say a little more about that last aspect in a moment.

8. In regard to the third requirement, which involves maintaining knowledge and skills, the Board has laid down a policy requirement concerning continuing professional education in an explanatory paper titled: ‘TPB(EP) 04/2012 Continuing professional education policy requirements for registered tax and BAS agents from 30 June 2014’. That policy requires registered tax agents to complete a minimum of 90 hours of continuing professional education over three years that should be relevant to the tax agents services. There is also a requirement that a minimum of 10 hours be completed in each year. There are a range of activities that qualify as continuing professional education which over and above the usual or expected seminars, workshops and courses includes ‘structured conferences and discussion groups’ and ‘attendance at structured in-house training on tax related subjects by persons or organizations with suitable qualifications and/or practical experience in the subject area covered’. The policy requires contemporaneous records and evidence to be maintained.

9. Section 30-15 gives power to the Board to impose administrative sanctions on tax agents for breaches of the Code. These sanctions can only be applied after an investigation by the Board. The sanctions are available to the Board either alone or in combination and include a written caution, orders requiring a tax agent to take action (such as that involving doing training courses, limiting the services they provide, subjecting themselves to supervision and the like), suspension of registration for a period and termination of registration. The administrative sanction of termination may also be accompanied by a period of up to five years during which a tax agent is precluded from applying for registration.

10. Apart from the power to impose administrative sanctions under s 30-15, the Board also has power under s 40-5 to terminate the registration of a tax agent upon the happening of particular events which include the circumstance that a tax agent no longer meets the registration requirements. Those requirements are found in s 20-5 and include the Board being satisfied that the tax agent is a fit and proper person, that the tax agent meets the requirements of the regulations so far as qualification and experience are concerned and so far as renewal of registration that the tax agent has continued to meet continuing professional education requirements.

11. The Board is required under s 20-15 to have regard to whether a person is of good fame, integrity and character in order to determine whether a person is fit and proper to be a tax agent. The Board must consider a range of matters such as whether the person has been imprisoned or held the status of an undischarged bankrupt over the last five years or whether the person has been convicted of various kinds of offences or has been made bankrupt. None of those other kinds of consideration are relevant here.

12. Finally, one of the qualifications for registration prescribed by Regulations 8 of the Tax Agent Services Regulation 2009 (Regulations). Regulation 203 in Division 1, Part 2, Schedule 2 of the Regulations applies to someone who holds a diploma or higher qualification from a registered training organization or equivalent in accountancy. It prescribes that a person with that qualification must engage in the equivalent of two years full time relevant experience within the five years preceding registration. Regulation 208 in Division 1, Part 2, Schedule 2 of the Regulations provides ‘relevant experience’, so far as this matter is concerned, must involve work ‘under the supervision and control of a tax agent registered under the Act’. Further, that provisions requires that such experience ‘has included substantial involvement in two or more of the types of tax agent services described in s 90–5 of the Act, or substantial involvement in a particular area of taxation law to which one or more of those types of tax agent services related’.

    THE FACTUAL SETTING

13. Ms Cerrah graduated with an Advanced Diploma of Accounting from the Kangan Institute in June 2015.

14. On 22 January 2016, and 9 September 2016, Ms Cerrah submitted applications for registration as a tax agent to the Board.

15. Between 26 May 2014 and 13 December 2016, Ms Cerrah had recorded on her records with the Australian Taxation Office (ATO) ‘return not necessary’. This was because a data matching exercise conducted with Centrelink disclosed that she was in receipt of various social security benefits.

16. On 5 September 2016, the ATO issued a notice of penalty to Ms Cerrah in the amount of $850 because Ms Cerrah had not lodged her 2013 income tax return. The debt always remained although the ATO described it in its records with the words ‘non-pursuit – uneconomical to pursue’. The debt did not appear in Ms Cerrah’s account with the ATO after the date it was marked non-economical to pursue and Ms Cerrah was not reminded about it by letter or otherwise until it was later brought to her attention by these proceedings.

17. In October 2016, Ms Cerrah suffered a stroke. In April 2017, she was involved in a serious motor vehicle accident. There were some other personal things happening in Ms Cerrah’s life around this time which I will return to later in these reasons.

18. On 14 November 2016, the Board wrote to Ms Cerrah and informed her that she had ‘lodged a return not necessary for 2014/2015’ and went on to say, ‘In order to continue with your application for registration you need to rectify this, contact the ATO promptly and lodge these returns and advise the Board when this will be rectified’.

19. On 17 November 2016, Ms Cerrah, who at that time went by the surname Kol, sent an email to the Board telling the Board that she had suffered a stroke and would need ‘additional time in regard to lodging [her] 2014 and 2015 income tax returns’ and asked whether ‘on this basis can you please cancel my application and I will reapply in around 6 months once I have enough time to recover and prepare my 2014 and 2015 returns’.

20. Ms Cerrah said in her evidence that as a result of what happened with her 2016 application, she ‘knew’ that in order to obtain registration all her outstanding tax obligations needed to be dealt with and was ‘well aware that there was a big issue about her failure to lodge tax returns for various years. People were making a ‘song and dance of it’.

21. On 7 July 2017, Ms Cerrah lodged an application for registration as a tax agent with the Board.

22. In August and September 2017, the Board was processing Ms Cerrah’s application for registration and in doing so asked Ms Cerrah to produce pay slips and invoices issued between 2014 and 2017. Ms Cerrah sent three invoices to the Board which were issued to Paterson & Co Pty Ltd (Paterson) in August 2014, Accountancy Matters (Matters) in June 2016 and Peter McMillan Accountancy Solutions Australia Pty Ltd (Solutions) and June 2017. Each of the invoices were for about 35 hours work for about a week’s work each and were for amounts of $630, $722 and $702. The invoices were all for ‘tax services’.

23. The application for registration included three statements of relevant experience which contained declarations concerning Ms Cerrah’s experience. The declarations were made by the tax agents who had supervised Ms Cerrah.

24. The first was dated 9 September 2016 and was completed by Mr Jaksic of Paterson and said that Ms Cerrah had worked from 5 July 2014 until 29 May 2015 having completed approximately 120 tax returns for individuals, partnerships, company’s, trusts and superannuation funds. In the period which the declaration identified, records held by the ATO indicated that Paterson had not lodged any tax returns or business activity statements. Nor did Mr Jaksic lodge any return under his own registration number with the ATO. A company associated with Mr Jaksic, which was not identified in his declaration, lodged 77 tax returns in the period.

25. It was suggested to Ms Cerrah in cross-examination that she did not do the work described in the statement of relevant experience, so far as it related to work for Mr Jaksic on the basis that the ATO did not have any record of any lodgements by Paterson or Mr Jaksic personally. Ms Cerrah was adamant that she did the work. I am not prepared to make an adverse finding against Ms Cerrah based on the evidence that she said she completed 120 returns for Mr Jaksic and yet the ATO only has records of 77 returns, in particular without evidence from Mr Jaksic. The fact that there were no returns lodged is ultimately, as Ms Cerrah pointed out, a question to be asked of Mr Jaksic.

26. The more troubling aspect of the evidence concerning this declaration is that Ms Cerrah said that she was only paid for one or two weeks when she worked for Mr Jaksic or one of the entities associated with him. Nonetheless she had submitted to the Board an independent contractor agreement between her and Lawson Barnett Pty Ltd, a company associated with Mr Jaksic, for the period 1 July 2014 to 30 June 2015 and stated that she was to be paid $630 per week for that term. In return she was to provide ‘tax compliance services’, ‘tax consulting services’ and ‘administrative services’ as defined by the agreement. Ms Cerrah said she was not paid $630 per week in that period at all. Ms Cerrah said that Mr Jaksic had prepared the document, that her English ‘wasn’t very good’ and that she ‘just signed the document to get her work experience done’. The existence of that document does not seem to be relevant to any prove any aspect of the particular breaches, but it is strikingly odd in the circumstances given that Ms Cerrah says she was working albeit for no remuneration at all and just to get experience.

27. The second declaration was dated 7 September 2016 and said that Ms Cerrah had worked from 5 June 2015 to 6 September 2016. It was declared by Mr Mavrokokki of Matters and said that Ms Cerrah had completed about 180 similar returns. Mr Mavrokokki confirmed to the Board in the course of its investigation conducted in 2020 that the contents of the declaration were true.

28. So far as Matters was concerned, Ms Cerrah said she only ever issued one invoice to Matters for the period 6 June 2016 to 12 June 2016. This was despite the fact that she worked, on her evidence, full time which involved going ‘there’ daily, for about 14 months. As curious as the suggestion is that Ms Cerrah worked for that period for next to nothing there does not seem to be, having regard to Mr Mavrokokki’s confirmation of the declaration, reason to doubt it.

29. The third declaration was completed by Mr McMillan, apparently of Solutions and dated 7 July 2017. It said that Ms Cerrah had worked from 3 January 2017 until 7 July 2017 and had completed about 90 tax returns which did not include superannuation returns. Mr McMillan later explained that he had performed work ‘under contract’ with Solutions. Mr McMillan was not a tax agent nor had he ever been one. Nor was he a legal practitioner or a person approved by the Board for the purpose of supervising someone undertaking ‘relevant experience’. This will become relevant later.

30. During its investigation in 2020 the Board wrote to Mr Thomas who was a director of Solutions asking about the contents of the declaration. Mr Thomas said that in the period identified in the declaration Mr McMillan was not an authorised supervising tax agent of Solutions and that Solutions had never had any dealings at all with Ms Cerrah. For that reason, Mr Thomas said the contents of the declaration and the invoice referred to earlier for the period in March 2017 were false.

31. Mr McMillan explained that the ‘mistake’ that arose in relation to that declaration was his and that he had wrongly stated that the work Ms Cerrah had done was done for Solutions when it was in fact done for Mr McMillan. Mr McMillan’s said he paid Ms Cerrah for the work she did which on one view of his evidence was every week in the period 3 January 2017 to 7 July 2017, because that is when the declarations say she worked for him, but based on his oral evidence was, at least, for many of the weeks in that period.

32. It is convenient to interpose here that it seems on the information provided that no pay as you go instalments were withheld by any of the three identified accounting practices, or indeed anyone else, in respect of payments made to Ms Cerrah for the period 2015 to 2018.

33. On 20 September 2017, the Board registered Ms Cerrah as a tax agent.

34. On 3 October 2018, 26 September 2019 and 17 August 2020, Ms Cerrah submitted Annual Declarations to the Board declaring that she did not have any overdue personal tax obligations. That statement was not correct for reasons I will refer to later.

35. On 25 November 2019, Ms Cerrah lodged income tax returns for the years 2017 and 2018. Both returns were late. The 2017 return was about 560 days late and the 2018 return was more than a year late.

36. On 2 December 2019, the Board wrote to Ms Cerrah indicating that the Board had received information that raised ‘concerns’ about Ms Cerrah’s conduct. This information was about the coincidence in timing of Ms Cerrah being in receipt of social security benefits which she had received on the basis that she had told Centrelink she was not receiving any income at a time, when she was for long periods engaged in providing supervised tax agents services with one or other of the practices referred to earlier. The letter outlined the Board’s view that Ms Cerrah may not have been employed at the times she told the Board she was obtaining relevant work experience or that she may have given one or other of the ATO or the Department of Human Services false and misleading information about her income. The Board sought a response to some specific questions and indicated that the response should include relevant documents. The response was required by 16 December 2019.

37. On 12 December 2019, Ms Cerrah lodged income tax returns for the years 2015, 2016, and 2019 as well as an amended return for the 2017 year. All of the returns were late. The first return was more than 1,500 days late and the last was about 40 days late. Ms Cerrah said in her evidence that she was not prompted by the Board’s letter about 10 days before to lodge her tax returns but rather the matter of her outstanding returns had simply come to her attention and she was fixing things. In context that assertion seems a little unlikely.

38. The returns (except for the 2018 return) identified taxable income over and above the social security benefits that were being received: the 2015 return identifies $13,214 of other income, the 2016 return $13,984, the 2017 return $5,580 and the 2019 return $31,690 (noting no social security benefits were received in that year).

39. On 12 December 2019, Ms Cerrah wrote ‘To whom it may concern’ saying that in submitting her applications for parenting payment she ‘inadvertently omitted personal services income’ in the amounts of $13,500, $13,984 and $5,580 for the 2015, 2016 and 2017 years. The letter went on to state what the amounts received by way of parenting benefit were and sought that any adjustment be provided with a ‘bill so that I can repay you ASAP’. The document was not signed. Ms Cerrah said that she sent the letter to Centrelink by uploading it to ‘their portal’. No reply was received to the document.

40. On 13 December 2019, the day after lodging several of her tax returns and her amended 2017 return, Ms Cerrah wrote to the Board. She explained that her earlier tax returns had been prepared in ‘haste’ and because of that ‘left out personal services income earned in 2015, 2016 and 2017’. The letter explained that Ms Cerrah had taken action to correct things by lodging amended returns for 2015, 2016 and 2017, had paid the tax that was owed and had prepared a letter to Centrelink asking them to correct things and indicating that any money owed would be paid. The letter said some things about Ms Cerrah’s personal circumstances, being a mother of three children and having had stroke in 2016 while setting up a business at the time. Ms Cerrah referred to what had happened as a ‘personal mistake’ and an ‘inadvertent mistake’, the fact that she had rectified her ‘mistake’ and twice referred to her regret.

1. On 9 July 2020, the Board wrote to Ms Cerrah and told her that it was investigating her conduct. The letter identified the matters I have referred to earlier as involving breaches of her obligations in relation to honesty and integrity and to have own taxation affairs in order. The letter also raised questions about whether Ms Cerrah continued to satisfy the eligibility requirements to be a registered tax agent, of being a fit and proper person and in respect of qualifications and experience. The letter did not require Ms Cerrah to do anything and told Ms Cerrah of the requirements that the Board complete its investigation within six months.

2. On 17 August 2020, Ms Cerrah lodged her application for renewal of registration as a tax agent.

3. On 10 September 2020, the Board asked Ms Cerrah to produce her continuing professional education records ‘for the period 4 April 2019 to 10 September 2020’. The request did not on its face appear to involve any complexity.

4. On 15 September 2020, Ms Cerrah sent an email to the Board telling the Board that in February 2020 she had engaged Mr McMillan on a part time basis to ‘assist’ with her ongoing training which was for ‘roughly 5 hours a week since’ then. It referred to the arithmetic conclusion that totalled 120 hours as at 10 September 2020. The letter referred in dot points to what had been done in that training. It might be noted, a little more than in passing, that what was said in the letter in that respect was nonresponsive to the request: the Board had only sought production of records.

5. The letter did attach a document, that was not referred to in the letter, that was titled ‘CPD Records’ which was the document identified for the period 15 September 2018 to 15 September 2020. The document had about 43 entries over various dates which indicated (except for four entries) that the ‘provider’ of CPD was Mr McMillan for periods generally of between two and eight hours. The document also indicated that Ms Cerrah had undertaken continuing professional education of 46 hours duration with the Institute of Public Accountants on 21 October 2019. The document did not describe anything about what was involved in each of the sessions for each of the periods of time referred to. The total hours of continuing professional education shown on the document was 264 hours of which 259 were said to be ‘structured’ hours. No continuing professional education was recorded as having been undertaken at any time before 19 February 2019.

6. As things turned out Mr McMillan did not have any recognised taxation, accounting, or legal qualifications, although in February 1992 he had completed an Associate Diploma of Business (Accounting) at Dandenong College of TAFE. He has never, as I have already observed, worked as a tax agent although he had some experience doing ‘tax work’. He also said that so far as Ms Cerrah was concerned, he carefully checked every return she prepared and explained things carefully and closely to Ms Cerrah. Ms Cerrah said at the time that she undertook the ‘continuing professional education’ with Mr McMillan she was not at all aware that he was not qualified to deliver such education. I am inclined to accept Ms Cerrah’s evidence about that given that Mr McMillan was an accountant and given his apparent experience in accounting and taxation matters.

7. On 6 October 2020, the Board sought Ms Cerrah’s continuing professional education records for the period 20 September 2017 to 15 September 2018. Ms Cerrah did not provide them, but instead provided an explanation about her stroke in October 2016 and motor vehicle accident in April 2017 and her hospitalization such that she only ‘received customers unless [she] had to’. She started work and CPD training after she ‘started to feel better’ which was after September 2018.

8. On 3 November 2020, the Board sent Ms Cerrah a letter telling her what was alleged against her, enclosing a submission that was made to the Board’s Conduct Committee and seeking her response.

9. On 18 December 2020, the Board wrote to Ms Cerrah telling her that it had decided to terminate her registration as a tax agent and that she would be prohibited from applying for registration for a period of five years. This was because her conduct was found to be in breach of the Code and because the Board was satisfied that Ms Cerrah no longer met the requirements for registration so far as she was required to be a fit and proper person. The requirements prescribed by the Regulations that she be engaged in the equivalent of 12 months full time relevant experience within the preceding five years and the requirement that she had undertaken 90 hours continuing professional education during the three years preceding the date of lodgement of her renewal application. The reference to 12 months relevant experience was, as became apparent in this review, an error and should have been a reference to two years relevant experience.

10. Ms Cerrah says in relation to many of the things that happened over the period of her registration that involved her apparent dishonesty and failure to have her own tax affairs in order that at ‘[t]hat time, I was not myself and I made an error, I see that, I understand that. I made an error and its with my own personal affairs, not with clients, not anyone else. It’s my own personal affairs and I accept that. I know that. It’s a big mistake and I fixed it in 2019. And after 2019, everything is on time’. She also said, ‘I was like, you know, careless and didn’t pay enough attention’. This was in a context where Ms Cerrah had no doubt about the importance of the document she was completing and the need to be truthful. Ms Cerrah referred to the ‘enormous personal stress’ she was under because of a number of personal events in her life which included the breakdown of her marriage, bringing up three children as a single mother, her son’s epilepsy diagnosis, her stroke in October 2016, her car accident in April 2017, the death of ‘very many’ close friends and family members and her subsequent anxiety, depression and panic attacks.

11. So far as her mental state is concerned, Ms Cerrah relied mainly on her own evidence with the only significant medical evidence about that was from a Dr Grimshaw who Ms Cerrah first saw in October 2019.

12. On 5 March 2021, the $850 that was the subject of the penalty issued on 5 September 2016 was paid.

    THE BREACHES OF THE CODE

13. The breaches of the Code which the Board relied upon were set out in the Board’s submissions. They were:

    (a)a failure to act with honesty and integrity by submitting annual declarations to the Board for the years 2018 and 2019 because Ms Cerrah had declared she had no outstanding tax obligations when she in fact had overdue obligations for the 2017 and 2018 years;

    (b)a failure to act with honesty and integrity and a failure to comply with taxation laws in respect of her personal affairs because she did not tell the ATO that she was in fact required to lodge tax returns for the years 2015, 2016 and 2017;

    (c)a failure to act honestly and with integrity and to comply with taxation laws in respect of her personal affairs because she did not declare all of her assessable income to the ATO in tax returns for the financial years 2015, 2016 and 2017;

    (d)a failure to act with honesty and integrity and failure to comply with taxation laws in respect of her personal affairs by failing to lodge her tax returns in the 2015, 2016 and 2017 years so that she was receiving a higher social security benefit than she would have otherwise been entitled to;

    (e)a failure to act with honesty and integrity in her annual declaration submitted to the Board for the 2018 year because she represented, she had met the Board’s minimum continuing professional education requirements when she did not;

    (f)a failure to maintain her knowledge and skills by failing to complete sufficient continuing professional education conducted by people qualified to conduct such education; and

    (g)a failure to act with integrity by declaring to the Board in her registration renewal application on 20 August 2020 that she had met the Boards continuing professional education requires and relevant full-time work experience requirements in the preceding five years.

    The 2018 and 2019 declarations

14. Ms Cerrah told the Board on 3 October 2018, when she lodged her Annual Declaration that she did not have any overdue personal tax obligations. She did this by answering ‘No’ to the question ‘Do you have any overdue personal tax obligations’ in the declaration. As of 3 October 2018, that was not correct because Ms Cerrah had not lodged her tax returns for the years ending 30 June 2017 and she had the outstanding penalty of $850 that had been issued on 5 September 2016. Ms Cerrah also told the Board on 26 September 2019 again that she did not have any outstanding tax obligations, yet at that time her tax returns for the years ending 30 June 2017 and 30 June 2018 remained outstanding, as did the $850 debt. Her declaration was not correct.

15. Ms Cerrah admitted that in each of the years 2018 and 2019 she had told the Board that she did not ‘have any outstanding income tax returns which I did have’. Ms Cerrah said that in answering the question and filling in the declaration, ‘[for the question] have you lodged your income tax returns, I said ‘yes’, but they were not lodged. I was just careless’. So far as the $850 outstanding tax debt, Ms Cerrah said she did not know that she had a debt at the time because ‘it was written off by the ATO’.

16. The starting point is that Ms Cerrah by her answers in the 2018 and 2019 Annual Declarations intended those answers to have their natural and ordinary consequence such that a person reading them presumed that Ms Cerrah was telling the truth and that she therefore had no outstanding tax obligations. In light of what the real position was the answers were on the face of things not truthful answers.

17. I am unable to accept Ms Cerrah’s evidence that the matter was something that involved being careless or inadvertent for several reasons. The context of her explanation is, of course itself problematic because there is no explanation of any facts that amounted to carelessness or inadvertence but simply asserts a conclusion about the circumstances.

18. First, it must be remembered in considering these issues that in both 2018 and 2019 Ms Cerrah was by then a person who was a registered tax agent who had, on her own evidence, some experience in dealing with and lodging tax returns. It would be remarkable that a registered tax agent who had qualifications and experience in the field was not acutely aware of the need to lodge their own tax return. It is difficult to accept that a tax agent who has, in particular, derived personal services income in a year of income, could somehow be careless about whether they have conformed to their tax obligations. The personal services income for each of the relevant years was in a significant amount.

19. Second, it is difficult to accept that Ms Cerrah was not aware and on notice of the need to have lodged all outstanding tax returns and the importance of that in processing applications for registration and renewal with the Board. This is in light of the fact that Ms Cerrah’s application for registration in 2016 was withdrawn because the Board brought to her attention that she had not lodged her 2014 and 2015 tax returns. Her evidence was that as a result of that experience she understood that her tax obligations needed to be up to date and there was ‘a big issue about that’. It is also relevant that she was on notice that the Board would not give her registration if she answered the question about outstanding tax obligations in the affirmative.

20. Third, the questions are very clear as to what they are asking and the answer in the context of someone who recently derived income is binary. The forms themselves contain clear warnings about the concerning the need to answer questions truthfully and the serious consequences of not doing so.

21. Fourth, it appears that the very same inadvertence or carelessness happened over several years and certainly for two years running in 2017 and 2018. It is difficult to accept that the same thing happening twice was due to carelessness when the question is really a very simple one.

22. Fifthly, I do not understand how Ms Cerrah’s stroke in 2016 and other personal circumstances continued to affect her in such a way that she was ‘careless’ or ‘inadvertent’ in answering questions in circumstances where, on her evidence, she was still able to do work for clients even if only on an intermittent basis. It was by no means clear what the circumstances or facts that led to her answering the questions wrongly were. There was no medical evidence which supported her self-serving claim that she was affected by her stroke and car accident in such a manner that one and two years later they continued to affect her in such a way that she gave incorrect answers.

23. Finally, there were significant aspects of Ms Cerrah’s evidence that lead me to approach her explanation with significant caution. In particular, she denied that she had been dishonest at any time but during one of her answers in her evidence ‘apologise[d] for not being honest’. When this was brought to her attention, she was unable to explain her answer other than by reference to ‘when I am under stress, I don’t know which word to use’. To a similar effect, she denied that she knew her application for renewal would be rejected if she had outstanding obligations but later in her evidence said that she knew that because of the issues that had been raised in 2016 about her outstanding obligations. Her consistent appeal to carelessness and the events that had beset her in and around 2016 was also unconvincing.

24. I do not accept Ms Cerrah’s explanation as to why the answers in the 2018 and 2019 Annual Declarations were incorrect. I find that Ms Cerrah was not being truthful in her answers to the Board’s enquiry about whether she had any overdue personal tax obligations when she told the Board she did not. She was not truthful because at the time she had not lodged her 2017 and 2018 tax returns. In doing so Ms Cerrah breached her obligations of honesty and integrity.

25. I am not, however, persuaded that Ms Cerrah was dishonest about her omission to recall the $850 debt arising from the penalty imposed on her. This is because it had been earmarked as being something that was uneconomical to pursue and did not show in her portal, so it would seem as an outstanding debt. I am prepared to give Ms Cerrah the benefit of the doubt about that.

    The failure to lodge tax returns and declare assessable income

26. Ms Cerrah did not tell the ATO that she was required to lodge tax returns for 2015, 2016 and 2017 and for each of those years did not declare all of her assessable income. The first of those returns was due in November 2015 and the second and third were due by 15 May 2017 and 15 May 2018. They were all lodged more than 500 days late with the 2015 return more than four years late.

27. At the time that Ms Cerrah did not file her 2015 and 2016 tax returns, the Code did not apply to her, but after September 2017 it did. So as far as the 2017 return is concerned, she did not lodge that tax return at a time when the Code applied. In any event when she did become registered her two outstanding tax returns that had not been lodged was a matter caught by the Code because she had an ongoing obligation and as a matter of integrity, she was not then compliant with taxation laws. Even if they cannot be viewed that way the matters are relevant to the question of fitness and propriety to which I later will turn to consider.

28. It is no matter of small moment that in the relevant years Ms Cerrah derived personal services income of $13,500, $13,984 and $5,580. The matter of late lodgements may not have been on its own quite so significant if, for example, no income had been derived in any of the years. I say ‘may’ not have been so significant because it would obviously ultimately depend on all of the circumstances.

29. Again, in relation to the alleged breaches of the Code, Ms Cerrah relied upon the matters I have referred to earlier regarding her failure to be truthful on her declarations to the Board. Ms Cerrah was able to undertake tax work during the relevant periods, the reason why she derived personal income. The reasons are unclear as to how this somehow prevented her or caused her to be careless about her own tax affairs. This was in circumstances where she knew how important it was to the Board that the tax returns be lodged on time because of what happened in 2016. Even more so was it important because she had derived personal services income.

30. For much the same reasons that I did not accept Ms Cerrah’s explanation about her untruthful declarations I do not accept her explanations about why she did not lodge her returns and declare her assessable income which involve references to doing things in ‘haste’ and inadvertence on her part. As a tax agent doing tax returns for others, she must have been aware of the need to lodge returns and to declare income and to do so accurately and carefully. She was on notice of the importance of lodging her own tax returns and having them up to date. Her explanations were in general unconvincing because of the inconsistencies I have referred to. In addition, none of her evidence about her mental condition was corroborated by any medical or other evidence as to its consequences and was largely self-serving and unconvincing.

31. I find that Ms Cerrah did not act with honesty and integrity in failing to lodge her 2015, 2016 and 2017 tax returns in time and in not declaring all of her assessable income for each of those years. Further, those failures were in breach of her obligation to comply with taxation laws in the conduct of her personal affairs.

    The failure to lodge returns whilst receiving government benefits

32. The substance of this allegation is that by not lodging her tax returns in the 2015, 2016 and 2017 years, Ms Cerrah was able to receive a higher social security benefit than she would have otherwise been entitled to. That conduct was said to be contrary to her obligation of honesty and her obligation to comply with taxation laws.

33. The allegation in its effect explains that Ms Cerrah’s failure to comply with her taxation obligations by failing to lodge returns and failing to declare assessable income was motivated by her desire to avoid losing in part or in whole any of the government benefits she was receiving at the time.

34. The absence of any plausible or acceptable explanation for why Ms Cerrah did not declare her assessable income leaves that inference open. Ms Cerrah did not offer much explanation about why she failed to lodge the returns and declare her income other than to say that she did things in haste and was inadvertent. To the extent that it relied on carelessness I do not accept that explanation because of the inconsistencies in much of Ms Cerrah’s evidence. In particular, I do not accept that someone who was working towards being a tax agent could simply have forgotten or been so consistently careless as to not lodge their own tax returns and declare their own assessable income.

35. I find that Ms Cerrah was in breach of her obligation of honesty and integrity and her obligation to comply with taxation laws in the conduct of her personal affairs because she did not lodge her income tax returns and declare her assessable income of the 2015, 2016 and 2017 years so that she might continue to receive the same level of government benefits she was receiving.

    The failure to act honestly in relation to the 2018 CPD declaration

36. Ms Cerrah told the Board on 3 October 2018, in her Annual Declaration that she had met the Board’s minimum annual continuing professional education requirements. That requirement was that she had undertaken 10 hours continuing professional education annually. As at the date she made the declaration, she had not completed any continuing professional education. She provided no evidence to the Board about that when it was requested in October 2020 and she provided no evidence to the Tribunal about it either.

1. There was not a great deal of attention directed to this aspect of the matter in Ms Cerrah’s answer to the allegations, but it should be understood to have been in the same context that her answers in relation to not having overdue taxation obligations were considered, namely that her omission was caused by her personal circumstances at the time. Again, I am unable to accept that the matter was one of carelessness or inadvertence because of the inconsistencies in Ms Cerrah’s evidence and the fact that all of her evidence about it was self-serving, self-interested and uncorroborated.

2. I find that Ms Cerrah breached her obligation of honesty and integrity in telling the Board that she had met the Board’s minimum annual continuing professional development obligations when she had not.

   Failing to maintain knowledge and skills

3. This allegation concerns the fact that Ms Cerrah failed to complete sufficient continuing professional development by someone with appropriate qualifications or experience consistent with the Board’s requirements because Mr McMillan was not an appropriate person to provide continuing professional education. This allegation is not one that is directed to Ms Cerrah’s honesty and integrity but rather to her failing to do that which was required to maintain her knowledge and skills.

4. I have recorded earlier that Mr McMillan was not a registered tax agent and had not ever been a registered tax agent. Although he was an accountant there was nothing that would suggest that he was an appropriate person to provide continuing professional education to tax agents. Given Mr McMillan’s apparent experience I accept Ms Cerrah’s evidence that she assumed Mr McMillan held qualifications, but as things turned out he did not. But before she warranted to the Board that she had in fact satisfied the Board’s continuing professional education requirements it was incumbent upon her to ensure that Mr McMillan was an appropriate person to undertake such training. In any event, her failure to do that meant that she was not maintaining her skills and knowledge consistent with the relevant regulatory requirements.

5. There is another reason why I do not accept that the time spent with Mr McMillan was in fact continuing professional education. This is that there is simply no satisfactory evidence about what in fact occurred during each of the times ‘education’ was being delivered that would suggest it was continuing professional education as required by the Board’s policy. Although the training was claimed to be structured, it appeared to involve little more than Mr McMillan checking Ms Cerrah’s work. The contents of what was done during in any of the times was not evidenced in any way in the log that was produced.

6. No documents of any kind were produced, such as papers or notes or anything that would indicate what knowledge about any particular thing or matter was imparted during the sessions. Nothing was produced in answer to the Board’s notice to demonstrate what continuing professional education had been conducted. The Boards policy requires a contemporaneous record and evidence of the completed continuing professional education be maintained. A simple list of dates and periods of times with someone’s name on it does not provide any indication of anything that was in fact done and does not satisfy the requirement. I am not satisfied that any of the times listed that were spent with Mr McMillan were continuing professional education.

7. The Board’s requirements for continuing professional education are 90 hours in three years with a minimum of 10 hours each year. The previous allegation deals with the fact that Ms Cerrah had not done any continuing professional education in the year to October 2018. The only continuing professional education she had done that would satisfy the Board’s requirements on the information is that which she undertook with the Institute of Public Accountants on 21 October 2019. This means that Ms Cerrah did not satisfy the relevant requirement.

8. By 20 September 2020, because of Mr McMillan’s lack of appropriateness in delivering continuing professional education and my rejection of the suggestion that the sessions with him were continuing professional education at all, she had only undertaken 46 hours of continuing professional education on the third anniversary of her registration. As such she did not satisfy the Board’s continuing professional education requirements and therefore had failed to maintain her knowledge and skills relevant to the provision of tax agents services in breach of her obligation to do so.

   Failure to act honestly in the 20 August 2020 renewal application

9. In her Annual Declaration dated 17 August 2020, Ms Cerrah said that she had met the Board’s requirements regarding ‘relevant experience’ which required her to have two years full time ‘relevant experience’ in the last five years from the date of her application for registration and that she met the Boards continuing professional education requirement to have 90 hours of continuing professional education over three years with not less than 10 hours in the preceding year.  The Board alleged that Ms Cerrah did not satisfy the relevant experience requirement or the requirement to have 10 hours continuing professional education in the preceding year.

10. The first matter requires consideration of the evidence about Ms Cerrah’s relevant experience. I have earlier set out my findings about those things. Ms Cerrah’s experience with Mr Jaksic was for the period 5 July 2014 until 29 May 2015, a period of about 11 months. From 5 June 2015 to 6 September 2016, she was working under the supervision of Mr Mavrokokki for about 14 months although there are some serious issues about whether that time was fulltime work or not. I accept that it was given Mr Mavrokokki’s confirmation of the statement of relevant experience and Ms Cerrah’s evidence about that. The time working for Mr McMillan cannot count for the purpose of relevant experience because he was not a tax agent of any kind. The combined periods spent working with Mr Jaksic total about 25 months which would satisfy the relevant requirement about two years full time in the five years preceding the date of Ms Cerrah’s application for registration.

11. So far as the continuing professional education requirement is concerned Ms Cerrah completed 46 hours of continuing professional education provided by the Institute of Public Accountants on 21 October 2019 so the requirement to have undertaken 10 hours continuing professional education in a year, the minimum annual requirement, was satisfied at least for the year before the 17 August 2020 Annual Declaration was lodged.

12. I am not satisfied that either aspect of this allegation has been made out because I have accepted that Ms Cerrah did work for Mr Jaksic and Mr Mavrokokki for more than two years to obtain relevant experience and because she did undertake more than 10 hours continuing professional education in the year preceding her application for renewal on 17 August 2020.

    Fit and proper person requirements

13. Next, I must consider whether I am satisfied that Ms Cerrah meets the requirement in s 20-5(1)(a) of the Act that she be a fit and proper person, because if I am satisfied she is not her registration may be terminated.

14. The question of whether a person is a fit and proper person relies upon a number of indicators some of which are mandatory under the Act, namely whether the person is of good fame, integrity and character.

15. In general, the phrase ‘fit and proper’ has no exact meaning. In the context of tax agents, the question is most often addressed by having regard to the fact that a tax agent is someone who prepares and lodges tax returns on behalf of others, most usually clients. Such a person needs to be both competent and honest because they are trusted to take care of the affairs of other people. A tax agent is also trusted to deal with important government agencies such as the ATO. The public must have confidence that the tax agent will conduct themselves in manner that is honest, competent and professional.

16. The breaches I have found involve dishonesty in dealings with the Board and failures to comply with taxation laws in the conduct of the agents own affairs. The fact of dishonesty is a significant matter affecting the question of fitness and propriety because public trust and confidence in the regulation of tax agents and the taxation system relies foundationally upon the honesty of the participants. A tax agent stands very much front and alongside the ATO in that system.

17. In this case the most egregious breaches involve telling the Board that personal taxation obligations were not overdue when they were. This was aggravated because an earlier application for registration had been withdrawn on the very basis that it was brought to attention that personal taxation obligations were outstanding and needed to be dealt with before registration could occur. The breaches of the other obligations that I have found are nonetheless serious and it should not be thought that the focus upon the misleading statements to the Board and the failures to lodge tax returns and declare assessable income in three income tax years diminish their importance.

18. I have also observed that in respect of some of the breaches, the conduct, not lodging tax returns and not declaring assessable income, occurred before registration but that in the view I take does not detract from the ongoing nature of the breaches after registration and, as well, reflects adversely upon fitness and propriety. It directly goes to the integrity of the agent quite apart from questions of adherence to the Code.

19. If the Board was not able to rely upon Ms Cerrah’s word regarding important matters such as those that concerned her lodgement of tax returns and compliance with taxation laws it is not possible to conclude that the ATO and the public at large are, or would be, able to do so. Similarly, if Ms Cerrah is unable to comply with taxation laws it is not possible to conclude that she will ensure that others do so. A failure by a tax agent to look after her or his own affairs demonstrates an inability to be trusted to look after the affairs of others.

20. I am not persuaded that the one invoice addressed to Solutions was in fact misleading. The relationship between Solutions and Mr McMillan would seem on the face of things to explain why Ms Cerrah sent to Mr McMillan an invoice with his name on it addressed to Solutions. Much was made of this invoice and it being misleading, but I do not consider it was misleading and even if it was it is not as significant as the other matters to which I have referred.

21. There is not much evidence as to Ms Cerrah’s fame before the Tribunal but so far as character and integrity the evidence counts firmly against any satisfaction that Ms Cerrah is a fit and proper person to be registered as a tax agent. Together with the breaches found, I cannot due to the serious questions over Ms Cerrah’s honesty and integrity, be satisfied that Ms Cerrah is a fit and proper person to be a registered tax agent.

22. Also, I have referred to in the course of these reasons significant matters which concern Ms Cerrah’s frankness in giving evidence to the Tribunal which cast doubts upon her honesty and integrity. In particular, I have rejected her claim concerning her ‘haste’ and inadvertence as being the reason for failing to lodge her tax returns and declaring all of her assessable income. I have also rejected her continued reliance on being ‘careless’ in answering questions on her application for registration and on her renewal applications concerning the state of her own taxation affairs and representing that there was nothing outstanding when there was. These are significant matters where I have found a lack of frankness and candour both with the Board and with the Tribunal. The persistence in those things are significant in my assessment as to whether I can be satisfied that she is presently a fit and proper person to be registered as tax agent.

23. On the basis of the above, I find that Ms Cerrah’s registration should be terminated as she does not satisfy the requirement in s 20(1)(a) and 40(5)(1)(b) of the Act. It is not appropriate that she remain registered on the circumstances where the Tribunal cannot be satisfied, she continues to meet the requirements of registration.

    Continuing professional education requirements

24. Next, I must consider whether I am satisfied that Ms Cerrah meets the continuing professional education requirements in s 20-5(1(d) of the Act.

25. I have set out earlier the reasons why I am satisfied that Ms Cerrah did not undertake continuing professional education that met the Board’s requirements which are because she did not in 2018 meet the minimum annual requirement of 10 hours continuing professional education for the preceding year and had not, because of Mr McMillan’s lack of qualifications and because of any identification of anything she did as continuing professional education in the three years of her registration undertake 90 hours of continuing professional education.

26. Her failure to satisfy those requirements means that she does not meet one of the requirements of registration, namely that which is found in s 20-5(1)(d) so that her registration should be terminated under s 40-5(1)(b) of the Act.

    Should there be a prohibition on applications for re-registration?

27. Next, it is necessary to determine whether it is appropriate to lay down a period during which Ms Cerrah should be precluded from making an application for registration.

28. The matters relevant to whether there should be a preclusion period and, if so, how long it should be, involve an objective assessment of all of the circumstances having regard to the seriousness of any misconduct, the prospects that it will be repeated, the likely harm caused, the impact of termination and the individuals response to their found conduct.

29. There is no single right answer to the objective assessment that is involved, especially where the operation of the preclusion period will simply mean that no application can be made in the relevant time but even when one is made the tax agent will still need to demonstrate fitness and propriety to the Board’s satisfaction against a backdrop of findings that relevantly led to termination.

30. The Board suggested that a prohibition for less than five years ‘will insufficiently protect the public and the integrity of the system although contextually that submission appeared not to account allegations that were not pressed’.

31. Objectively, the conduct involved in this matter is at the high level of seriousness because it involves dishonesty and demonstrates an incapacity to have confidence in the tax agent. It is relevant that the dishonesty in this case did not involve any loss to any clients or taking advantage of clients. The breaches that involved the likely overpayment of social security benefits probably involved some loss to the public at large and it is not at all clear from the evidence that this has, as of yet been rectified.

32. Ms Cerrah’s evidence suggests that she has taken some steps to do things to make sure that she does not engage in such conduct again in the future albeit against the backdrop of her claim that the conduct involved carelessness and was not deliberate. This includes a suggestion that she has learnt some things because of what has happened to her. Her evidence was that the loss of registration will have some impact upon her financially although it is not possible to determine what that will involve.

33. The regulatory system requires that there be a message sent to tax agents more generally to deter conduct such as that is involved in this case.[1] This is perhaps heightened in these circumstances because Ms Cerrah was a recently registered tax agent.

    [1] Ridden and Tax Practitioners Board [2020] AATA 422 at [36]

34. In the circumstances, I consider a prohibition on applying for registration for a period of four years is appropriate. In making this determination I have had regard to the dishonest nature of much of the conduct. The failure of Ms Cerrah to accept responsibility for her conduct has resulted in a significant preclusion period which aims to deter her from engaging in such conduct if she is registered again. A significant preclusion period will also deter like conduct by other tax agents. Ms Cerrah’s personal circumstances, as someone who has suffered a stroke with the attendant hardship that caused at least for a time and that she is a single mother caring for three children will mean that the effect of any preclusion period will be slightly harsher for her than it might be in more usual circumstances so I have slightly reduced it from the period I might otherwise have considered appropriate.

35. Also, it should not be forgotten that even after the preclusion period Ms Cerrah will need to satisfy the Board that she is a fit and proper person to be registered so registration will not be automatic.  In the period of preclusion from applying for registration Ms Cerrah will have the opportunity to do things that will, it is hoped, enable her to demonstrate to the Board’s satisfaction that she is a fit and proper person to be registered once again should she choose to seek registration once again.

    DECISION

36. The Tribunal affirms the decision dated 18 December 2020 so far as it terminated the registration of the applicant but varies it so that the applicant is prohibited from applying for registration for a period of four years rather five years.

I certify that the preceding 112 (one hundred and twelve) paragraphs are a true copy of the reasons for the decision herein of R Reitano, Member.

113.    

......[sgd].....................................................

Associate

Dated: 6 January 2022

Dates of hearing:	8 & 9 June 2021
Applicant:	Self-Represented
Counsel for the Respondent:	A Haban-Beer
Solicitors for the Respondent:	Tax Practitioners Board