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The TPB has terminated a tax agent’s registration after allegedly misappropriating more than $2.5 million in client funds for personal financial gain.
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TPB bans agent for misappropriating $2.5m in client funds
04 June 2024
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The Board of Conduct Committee (BCC) has decided to terminate the agent’s registration and prohibit them from applying for registration for five years.
The BCC found that the individual tax agent had breached a number of items of the Code of Professional Conduct, including:
- Code item 1 - You must act honestly and with integrity.
- Code item 2 - You must comply with the taxation laws in the conduct of your personal affairs.
- Code item 4 – You must act lawfully in the best interests of your client.
- Code item 13 - You must maintain professional indemnity insurance that meets the Board's requirements.
The BCC found that the tax agent had failed to act honestly and with integrity by systematically misappropriating client funds totalling more than $ 2.5 million.
The tax agent had also failed to comply with a payment arrangement with the ATO for an income tax debt, act lawfully in the best interests of clients by misappropriating funds for personal advantage or benefit, and maintain professional indemnity insurance, according to the TPB.
The individual tax agent was also found to have become an undischarged bankrupt and ceased to meet the registration requirements to be a fit and proper person, the TPB said.
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“In finding that they were no longer a fit and proper person to be registered, the BCC noted that the misappropriation of client funds for personal financial gain is particularly egregious, a serious and inexcusable misuse of their position and a breach of trust,” it said.
“The seriousness and systemic nature of the conduct and size of funds misappropriated also demonstrated that we could not have confidence the individual would continue to uphold the ethical and professional standards required to remain registered.”
In making its decision to terminate the agent’s registration and prohibit them from applying for registration for 5 years, the BCC stressed that the board’s role is to ensure consumer protection and that it has an “objective to protect and maintain the integrity of the registered tax practitioner profession”.
In a separate decision, another tax agent received a two-year ban after they were found to have engaged in serious breaches of the Code of Professional Conduct (Code) and ceased to meet the registration requirements to be a fit and proper person.
“The tax agent breached Code item 3, by failing to account for clients' funds of over $1.1 million that were paid by the Australian Taxation Office into a bank account that they were not a signatory off and had little or no control over, and from which personal and other expenses appear to be paid,” the TPB said.
“The agent also breached Code item 7 by failing to provide adequate supervision and control over the lodgement of business activity statements over a prolonged period of time. This resulted in client refunds being deposited into a bank account to which they were not a signatory, and otherwise had no control over.”
The TPB said that based on this conduct and the failure to demonstrate insight or accept responsibility as a registered tax agent for accounting to clients and ensuring refunds received on trust are paid into an appropriate account, the BCC determined that the tax agent had ceased to meet the fit and proper person requirements to remain registered and imposed a two-year non-application period.
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