Federal Court of Australia

Tax Practitioners Board v Auz Tax Pty Ltd [2026] FCA 751

ORDERS

THE COURT ORDERS THAT:

1. The appeal is dismissed.

2. The applicant pay the respondents’ costs, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

HORAN J:

1 On 5 September 2025, the Administrative Review Tribunal set aside the decisions of the Tax Practitioners Board to terminate the registration of each of the respondents, Auz Taxation Pty Ltd and Mr Sumit Bagga, as a registered tax agent under the Tax Agent Services Act 2009 (Cth) (TAS Act), and instead decided to give them a written caution and to require them to take specified actions pursuant to ss 30-15 and 30-20 of the TAS Act: Auz Taxation Pty Ltd v Tax Practitioners Board [2025] ARTA 1711 (T).

2 By a notice of appeal dated 3 October 2025, the Board appeals from the Tribunal’s decision.  The questions of law contained in the notice of appeal raise the following issues:

(a) whether the Tribunal erred by conflating the separate powers available under Pt 3 and Pt 4 of the TAS Act, in so far as it treated the availability of administrative sanctions under Pt 3 as a basis on which to exercise its discretion not to terminate the respondents’ registration under Pt 4;

(b) whether it was legally open to the Tribunal to find that Mr Bagga was a fit and proper person at the time of its decision, in the light of its findings concerning past conduct involving a lack of integrity and contraventions of the Code of Professional Conduct set out in s 30-10 of the TAS Act;

(c) whether the Tribunal took into account an irrelevant consideration, namely, the asserted adverse impact of suspension or termination of registration on clients who continued to use the respondents’ services; and

(d) whether the Tribunal misconstrued or misapplied s 30-10(4) of the TAS Act by failing to consider whether the respondents’ failure to provide adequate supervision of its staff could involve non-compliance with the obligation to act lawfully in the best interests of clients.

3 For the reasons set out below, the Board has not established that the Tribunal’s decision was affected by legal error on any of the grounds of appeal.  Accordingly, the appeal is dismissed with costs.

Background

4 Mr Bagga is an accountant who became registered as a tax agent on 13 July 2016.  After having practised as a sole practitioner, he has operated his business through Auz Taxation since January 2021.  At all relevant times, Mr Bagga was the sole director of Auz Taxation.

5 In April 2022, Mr Bagga provided his “myGovID” login credentials to an employee of Auz Taxation, Mr Amit Kumar.  Mr Bagga also provided Mr Kumar with the login credentials of his wife, Neetu.  Such login credentials could be used to access the “Online Services for Agents” portal (the ATO portal) operated by the Australian Taxation Office, through which tax agents are able to obtain client records and electronically lodge returns and activity statements.  It appears that this was done because Mr Kumar had been unable to obtain his own myGovID in the light of his recent arrival in Australia and “due to some issues concerning providing relevant identification documents”: T [12].

6 Mr Kumar used the login credentials to gain access to the ATO portal and lodge fraudulent activity statements on behalf of two companies, which had been linked by him as clients of Auz Taxation, and then to direct GST refunds to be paid into an account that was controlled by him.  In June 2022, the ATO identified the fraudulent transactions and notified Mr Bagga.

7 Mr Kumar was not dismissed from his employment as a result of his fraudulent conduct, for reasons that Mr Bagga sought to explain in his oral evidence to the Tribunal: see T [19], [51(d)].  Instead, Mr Bagga issued him with a warning letter, and he continued to work for Auz Taxation.  Mr Kumar was permitted by Mr Bagga to continue to access the ATO portal using the myGovID login credentials of Mr Kumar’s wife, Ms Sayeesha Monga, who was not an employee of Auz Taxation.  In November 2022, Mr Kumar used those login credentials to register a taxpayer as a client of Auz Taxation, without the taxpayer’s authorisation and without Mr Bagga’s knowledge or authority.  The taxpayer subsequently made a complaint to the ATO.

8 On 9 February 2023, Mr Kumar lodged an application for registration as a tax agent.  In connection with that application, Mr Bagga signed a Statement of Relevant Experience (SRE) which contained erroneous information about the date on which Mr Kumar had commenced employment with Auz Taxation and the tax agent services that he had provided.  Mr Bagga said that he had given directions to Mr Kumar to correct those errors before the SRE was provided to the Board.

9 On 6 March 2023, the Board wrote to the respondents concerning their conduct as registered tax practitioners.

10 Mr Kumar was dismissed by Auz Taxation on 8 March 2023, after having been confronted by Mr Bagga about the matters raised in the Board’s letter.  However, Mr Kumar was permitted to return to the office on 9 March 2023 to collect his belongings and conduct a handover of files, and his ability to access the ATO portal using Ms Monga’s credentials was not removed until 10 March 2023.

11 By notices dated 13 June 2023, the Board commenced an investigation under Subdiv 60-E of the TAS Act into the conduct of Auz Taxation and Mr Bagga, identifying potential failures to comply with the Code and to meet tax practitioner registration requirements.

12 On 27 October 2023, the Board provided the respondents with a copy of the investigation report, and gave them notice of potential sanctions including the termination of their registration as tax agents.  On 15 January 2024, the respondents’ solicitors provided a response to the Board’s letter and investigation report.

The Board’s decisions

13 On 24 January 2024, the Board decided to terminate the registration of Auz Taxation and Mr Bagga as tax agents under ss 40-5(1)(b), 40-15(1)(b) and 60-125(2)(b)(ii) of the TAS Act.  In respect of Mr Bagga, the Board decided under s 40-25 to disqualify him from applying for registration for a period of one year.

14 The Board found that each of Auz Taxation and Mr Bagga failed to comply with s 30-10(1), (2), (4), (7) and (14) of the Code of Professional Conduct.  The Board found:

(a) Contrary to s 30-10(1), the respondents did not act honestly and with integrity, by sharing personal myGovID credentials so as to allow Mr Kumar to have unsupervised access to the ATO portal and confidential client information, which enabled Mr Kumar to lodge false or misleading business activity statements and to obtain the payment of GST refunds into a bank account controlled by him.  Further, Mr Bagga signed the SRE without ensuring that errors were corrected in relation to the date of Mr Kumar’s employment and the number of returns he had completed.

(b) Contrary to s 30-10(2), the respondents failed to comply with taxation laws in the conduct of their personal affairs.  This primarily involved numerous instances of late lodgement of income tax returns and business activity statements.

(c) Contrary to s 30-10(4), the respondents failed to act lawfully in the best interests of their clients, in that they had failed to advise “the two companies who were victims of Mr Kumar’s fraud” of the actions taken without their authorisation.

(d) Contrary to s 30-10(7), the respondents failed to ensure that the tax agent services provided by them or on their behalf were provided competently, comprising a failure to provide adequate supervision and control resulting in the fraudulent activities undertaken by Mr Kumar.

(e) Contrary to s 30-10(14), the respondents had failed to respond to requests and directions from the Board in a timely, responsible and reasonable manner.

15 The Board also found that Auz Taxation and Mr Bagga no longer met the tax practitioner requirements:

(a) The Board was not satisfied that Mr Bagga was a fit and proper person as required by s 20-5(1)(a) of the TAS Act, by reason of his contraventions of the Code demonstrating a pattern of consistent disregard for honesty and integrity.

(b) In the case of Auz Taxation, the Board was not satisfied that Mr Bagga as its sole director was a fit and proper person as required by s 20-5(3)(a).  Further, the Board was not satisfied that Auz Taxation had a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements as required by s 20-5(3)(d)(i) of the TAS Act.

The Tribunal’s decision

16 The respondents applied to the Tribunal for review of the Board’s decisions.  Although the reviewable decisions were made by the Board under Part 4 of the TAS Act (see ss 60-125(2)(b)(ii),  70-10(e), (h)), it appears to have been common ground that, for the purposes of reviewing those decisions, the Tribunal could also exercise the powers and discretions conferred on the Board under Part 3 of the TAS Act: see generally Administrative Review Tribunal Act 2024 (Cth), s 54.

17 A conditional stay order was made pending the decision of the Tribunal on the application for review, pursuant to which the respondents were permitted to continue providing tax agent services subject to restrictions on taking on new clients and obligations to inform clients and employees of the Board’s decisions: T [38].

18 A number of matters were accepted by the respondents before the Tribunal, including:

(a) that they had failed to comply with their personal tax obligations, in breach of the obligation in s 30-10(2) (T [79], [98]);

(b) that the process for correction of the SRE was inadequate (T [80]);

(c) that Mr Bagga had authorised Mr Kumar to use the myGovID login credentials to access the ATO portal, contrary to the ATO’s terms and conditions (T [81]); and

(d) that there were issues concerning the supervision and control by Auz Taxation of its employees and contractors (T [82]).

19 It was not in dispute that Auz Taxation had offices in various locations, comprising five offices in Victoria and an office in Queensland: T [85].  At the time of the hearing before the Tribunal, Auz Taxation had approximately 5,500 clients, and 13 employees or contractors: T [86]–[87].  Mr Bagga was its sole director, and its only registered tax agent.

20 The Tribunal found that Mr Bagga had demonstrated a lack of integrity by providing the myGovID login credentials to Mr Kumar and in allowing him to gain unconstrained access to the ATO portal: T [90(a)].  Mr Bagga also permitted Mr Kumar to access the ATO portal after his fraud had been detected, using his wife’s login credentials: T [90(b)], [92].  The Tribunal found that these actions were contrary to the terms and conditions for the use of the ATO portal and amounted to a breach of security: T [90(c)].  As well as putting at risk confidential dealings between clients and the ATO, the actions of Mr Bagga enabled Mr Kumar to engage in fraudulent conduct and to hold himself out as someone who had authority to transact business on the ATO portal: T [90(c)], [92].  Further, by signing the SRE with incorrect information and leaving it in the possession of Mr Kumar, Mr Bagga effectively “allowed Mr Kumar to use his name and to represent a false state of affairs to the Board concerning Mr Kumar’s experience”: T [90(d)], [93].

21 While the Tribunal accepted that Mr Bagga had no knowledge of Mr Kumar’s fraud, it found that his actions did not meet the high degree of trust that had been placed in him as a tax agent in dealing with clients and the ATO: T [91].  Having noted the submissions made on behalf of Mr Bagga that he was not dishonest and had been candid in admitting mistakes, and his reliance on character witnesses as evidence of his good reputation, the Tribunal found (T [94]):

To some extent, this submission diverts attention from the conduct required of Mr Bagga in satisfying the requirements for being a fit and proper person.  While it may go to contrition and any sanction to be imposed, his contrition and acknowledgement of mistakes does not avoid a conclusion that his conduct demonstrates a lack of fitness and propriety.

22 The Tribunal made findings that the respondents had failed to comply with the following obligations under the Code:

(a) s 30-10(1): each of Auz Taxation and Mr Bagga failed to comply with the obligation to act honestly and with integrity (T [97]);

(b) s 30-10(2): while the respondents admitted non-compliance with taxation laws in the conduct of their personal affairs, the Tribunal found that there was no evidence of any continuing breaches (T [98]);

(c) s 30-10(7): the respondents failed to ensure that tax agent services were provided competently (T [113]–[114]):

(i) by failing to put in place sufficient supervision and controls to monitor and report on the use of the ATO portal in a manner likely to prevent or at least detect Mr Kumar’s fraudulent conduct;

(ii) by allowing employees to access and use the ATO portal other than with their own credentials, and to enter and make changes to data without the respondents’ knowledge or direction, and without any processes to verify the correctness of what had been done or to report on its occurrence; and

(iii) by failing to have a sufficient number of tax agents appropriately qualified to supervise the staff on hand at the locations where the business was conducted.

23 The Tribunal found that there was no failure to comply with s 30-10(4), under which a registered tax agent must act lawfully in the best interests of their client: T [101]–[104].  The Board had contended that, after the fraudulent conduct of Mr Kumar had been detected, there was a failure to notify the particular clients who were affected by the fraud.  However, the Tribunal found that those companies were not clients of Auz Taxation or Mr Bagga, having been fraudulently entered into the ATO portal by Mr Kumar in order to lodge false activity statements: T [102].  The Tribunal also found that, in circumstances where the companies were aware of the fraud and had not suffered any loss, there was no obligation to communicate with them about what had occurred: T [103]–[104].

24 The Tribunal was not satisfied that there had been a breach of s 30-10(14), which requires a registered tax agent to respond to requests and directions from the Board in a timely, responsible and reasonable manner: T [115]–[121].  The Tribunal found that the respondents had taken the Board’s requests seriously, and had instructed lawyers to assist them in preparing a response to the allegations.  A considerable amount of detail had been requested by the Board, and additional information was provided as questions were reframed or further questions were asked.  The respondents made candid admissions in relation to the provision of the login credentials to Mr Kumar, and concerning their own tax affairs.  The Tribunal was not satisfied that there was any attempt by the respondents “to mislead or obfuscate”: T [121].

25 Under the heading “Other matters”, the Tribunal found that Auz Taxation did not meet the eligibility criteria under s 20-5(3)(d)(i), under which a corporate registered tax agent must have a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements: T [122]–[124].  In particular, the Tribunal found that there was an insufficient number of tax agents to service all of Auz Taxation’s locations, and that Mr Bagga was “unable to provide necessary supervision having regard to the number of employees and the amount of work undertaken by [Auz Taxation] for more than 5000 clients”: T [124].  The Tribunal noted Mr Bagga’s evidence that he rarely attended the Queensland office, and that it did not appear that there was any employee who was a registered tax agent in that location: T [124].

26 In the light of these findings, the Tribunal turned to consider the “present position” in relation to whether Mr Bagga was a fit and proper person, including whether he was of good fame, integrity and character (see s 20-15(a)), observing (T [128]):

The question of present fitness and propriety requires an examination of the past conduct, the nature and severity of any misconduct, whether corrective action has been taken and/or whether there are continuing breaches of obligations the person has, the likelihood of future inappropriate conduct, the persons recognition and remorse for the conduct in question and the degree to which the passage of time might demonstrate matters of misconduct might properly be put in the past.

27 The Tribunal came to the view that Mr Bagga was a fit and proper person within the meaning of the TAS Act: T [141].  I note that the relevant finding at T [141] erroneously refers to Mr Kumar, but it is common ground that this is a typographical error and that the Tribunal intended to refer to Mr Bagga.  In reaching this conclusion, the Tribunal made the following findings:

(a) The past conduct of Mr Bagga indicated a lack of integrity in authorising Mr Kumar to use myGovID login credentials to access the ATO portal, and in signing the SRE with incorrect information: T [129].  While this conduct was regarded by the Tribunal as “ill considered and certainly inappropriate”, it was not characterised as “fraudulent or carried out in a manner intended to deceive”: T [130].  Nevertheless, the Tribunal found that Mr Bagga’s conduct had “eroded the trust which the ATO and the Board was able to place in [him] as a tax agent and director of [Auz Taxation]”: T [130].

(b) After Mr Kumar’s fraud had been detected, he was given further authorisation to use his wife’s login credentials to access the ATO portal, which permitted him to register new clients without Mr Bagga’s knowledge or authority: T [131].  This reflected a declining level of supervision of Mr Kumar until he was dismissed.  However, since Mr Kumar’s dismissal, there was no suggestion that other employees had been permitted to access the ATO portal other than with their own credentials: T [132].

(c) The respondents engaged in “significant breaches of the Code”, which relevantly included a failure to comply with personal tax obligations (s 30-10(2)) and a failure to ensure that tax agent services were provided competently (s 30-10(7)): T [133].  Each of those matters was the subject of findings made by the Tribunal earlier in its reasons: see T [98], [114].

(i) In relation to personal tax affairs, the Tribunal had regard to Mr Bagga’s explanation for the late lodgement of returns in the past, before finding that “[t]he evidence indicates that all personal tax obligations are now being met, any failures have been rectified and that there are no continuing contraventions of the Code”: T [136].

(ii) In relation to the competent provision of tax agent services, the Tribunal found that “there continues to be inadequate supervision of existing staff across all offices of [Auz Taxation]”: T [138].  However, the Tribunal noted that Mr Bagga had been an accountant and registered tax agent since 2016, that Auz Taxation had more than 5,000 clients and lodged more than 20,000 returns each year, and that “[a]side from the incidents involving Mr Kumar, it was not suggested in these proceedings that the tax agent services provided by [the respondents] to their clients are deficient or substandard”: T [139].

(d) Otherwise, the Tribunal found that there were no allegations that the respondent had failed to deal with client affairs on a timely basis (T [137]), and that the quality and timeliness of the tax agent services provided to clients and the good character of Mr Bagga was supported by statements from character witnesses as well as by the clients who had remained after being given a copy of the Board’s decisions (T [140]).

28 The Tribunal then considered what, if any, sanctions should be imposed on the respondents under either s 30-15 or ss 40-5 and 40-15 of the TAS Act: T [125]–[126].  The Tribunal ultimately decided not to exercise its discretion to terminate the respondents’ registration as tax agents under the TAS Act: T [142]–[143].

While I am satisfied that past conduct demonstrated a lack of integrity, what has occurred since the events involving Mr Kumar, the rectification of non-compliances with personal tax obligations together with a history of dealing with client tax affairs (which appears unblemished) provides me with some confidence that the events of the past will not be repeated.

In these circumstances, in my opinion termination of the registration of each of the Applicants is not warranted and the decisions of the Board should be set aside.  This is so notwithstanding the continuing non-compliance by the Company to provide “a sufficient number of individuals, being registered tax agent, to provide tax agent services to a competent standard and to carry out supervisory arrangements” (as required by subs 20-5(3)(d)(i)) and to ensure the obligations of subs 30-10(7) of the Code are met.

29 The Tribunal nevertheless considered that the respondents’ past conduct and contraventions of the Code required the imposition of some sanctions “to provide both specific deterrence and general deterrence for past non-compliance and to ensure corrective action is taken in connection with supervisory arrangements and the competency obligations under the Code”: T [144].

30 The Tribunal considered that suspension of the respondents’ registration (see s 30-25) would be punitive and would “unnecessarily adversely affect the more than 5000 clients of [Auz Taxation] who continue to use the services of and put their trust in the [respondents]”: T [146].

31 Instead, the Tribunal considered that a sufficient sanction would be a written caution in accordance with s 30-15(2)(a), together with orders under s 30-20 in a form proposed by the respondents in order to “address issues of supervision of existing staff and provide a more robust environment, both in terms of directors to manage the Company and additional tax agents to supervise, provide training and maintain the competency and quality of the work done by the [respondents’] employees and contractors”, with reporting obligations to ensure compliance: T [145], [147].

32 Accordingly, the Tribunal decided to set aside the Board’s decisions, and made orders that:

(a) each of the respondents be given a written caution in respect of the contraventions of the Code (see s 30-15(2)(a) of the TAS Act);

(b) the respondents be required to take the following actions under s 30-20 of the TAS Act:

(i) within one month, inform clients, employees and contractors of the Tribunal’s decision (and notify the Board that it has done so within 14 days after the notifications are complete);

(ii) within two months, arrange for employees and contractors to undergo compulsory training concerning the terms and requirements of use of myGovID and the online services for agents platform;

(iii) within three months, arrange for the appointment of at least one additional director of Auz Taxation, who must be a registered tax agent (and notify the Board of the person or persons so appointed);

(iv) within six months, take all reasonable and necessary steps to ensure that there is at least one registered tax agent employed or engaged by or on behalf of Auz Taxation at each of its business branches, who are instructed or required to review any documents before they are lodged on behalf of a client (and notify the Board of the persons appointed in such a role);

(v) within 12 months, Mr Bagga must undertake and complete remedial education in two specified courses (“TASA 2009 and The Code of Professional Conduct Course” offered by The Tax Institute and a Certificate IV in Human Resource Management offered by Swinburne University), and notify the Board within seven business days of his satisfactory completion of those courses.

Statutory framework

33 In Clifford v Tax Practitioners Board (No 2) [2024] FCA 557 at [63]–[78], I summarised the relevant features of the statutory regime established by the TAS Act.

34 The stated object of the TAS Act is “to support public trust and confidence in the integrity of the tax profession and of the tax system by ensuring that tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct”: s 2-5(1).  To that end, the TAS Act provides for the registration and regulation of tax agents by the Board, establishes the Code, and provides for disciplinary sanctions in relation to the conduct of registered tax agents: s 2-5(2).

35 Part 2 of the TAS Act provides for the registration of tax agents.  A person must be registered in order to provide tax agent services for a fee, or to engage in other conduct connected with providing such services: ss 2-10(1), 50-5.

36 Relevantly, to be eligible for registration, an individual must satisfy the Board that he or she is a fit and proper person: s 20-5(1)(a).  A company must satisfy the Board that each of its directors is a fit and proper person: s 20-5(3)(a).  A company must also satisfy the Board that –

(d)    the company has:

(i)     in the case of registration as a *registered tax agent—a sufficient number of individuals, being registered tax agents, to provide *tax agent services to a competent standard and to carry out supervisory arrangements; …

37 Section 20-15 sets out criteria for determining whether an individual is a fit and proper person, as follows:

In deciding whether it is satisfied that an individual is a fit and proper person, the Board must have regard to:

(a)     whether the individual is of good fame, integrity and character; and

(b)     without limiting paragraph (a):

(i)     whether an event described in section 20-45 has occurred during the previous 5 years; and

(ii)     whether the individual had the status of an undischarged bankrupt at any time during the previous 5 years; and

(iii)     whether the individual served a term of imprisonment, in whole or in part, at any time during the previous 5 years.

38 Part 3 of the TAS Act deals with the Code, which regulates the personal and professional conduct of registered tax agents.  The Code is set out in s 30-10, which relevantly provides:

30-10 The Code of Professional Conduct

Honesty and integrity

(1)     You must act honestly and with integrity.

(2)     You must comply with the *taxation laws in the conduct of your personal affairs.

…

Independence

(4)     You must act lawfully in the best interests of your client.

…

Competence

(7)     You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.

…

Other responsibilities

…

(14)      You must respond to requests and directions of the Board in a timely, responsible and reasonable manner.

39 Subdivision 30-B deals with the liability of a registered tax agent for administrative sanctions.  If the Board is satisfied, after conducting an investigation, that the agent has failed to comply with the Code, the Board may do one or more of the following under s 30-15(2):

(a) give the agent a written caution;

(b) give the agent an order under section 30-20;

(c) suspend the agent’s registration under section 30-25; or

(d) terminate the agent’s registration under section 30-30.

40 Section 30-20 confers power on the Board to give orders requiring the tax agent to take specified actions:

30-20 Orders

(1)     The Board may make an order that requires you take one or more actions including, but not limited to, the following:

(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;

(d)     requiring you to notify, in writing, all of your current clients about the findings of the Board’s investigation specified in the order.

(2)     The Board must notify you in writing of the order.  The order may specify the following, as appropriate:

(a)     the period of time within which you must complete the requirements specified in the order;

(b)     the period of time during which the order applies.

41 Section 30-25 confers power on the Board to suspend the tax agent’s registration for a period determined by the Board, during which the tax agent is prohibited from providing tax agent services.

42 Section 30-30 provides that the Board may terminate the tax agent’s registration, and includes a note referring to Subdivision 40-B (contained in Pt 4) which deals with notice and effect of termination of registration.

43 Part 4 of the TAS Act deals with termination of registration.  Section 40-5 provides:

40-5 Termination of registration – individuals

(1)    If you are a *registered tax agent or BAS agent and an individual, the Board may terminate your registration if:

(a)    an event affecting your continued registration, as described in section 20-45, occurs; or

(b)    you cease to meet one of the *tax practitioner registration requirements; or

(c)    you breach a condition of your registration.

Note: The Board may also terminate your registration for breach of the Code of Professional Conduct: see Subdivision 30B.

(2)     The Board must terminate your registration if:

(a)     you surrender your registration by notice in writing to the Board; or

(b)     you die.

(3)     Despite paragraph (2)(a), the Board need not terminate your registration if:

(a)     you surrender your registration by notice in writing to the Board; and

(b)     either:

(i)     the Board considers that, due to a current investigation or the outcome of an investigation, it would be inappropriate to terminate your registration; or

(ii)     the Board, within 30 days after receiving your surrender notice, decides to investigate you and considers that it would be inappropriate to terminate your registration.

44 Section 40-15 confers analogous powers of termination in relation to companies.

45 For the purposes of s 40-5(1)(b) and 40-15(1)(b), the “tax practitioner registration requirements” are defined in s 90-1 to mean “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”.  This includes the eligibility requirements under s 20-5, including the requirement that an individual or a director of a company must be a “fit and proper person” and the requirement that a company must have a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements.

The appeal

46 The Board’s notice of appeal identifies the following questions of law, each of which is further elaborated in a corresponding ground of appeal:

1.    Did the Tribunal err in law by treating orders available under s 30‑20 of the [TAS] Act as an available basis to decline to terminate a registration under s 40-15(1) of the [TAS] Act notwithstanding its acceptance that Auz Taxation ceased to meet the registration requirement in s 20‑5(3)(d)(i) of the [TAS] Act and that there was ongoing non‑compliance with s 30‑10(7), thereby conflating the separate statutory regimes in Part 3 (Code of Professional Conduct (the Code)) and Part 4 (Termination of Registration) of the [TAS] Act?

2.     Was the Tribunal’s dispositive conclusion that Mr Bagga was a “fit and proper” person within the meaning of s 20-5(1)(a), and that therefore termination was “not warranted”, legally unreasonable and/or affected by illogical or irrational reasoning, given the Tribunal’s own findings of significant contraventions of the Code found in s 30-10 of the [TAS] Act, ongoing supervisory/competency deficits, and its reliance on remediation and client service history?

3.     In deciding against suspension or termination of the tax agent status of Auz Taxation and/or Mr Bagga, did the Tribunal take into account one or more irrelevant considerations or give them impermissible weight (namely the asserted adverse impact on “more than 5000 clients” and/or that the clients placed trust in Mr Bagga and Auz Taxation), in determining that suspension or termination were not warranted under Part 3 or Part 4 of the [TAS] Act which provides a protective disciplinary scheme focused on integrity, competence, reputation and public confidence?

4.     Did the Tribunal err in law in its construction and application of s 30-10(4) of the [TAS] Act by failing to recognise that the facts as found (namely the factual finding of an absence of supervision and competency) constituted or evidenced a breach of the duty to act lawfully in the best interests of clients and thereby proceeded on a material error as to the legal content and operation of s 30-10(4) of the [TAS] Act in determining the nature and sufficiency of sanction?

47 The Board accepts that it is necessary for it to establish that the Tribunal’s decision was affected by legal error.  In its written submissions in reply, the Board summarised its case on the appeal as follows:

The Board contends that the Tribunal’s discretion miscarried in four distinct ways: by misapplying the statutory framework (Ground 1); by illogical reasoning that is unsupported by its own findings (Ground 2); by relying on irrelevant considerations (Ground 3); and by misconstruing s 30-10 of the [TAS] Act (Ground 4).

Ground 1

48 The Board contends that the Tribunal erred by using “Code-based orders” under s 30-20 to address ongoing ineligibility for registration under s 20-5(3)(d)(i) and ongoing non-compliance with s 30-10(7) of the TAS Act.  This was said to have involved a misapplication of the statutory scheme, by “conflating” the distinct regimes under Pt 3 and Pt 4 of the TAS Act, and in particular Subdiv 30-B (dealing with liability for administrative sanctions for failure to comply with the Code) and Subdiv 40-A (dealing with grounds for terminating registration) respectively.  In circumstances where Auz Taxation did not meet the eligibility requirement in s 20-5(3)(d)(i) — in that it did not have a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard and to carry out supervisory arrangements — the Board contends that it was an error for the Tribunal to have concluded that termination of its registration was “not warranted” on the basis that supervision and competency issues could be addressed by orders under s 30-20.  Rather, the Tribunal should have concluded that termination was warranted because Auz Taxation no longer met one of the tax practitioner registration requirements.

49 In broad terms, the Board submitted that the Tribunal failed to have sufficient regard to the protective purpose of the TAS Act.  Counsel for the Board referred to the findings made by the Tribunal in relation to the adequacy of supervision and control over the provision of tax agent services by Auz Taxation, including: that Mr Bagga was the sole director of the company and the sole registered tax agent in the business; that documents were prepared for lodgement by staff in multiple offices in different States, which were rarely visited by Mr Bagga (other than the office at which he predominantly worked); that the company had close to 5,000 clients and lodged more than 22,000 returns every year; that it was not possible for Mr Bagga to keep track of all clients added to or removed from the ATO portal, or changes to client details made through the ATO portal; and that there was an insufficient number of tax agents to service all locations at which the company carried on business: T [9], [51(g)], [124], [138].  This led to the Tribunal’s finding that Auz Taxation did not meet the eligibility criteria under s 20-5(3)(d)(i) of the TAS Act.

50 The Board submitted that it was “antithetical to the protective object” of the TAS Act to allow an ineligible entity to continue operating in the hope that it would be brought into compliance by remedial or corrective actions required by prospective orders made under s 30-20.  In the Board’s submission, the tax practitioner registration requirements operate as the “minimum threshold” which must be satisfied by a registered tax agent.  The power to terminate registration under s 40-5 or s 40-15 is enlivened when a registered tax agent ceases to meet any of those requirements.  The Board submitted that the Tribunal was required to address, separately and distinctly, whether the company’s present and continuing ineligibility warranted the termination of its registration under s 40-15, having regard to the protective object of the TAS Act.  Instead, the Board argued, the Tribunal had improperly considered “whether conditions and orders could be fashioned to permit future improvement while avoiding the practical consequences of termination”, thereby “substituting a prospective Code-based remedy [under Part 3] for the separate evaluative exercise required by Part 4” of the TAS Act.  In other words, the Board submitted that the orders made by the Tribunal involved “using a Part 3 tool to do Part 4 work”.  Among other things, this had the practical consequence that the company’s ineligibility “would persist for a period of up to 6 months after the decision (and might never be cured if the orders were not complied with)”.

51 It is not in dispute that the powers conferred by Subdiv 40-A of the TAS Act are separate from the powers under Subdiv 30-B to impose administrative sanctions for breaches of the Code, although the latter can also include termination of registration: see Clifford at [90]–[99].  This was explicitly acknowledged by the Tribunal in its reasons for decision: see T [54]–[57], [126].  Nevertheless, this does not mean that the powers conferred by Pt 3 and Pt 4 are mutually exclusive, nor does it deny that there may be some overlap in the matters relevant to the imposition of administrative sanctions under Pt 3 and the exercise of a power to terminate registration under Pt 4.  In addition to textual cross-references between provisions within each Part, it is clear that the matters giving rise to a power to terminate under ss 40-5 or 40-15 might also involve a failure to comply with the Code, and vice versa: see, e.g., Clifford at [91].

52 The decision in Clifford establishes that the Board (or Tribunal) is not required to have regard to the availability of alternative sanctions under Subdiv 30-B as a mandatory relevant consideration in exercising the power to terminate registration under Subdiv 40-A: see Clifford at [102].  However, this does not lead to the conclusion that it is impermissible for the Board to consider the availability of administrative sanctions under Pt 3 when considering whether or not to exercise the discretion to terminate registration under ss 40-5 or 40-15.

53 The Board does not dispute that the powers conferred by ss 40-5 and s 40-15 are discretionary — that is, the Board may terminate an agent’s registration if the prescribed conditions are met: see Acts Interpretation Act 1901 (Cth), s 33(2A); cf. TAS Act, ss 40-5(2) and 40-15(2).  It follows that the fact that a registered tax agent has ceased to meet one of the tax practitioner registration requirements at the time of decision does not strictly mandate the termination of the agent’s registration.  As I observed in Clifford at [109], it may only be in limited or exceptional circumstances that a tax agent who no longer meets the “fit and proper person” requirement might be permitted to remain registered.  But each case will turn on its own facts.  Further, there are circumstances other than those involving questions of fitness or propriety in which a tax agent might cease to meet tax practitioner registration requirements.  In the present case, for example, Auz Taxation failed to satisfy s 20-5(3)(d)(i) because it had an insufficient number of individual registered tax agents to fulfil competency and supervisory obligations, but there was no finding made by the Tribunal that Mr Bagga was not a fit and proper person.

54 The Board nevertheless submitted that an entity that ceases to meet any of the tax practitioner registration requirements should ordinarily not be permitted to remain registered, in order to give effect to the protective purpose of the TAS Act and to support public trust and confidence in the integrity of the tax profession and of the tax system.  In particular, the Board submitted that the general powers to impose administrative sanctions for breaches of the Code cannot “displace the specific operation of s 40-15 in a case of admitted present ineligibility”.  If there is a present and continuing failure to meet essential registration requirements, the Board submitted that “the protective purpose of the [TAS] Act militates in favour of termination”.  In such circumstances, the Tribunal was said to have erred by concluding that termination was not warranted, “notwithstanding the continuing non-compliance” by Auz Taxation with the registration requirement in s 20-5(3)(d)(i), on that basis that remedial or corrective orders could be made under s 30-20 to “bring the entity into compliance” at some time in the future.  The Board submitted that this led to “the Part 3 inquiry being substituted for the distinct Part 4 inquiry required by s 40-15(1)”.

55 On the other hand, the respondents submitted that, on a fair reading of its reasons for decision, the Tribunal had properly considered whether to exercise the discretion to terminate their registration under ss 40-5 and 40-15 and concluded that termination was not warranted, notwithstanding the continuing non-compliance by the company with the registration requirement in s 20-5(3)(d)(i) and the failure to meet the obligations of s 30-10(7) of the Code: T [143].  The manner in which this conclusion was expressed by the Tribunal pointed to the requirements under each of Pt 3 and Pt 4 respectively.  After having reached that conclusion in relation to the termination of the respondents’ registration, the Tribunal proceeded to consider whether sanctions should be imposed in respect of the past conduct and contraventions of the Code, both “to provide both specific deterrence and general deterrence for past non-compliance and to ensure corrective action is taken in connection with supervisory arrangements and the competency obligations under the Code”: T [144].  Again, this finding was expressed by reference to both the supervisory arrangements within s 20-5(3)(d)(i) and the obligation under the Code to provide tax agent services competently within s 30-10(7).  The Tribunal ultimately accepted that the orders under s 30-20 would address both issues of supervision and competency, with reporting obligations to ensure compliance: T [147]–[148].

56 I accept the respondents’ submissions.  In my view, the Tribunal did not impermissibly conflate the powers under Pt 3 and Pt 4, nor did it treat the powers under Subdiv 40-A as qualified by the powers under Subdiv 30-B of the TAS Act.  It was open to the Tribunal to conclude that the correct or preferable decision was not to exercise the power to terminate the respondents’ registration, in circumstances where there was no lack of fitness and propriety and the ongoing issues of supervision and competency were capable of being addressed by corrective action through the imposition of administrative sanctions.

57 Such an approach is consistent with the Explanatory Memorandum to the Tax Agent Services Bill 2008.  Among the key elements of the new legislative regime was the introduction of a formal legislated code of professional conduct to govern the ethical and professional standards of tax agents and BAS agents, along with a broader range of administrative sanctions to allow the Board “to tailor its response according to the severity of the misconduct”, replacing the previous regime under which State-based Tax Agents’ Boards had only been able to suspend or cancel an agent’s registration: Explanatory Memorandum, [1.19]–[1.23], [3.17], [3.70]–[3.74], [6.11], [6.19], [6.36]; see also Clifford at [93]–[99].

58 As discussed in Clifford, the TAS Act retains separate powers under Subdiv 40-A to terminate registration on specific grounds, including certain prescribed events (such as bankruptcy or conviction of a serious taxation offence or an offence involving fraud or dishonesty), ceasing to meet the tax practitioner registration requirements, or breaching a condition of registration.  Although those powers are not qualified by Subdiv 30-B, the Board (or the Tribunal) is not precluded from exercising the power to impose administrative sanctions under Subdiv 30-B instead of exercising the discretion to terminate registration under Subdiv 40-A.  This possibility is contemplated by one of the examples provided in the Explanatory Memorandum: see Example 3.21 (at [3.73]), in which the Board could either exercise the termination power under s 40-5 for breach of a condition of registration or choose to impose an administrative sanction such as a written caution or an order specifying the services that the agent can provide.

59 While the termination powers under Subdiv 40-A encompass circumstances in which a tax agent has ceased to meet the tax practitioner registration requirements, which would preclude the grant or renewal of registration under s 20-25(1), the Parliament has nevertheless chosen not to require the mandatory termination of registration in such circumstances.  The regime therefore accommodates the possibility that a tax agent who does not meet the tax practitioner registration requirements might retain registration, at least for a period considered to be necessary to address and remedy the issues that gave rise to non-compliance.  Whether such an outcome is appropriate will turn on the particular facts of each case.

60 As the Tribunal recognised in the present case (T [57]), both the power to impose administrative sanctions under s 30-15 and the power to terminate registration under either s 40-5 or s 40-15 must be exercised to advance the statutory object in s 2-5 of the TAS Act.  There may be cases in which the protective purpose can be met by the imposition of an administrative sanction other than the termination of an agent’s registration.  In this regard, the suspension of registration is available under Pt 3 (but not under Pt 4) of the TAS Act: see s 30-25.  This might include circumstances in which a breach of the Code that enlivens the power to terminate registration is capable of being remedied or resolved within a specified period — for example, by removing a director who is not a fit and proper person, securing professional indemnity insurance that meets the Board’s requirements, or engaging additional registered tax agents to meet competency obligations and to carry out supervisory arrangements.

61 The Tribunal did not fail to address whether the respondents’ registration should be terminated as a result of the failure by Auz Taxation to meet the requirement in s 20-5(3)(d)(i) of the TAS Act.  Rather, the Tribunal concluded that termination was not warranted in the circumstances, including its findings that Mr Bagga was a fit and proper person and its confidence that the past conduct demonstrating a lack of integrity would not be repeated: T [141]–[143].  The Tribunal noted that it had not been suggested that the tax agent services provided by the respondents were deficient or substandard, and found that the quality and timeliness of those services was supported by unchallenged evidence from character witnesses: T [41(d), (e)], [137], [140].  The company had three employees who were or were about to become registered tax agents, and who might be prepared to act as additional directors or to supervise the work of other employees or contractors in the future: T [51(g)(iii)], [82], [108].

62 In those circumstances, the Tribunal proceeded to consider what sanctions should be imposed on the respondents for their breaches of the Code, in order to deter future non-compliance (by the respondents or by other registered tax agents) and to require corrective action to address the continuing non-compliance in relation to supervisory arrangements and competency obligations.  The Tribunal did not consider it appropriate to suspend the respondents’ registration.  The orders required the appointment of an additional director who was a registered tax agent, and having at least one registered tax agent at each place of business who must review any lodgements with the ATO on behalf of clients.  Further, Mr Bagga was required to undertake remedial education (see s 30-25(1)(a)), and the respondents were required to arrange for compulsory training of staff concerning the use of the ATO portal.  Such orders were implicitly designed to ensure compliance with the Code and satisfaction of the tax practitioner registration requirements for the future.

63 Although the orders accommodated a grace period within which the respondents would take the required actions, the Board did not submit that immediate termination of registration was mandatory whenever any of the tax practitioner registration requirements were not met at the time of the decision.  Accordingly, the question whether to allow some time for the respondents to address their non-compliance, and the appropriate length of any such period, were matters within the discretion of the Tribunal.  It cannot be said that it was outside the bounds of legal reasonableness for the Tribunal to require Auz Taxation to appoint an additional director within three months and the respondents to ensure that there was a registered tax agent at each branch office within six months of the Tribunal’s decision.  On the Tribunal’s findings, there was no immediate risk to the public from the continued provision of tax agent services by the respondents while they took the actions required by the orders made pursuant to s 30-20 of the TAS Act.  In such circumstances, the Tribunal’s reasons reveal an evident and intelligible justification for its decision, consistent with the scope and purpose of the TAS Act: cf. Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [76] (Hayne, Kiefel and Bell JJ), [91], [105] (Gageler J); Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 at [10]–[12] (Kiefel CJ), [78]–[84] (Nettle and Gordon JJ); see also, e.g., XKTK v Minister for Immigration, Citizenship and Multicultural Affairs (2025) 311 FCR 539 at [90]–[94] (Stewart and Needham JJ).

64 This does not mean that the Board or the Tribunal is required in every case to consider whether non-compliance can be remedied by the imposition of administrative sanctions under Pt 3 before exercising a power to terminate registration under Pt 4 of the TAS Act.  Nor does it enable entities that do not meet the tax practitioner registration requirements to avoid the practical consequences of termination of registration, or to continue to operate indefinitely provided that orders can be made under s 30-20 to bring the entity into compliance at some future date.  Rather, in giving effect to the protective purpose of the TAS Act, it is open to the Board or the Tribunal to consider the full range of powers that may be available under Pt 3 or Pt 4 of the TAS Act, in the light of the facts and circumstances of each particular case.

65 Accordingly, I consider that the first question of law identified in the notice of appeal should be resolved against the Board, and that ground 1 has not been established.

Ground 2

66 The Board contended that the Tribunal’s finding that Mr Bagga was a “fit and proper person” for the purposes of ss 20-5(1)(a) and 20-5(3)(a) was legally unreasonable, including because there was no logical or rational “bridge” to that conclusion from the Tribunal’s own findings in relation to past contraventions of the Code involving a lack of integrity and continued deficiencies in supervision and competence.  The Board contended that the Tribunal adopted an approach which impermissibly elevated remediation and impact on clients without squarely addressing the “primacy” of honesty, integrity, reputation and public confidence, referring to Ham v Tax Practitioners Board [2018] FCA 1652; (2018) ATR 869 at [37]–[38] (Logan J).

67 The Board further contended that, in finding that Mr Bagga was a fit and proper person, the Tribunal failed to take into account or to “grapple with” its finding (at T [15]) that Mr Bagga had made incorrect statements in his evidence about whether his wife’s myGovID credentials could be used to lodge documents on the ATO portal, and to explain how that finding could be reconciled with its conclusion (at T [130]) that Mr Bagga was not dishonest.

68 The Board’s notice of appeal included a contention that, on the facts as found by the Tribunal, Mr Bagga was not a fit and proper person within the meaning of s 20-5(1)(a), and that his registration should have been terminated as a consequence under s 40-5(1) of the TAS Act.  In its submissions, however, the Board accepted that the relief sought on the appeal was for the Tribunal’s decision to be set aside and the matter remitted for reconsideration according to law.

69 In support of its submissions, the Board relied in particular on the decision of Davies J in Su v Tax Agents’ Board of South Australia (1982) 61 FLR 1 and the decision of Logan J in Ham.  It may be observed that the Tribunal discussed these and other relevant authorities in its reasons for decision: T [60]–[71].  The Board accepted that the Tribunal’s reasons “recite[d] the correct caselaw principles concerning the meaning of ‘fit and proper’”, but submitted that the Tribunal did not apply those principles coherently to the facts as found.

70 In Su, the Administrative Appeals Tribunal upheld a decision to cancel the registration of a tax agent who had been convicted of offences involving his failures to lodge personal income tax returns and to remit employer group tax instalments.  Justice Davies relevantly observed (61 FLR 1 at 4–5):

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.

71 The concept of mutual trust between the tax agent and the ATO was also highlighted by Hill J in Stasos v Tax Agents’ Board of New South Wales (1990) 21 ATR 974 at 984, who referred to the “privilege” conferred upon registered tax agents, and continued:

In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the Boards or Tribunals to which I have already referred.  Those dealings must be able to be carried on in an atmosphere of mutual trust.  The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate. …

The Commissioner and his officers must be able, also, to accept the word of a tax agent when acting for a taxpayer in negotiations, and a fortiori in matters proceeding in a Board, the Administrative Appeals Tribunal or indeed a court it is imperative that the honesty and integrity of the tax agent not be called into doubt.  So it is that it is a requirement, not only of initial registration, but of remaining on the register that a tax agent be a fit and proper person to perform the duties of a tax agent and bear the responsibilities that come with those duties.

His Honour referred to the judgment of Dixon CJ, McTiernan and Webb JJ in Hughes and Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 at 156, which was also cited by the Tribunal in its reasons in the present case (T [67]), to the effect that “fitness” with respect to an office involves three things — honesty, knowledge and ability.

72 In Ham, the Board refused to renew the registration of a registered tax agent who had been knowingly concerned in a breach of trust and breach of fiduciary duty arising from the sale of trust property in which a former client had a beneficial interest.  In upholding the conclusion of the Administrative Appeals Tribunal that the agent was not a fit and proper person, Logan J referred to the breadth of the concept of “good fame, integrity and character” as a relevant consideration in determining whether a person was a “fit and proper person” for registration as a tax agent (see s 20-15), which represented a “parliamentary value judgment” to advance the statutory object of ensuring that tax agent services are provided to the community in accordance with appropriate standards of professional and ethical conduct: Ham at [37]–[38].  Accordingly, while the requirement is directed to whether a person is eligible for registration as a tax agent, it can extend to conduct otherwise than as a tax agent that bears upon the person’s reputation, character or integrity.

73 In the present case, the Board submitted that there was no rational “bridge” or intelligible path from the Tribunal’s findings that Mr Bagga’s past conduct indicated a lack of integrity (T [90]–[91], [129]–[130], [142]) and involved significant breaches of the Code (T [97], [98], [113]–[114], [133]), to its conclusion that Mr Bagga was a fit and proper person at the time of its decision (T [141]).  Relying on Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at [135] (Crennan and Bell JJ), the Board submitted that a decision can be said to be illogical or irrational, and unreasonable in the legal sense, “if there is no logical connection between the evidence and the inferences or conclusions drawn”.  Counsel for the Board submitted that there was a “missing step” between the Tribunal’s factual findings in relation to Mr Bagga’s past conduct and lack of integrity, and its asserted but unreasoned conclusion that he was presently a fit and proper person.

74 In particular, the Board submitted that the Tribunal failed to address whether Mr Bagga’s lack of integrity persisted at the date of its decision, or to consider the impact of his conduct on public trust and confidence in the integrity of the tax profession.  The Board submitted that the Tribunal had focused on the wrong question of whether it had “some confidence that the events of the past will not be repeated” (see T [142]), rather than asking whether Mr Bagga presently possessed the integrity required to be a fit and proper person, including adherence to the ethical standards of his profession: see Solicitors Regulation Authority v Wingate [2018] 1 WLR 3969 at [100] (Rupert Jackson LJ).  In the context of the Tribunal’s findings regarding Mr Bagga’s past lack of integrity, the Board argued that clear proof was necessary to demonstrate that he had changed his character so as to become a fit and proper person: Ex parte Tziniolis; Re the Medical Practitioners Act (1966) 67 SR (NSW) 448 at 461 (Walsh JA).

75 The Tribunal correctly directed itself as to the applicable principles concerning whether Mr Bagga was a fit and proper person at the time of its decision.  In particular, the Tribunal acknowledged that integrity was “not simply judged by asking the question whether or not there is some dishonest conduct” (T [63]).  Thus, the Tribunal stated (T [65]):

… there may be a lack of integrity and therefore an individual may not be fit and proper, if their conduct is such as to bring into question the trust that their clients, the ATO or the public might place in that individual.  This is so even where no dishonesty is involved.

The Tribunal was also aware that it was necessary to have regard to the nature and extent of any breaches of the Code: T [69].

76 The question whether Mr Bagga was “presently a fit and proper person” (T [127]) involved an evaluative exercise based on the evidence and the findings of fact made by the Tribunal.  As the Tribunal stated (T [128])

The question of present fitness and propriety requires an examination of the past conduct, the nature and severity of any misconduct, whether corrective action has been taken and/or whether there are continuing breaches of obligations the person has, the likelihood of future inappropriate conduct, the persons recognition and remorse for the conduct in question and the degree to which the passage of time might demonstrate matters of misconduct might properly be put in the past.

On a fair reading of the Tribunal’s reasons, I do not regard this list of factors as detracting from the principles set out earlier in the reasons, which recognised the width of the concept of “good fame, integrity and character” and the trust that is placed in a registered tax agent’s honesty, knowledge and ability.

77 It is not in dispute that the Tribunal made no finding of dishonesty against Mr Bagga.  The Tribunal found that Mr Bagga had demonstrated a lack of integrity in allowing Mr Kumar to have unconstrained access to the ATO portal and to make false representations to the Board by signing the SRE with false information: T [90]–[95], [129]–[131].  Among other things, this eroded the trust which the ATO and the Board were able to place in Mr Bagga as a tax agent and a director of Auz Taxation: T [130].  The Tribunal appears to have proceeded on the basis that such a demonstrated lack of integrity amounted to a lack of fitness and propriety (T [94], [95]), although it did not expressly find that Mr Bagga was not a fit and proper person at any particular time in the past.  The Tribunal also made findings that Mr Bagga had breached his obligations under s 30-10(1), (2) and (7) of the Code.  At least in relation to s 30-10(7) — the obligation to ensure that tax agent services are provided competently — the Tribunal found that there was continuing non-compliance by reason of inadequate supervision of staff across all offices of the company: T [138], [143].

78 On the other hand, the Tribunal found that Mr Bagga’s conduct, while “ill considered and certainly inappropriate”, was neither fraudulent nor carried out in a manner intended to deceive: T [130].  No other employees had been permitted to access the ATO portal other than with their own login credentials: T [132].  The Tribunal had regard to Mr Bagga’s explanation for the late lodgement of tax returns in the past, and found that his past failures had been rectified and he was now meeting his personal tax obligations: T [134]–[136].  There was no suggestion that the respondents’ inadequate supervision of staff had resulted in the provision to any clients of tax agent services that were deficient or substandard, noting the period during which Mr Bagga been registered as a tax agent and the scale of his business: T [139]–[140].

79 It was a matter for the Tribunal to weigh these findings in order to evaluate whether Mr Bagga presently met the description of a “fit and proper person” to provide tax agent services.  The Tribunal clearly did not assume that a lack of dishonesty was itself sufficient to demonstrate fitness and propriety.  The Tribunal had regard to the nature and seriousness of Mr Bagga’s past conduct and the extent to which there was a continuing non-compliance with obligations under the Code.  While it might be possible for reasonable minds to differ as to whether Mr Bagga was a fit and proper person, the finding that past conduct demonstrated a lack of integrity did not compel a conclusion that he was not a fit and proper person, nor did the findings of past or continuing breaches of the Code.

80 The present circumstances can be distinguished from those considered in Tziniolis, which involved a re-hearing by the Supreme Court of the question whether the applicant was of good character, in circumstances where he had previously been refused registration as a medical practitioner on character grounds.  I do not consider that the decision in Tziniolis stands for any general principle that, whenever a person has engaged in any past conduct involving a lack of integrity, that person has an onus of demonstrating a “reformation” of his or her character, let alone a “heavy onus” requiring “clear proof”: cf. Tziniolis at 261.  While it might be necessary to rely on more than the mere passage of time, Walsh JA recognised that there was “no universal rule” and that “[e]ach case must depend on its own facts and circumstances”.  In the present case, the evaluation of those facts and circumstances was a matter for the Tribunal.

81 It is necessary to deal with several more specific aspects in which the Board submitted the Tribunal had fallen into error.

82 First, the Board argued that the Tribunal’s description of the respondents’ history of dealing with client tax affairs as “unblemished” (T [142]) was irreconcilable with the evidence that established past breaches of the Code and supervisory failures.  In my view, the Tribunal was referring to the absence of any suggestion that the respondents had provided deficient or substandard tax agent services to any of its clients (T [139(c)], [140]).  This observation was separate from and unaffected by “the events involving Mr Kumar” which led to the breach of s 30-10(1), the inadequate supervision giving rise to the breach of s 30-10(7) and the failure to meet the requirement in s 20-5(3)(d)(i), and the late lodgements which constituted the past breaches of s 30-10(2).  So understood, the Tribunal’s characterisation was neither irrational nor illogical.

83 Second, the Board submitted that, in considering whether Mr Bagga was a fit and proper person, the Tribunal failed to grapple with its finding that Mr Bagga had given “incorrect” evidence that Mr Kumar was not authorised to lodge documents on the ATO portal using the myGovID login credentials of Mr Bagga’s wife: see T [13]–[15].  In this regard, the Tribunal drew attention to evidence that documents had in fact been lodged by Mr Kumar in the name of Mr Bagga’s wife.  Nevertheless, the Tribunal stopped well short of making any finding that Mr Bagga had lied or deliberately given false or misleading evidence, even assuming that any such suggestion was properly put to Mr Bagga in cross-examination.  The Tribunal did no more than “note in passing” that the evidence given by Mr Bagga concerning the level of access granted by his wife’s credentials “appears incorrect”, before finding that “[b]e that as it may” Mr Kumar had used the myGovID login credentials to lodge business activity statements and direct the payment of GST refunds into a bank account under his control: T [15]–[18].  Nothing appears to have turned on whether the fraud was effected using Mr Bagga’s login credentials or those of his wife.  In the absence of any clear finding that Mr Bagga had given false evidence, there was no need for the Tribunal to consider how this might have affected the question whether Mr Bagga was a fit and proper person.

84 Third, the Board submitted that the Tribunal (at T [136]) had proceeded on an incorrect factual premise that there were no continuing contraventions of the Code, when it made findings elsewhere in its reasons that there was continued non-compliance with the obligation in s 30-10(7): T [138], [143].  This submission involves a misconstruction of the relevant sentence in the Tribunal’s reasons, which was clearly dealing with the obligation of a tax agent to comply with taxation laws in the conduct of his or her personal affairs under s 30-10(2) of the TAS Act.

85 In dealing with “the first matter” concerning the failure to comply with personal tax obligations, the Tribunal reproduced Mr Bagga’s explanation for the late lodgement of tax returns, and stated at T [136]:

The evidence indicates that all personal tax obligations are now being met, any failures have been rectified and that there are no continuing contraventions of the Code.

86 The Tribunal then proceeded to deal separately with “the second matter” concerning the failure to ensure that tax agent services were provided competently, in respect of which it found that there continued to be inadequate supervision of staff (T [138]).  This was reflected in the Tribunal’s finding of “continuing non-compliance … to ensure the obligations of subs 30-10(7) are met”: T [143].  Read in its context, the reference in T [136] to there being “no continuing contraventions of the Code” must be understood as dealing only with the “first matter” in relation to compliance with s 30-10(2) of the TAS Act.

87 Finally, the Board submitted that it was irrational for the Tribunal to place any weight on the evidence of two character witnesses (T [94], [140]), who constituted a “negligible evidentiary sample” of the respondents’ client base, against the weight of the evidence of established contraventions involving inadequate supervision of staff across all of the respondents’ offices.  However, it cannot be said that the Tribunal gave such excessive weight to the evidence of the character witnesses as to render its decision manifestly unreasonable: cf. Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 41 (Mason J).  As the Tribunal noted, the Board chose not to cross-examine those witnesses.  Nor did the Board adduce any competing evidence directed to Mr Bagga’s reputation or competence.  In so far as the Board argued that the Tribunal wrongly relied on the retention of clients as opposed to the significant number of clients who had left the respondents’ practice after having been notified of the Board’s proceedings (T [87], [140]), this is no more than an attempt to reagitate the merits of the Tribunal’s decision.

88 It follows that the Tribunal’s finding that Mr Bagga was a fit and proper person was not legally unreasonable or affected by illogicality or irrationality, and the Board has not established ground 2 of the notice of appeal.

Ground 3

89 The Board contended that the Tribunal had regard to irrelevant considerations in determining that the registration of each of the respondents should not be terminated, namely, the asserted adverse impact of suspension or termination on “more than 5000 clients” who continued to use the respondents’ services and the fact that those clients had placed trust in the respondents: T [146].  The Board contended that such considerations were irrelevant to the protective purposes of the statutory scheme.

90 The Board submitted that the scope, subject matter and purpose of the TAS Act did not contemplate that a decision-maker should have regard to the number of clients of a registered tax agent, or the convenience of those clients, when exercising the discretionary powers under Pt 3 or Pt 4 of the Act.  The Board argued as follows:

Giving determinative or substantial weight to client inconvenience distracts from the statutory purpose and distorts the protective framework of the [TAS] Act.  Indeed, the larger the client base, the greater the public interest in ensuring that the services provided by registered agents meet the standards of competence and integrity required by the [TAS] Act.  The Tribunal’s reasoning inverts the protective logic of the scheme, causing it to fall into legal error, which should be corrected.

91 In so far as the TAS Act does not specify the considerations that must (or must not) be taken into account in exercising the power to terminate registration under ss 40-5 or 40-15, such matters are to be ascertained by reference to the subject matter, scope and purpose of the statute: Water Conservation and Irrigation Commission v Browning (1947) 74 CLR 492 at 505 (Dixon J); Peko-Wallsend at 39–40 (Mason J), 56 (Brennan J).  In my view, no implication can be drawn that the impact of the suspension or termination of registration on the clients of a registered tax agent is irrelevant in the sense that the Board or the Tribunal is bound not to have any regard to that consideration when exercising powers conferred by the TAS Act.

92 On one view, the Board’s complaint seems to be directed more to the weight that was given by the Tribunal to client inconvenience (i.e. “[g]iving determinative or substantial weight to client inconvenience …”), rather than whether the impact on clients can be taken into account at all.  In any event, the significance of the Tribunal’s finding to its decision should be understood in its proper context.

93 After having concluded that termination of registration was not appropriate, the Tribunal turned to consider the sanctions that should be imposed on the respondents for the past conduct and contraventions of the Code: T [144].  The position of the respondents’ clients was taken into account in deciding whether to suspend registration under s 30-25 of the TAS Act.  The Tribunal stated (T [146]):

While I have considered suspension, it seems to me that such an order would be punitive upon the [respondents] and unnecessarily adversely affect the more than 5000 clients of the Company who continue to use the services of and put their trust in the [respondents].

94 In my view, this did not amount to giving “determinative or substantial weight” to client inconvenience, whether in relation to termination or suspension of registration.  It was not impermissible for the Tribunal to have regard to the effect of its decision on the respondents’ clients when deciding what administrative sanctions should be imposed, including whether or not any adverse effect on those clients was necessary to give effect to the protective purpose of the TAS Act.

95 This conclusion is not inconsistent with my observations in Clifford at [109] that “[i]t would not ordinarily be in the interests of current clients or potential future clients to retain the services of a tax agent who is not [a] fit and proper person to be registered”, and that “[a]ny impact on existing clients in having to change their tax agent in such circumstances should not be overstated”.  Those observations did not contemplate that the Board or the Tribunal was precluded from taking into account the impact on clients.  Further, they were directed to a situation in which the tax agent had been found by the Tribunal not to be a fit and proper person, which can be distinguished from the facts of the present case.

96 Accordingly, the Tribunal did not err by having regard to the effect of its decision on those clients who continued to use the respondents’ services.  Ground 3 is not established.

Ground 4

97 The Board contended that there were internal inconsistencies in the Tribunal’s reasons, namely:

(a) the Tribunal stated (at T [136]) that there were “no continuing contraventions of the Code”, while also acknowledging ongoing non-compliance with s 30-10(7) and ineligibility under s 20-5(3)(d)(i) of the TAS Act;

(b) the Tribunal found (at T [101]) that no breach of s 30-10(4) had been established, while also finding (at T [114]) that there was a failure to provide adequate supervision and controls that was capable of amounting to non-compliance with the obligation under s 30-10(4).

98 I have already dealt with the first contention in the context of ground 2 above: see paragraphs [84]–[86].  The Tribunal’s statement at T [136] that there were no continuing contraventions of the Code is properly understood in context as a reference to the respondents’ compliance with taxation laws in the conduct of their personal affairs within the meaning of s 30-10(2) of the TAS Act.  Accordingly, there is no inconsistency between that statement and the finding that there continued to be inadequate supervision and non-compliance with ss 20-5(3)(d)(i) and 30-10(7) of the TAS Act.

99 Section 30-10(4) of the TAS Act provides that registered tax agents must act lawfully in the best interests of their clients.  The Tribunal found that the respondents had not breached s 30-10(4) because the companies affected by the fraudulent conduct of Mr Kumar were not in fact clients of Auz Taxation, and were otherwise aware of the fraud after it had been detected by the ATO: see T [99]–[104].

100 The Board submitted that this was an unduly narrow approach to s 30-10(4) of the TAS Act, and failed to address whether the respondents’ inadequate supervisory arrangements and controls amounted to non-compliance with their duty under s 30-10(4) to act lawfully in the best interests of their actual clients.  The Board submitted that s 30-10(4) “imposes a free-standing duty to act lawfully in the best interests of clients, distinct from competence under s 30-10(7)”,  and that “[b]y treating the supervision failures solely as a matter of competence under s 30-10(7), the Tribunal conflated two distinct Code duties and failed to give s 30-10(4) its own content and operation”.  In essence, the Board submitted that the Tribunal misconstrued s 30-10(4) by confining its inquiry to the two defrauded entities.

101 The Tribunal’s findings in relation to compliance with s 30-10(4) were largely responsive to the issues raised by the case that was advanced by the Board.  The relevant findings made by the Board following its investigation were that the respondents failed to act lawfully in the best interest of their clients “in that they failed to advise the two companies who were victims of Mr Kumar’s fraud” of the actions that had been taken without their authorisation: T [37(c)].  Before the Tribunal, the Board contended in relation to s 30-10(4) that “there had been a failure to notify the particular clients following the fraudulent conduct of Mr Kumar been detected [sic]”: T [99].  I was not taken to any other evidence or submissions that raised any broader allegations in relation to non-compliance by the respondents with s 30-10(4) of the TAS Act.

102 The Board relied on the respondents’ failure to provide adequate supervision and control as giving rise to a breach of their obligation under s 30-10(7) to ensure that tax agent services were provided competently: T [37(d)].  That contention was accepted by the Tribunal: T [114], [138].  Nevertheless, the Tribunal considered that termination of the respondents’ registration was not warranted, and that corrective action could be taken in connection with supervisory arrangements and competency obligations under the Code: T [143]–[144].  In such circumstances, it is not clear how any failure by the Tribunal to consider whether inadequate supervision also involved non-compliance with an overlapping duty under s 30-10(4) might have had a material effect on the outcome.

103 The Board has not established any legal error by the Tribunal in its construction and application of s 30-10(4), and ground 4 is not established.

Conclusion

104 As none of the grounds of appeal have been made out, the appeal must be dismissed.  The Board should pay the respondents’ costs.

Associate:

Dated:    17 June 2026