AAT upholds TPB's decision to terminate tax agent
The Administrative Appeals Tribunal has reinforced the registration termination of a tax agent who incorrectly prepared tax returns for over 500 people, inflating their work-related expense claims.
Australia Fortune Financial Group Pty Ltd (AFFG) and Feng Gao, the sole director and controlling mind of AFFG, had their tax registration terminated by the TPB on the 27 August 2019.
Following an investigation into AFFG, the TPB found that Mr Gao was also the sole director and controlling mind of Meihua Australia Pty Ltd, a client of AFFG.
After it was audited in 2017, the Australian Tax Office found that Meihua had not correctly reported GST in relation to some property transactions between 1 January 2014 and 30 June 2016.
The ATO determined that Meihua’s property sale was a mixed supply and that GST was payable on the land component. As a result, the ATO determined that Meihua owed $445,485 in GST had a tax shortfall penalty of $68,180.75.
The ATO also conducted an audit of AFFG, following which it found that it consistently lodged its own income tax returns (ITRs) and business activity statements (BAS) late. Moreover, AFFG had prepared the ITRs of 535 workers in the meat industry who had made large work-related expense claims.
All of the workers were required to amend their ITRs, with the ATO reducing their work-related expense claims by $1,789,638, with an ultimate shortfall of $616,050.29.
As a result of its findings, Mr Gao had his license terminated. The TPB told Mr Gao that it had decided that he was not a “fit and proper person” as required by paragraph 20.5(1)(a) of the TASA.
In his submissions regarding the GST issue in Meihua’s property sales, Mr Gao said: “It is not fair to judge me not being a fit and proper person because [the] ATO’s final decision on this issue was not on our side.”
He argued that the GST issue wasn’t an easy one, and that he was trying his “very best to work with ATO to get things right”.
“I was very co-operative with [the] ATO officer during the whole process, responded positively in a timely manner, trying to save time and [resources] for Tax office to save public [resources] and taxpayer money.”
However, AAT member Dominique Grigg deemed that Mr Gao “knew Meihua had claimed interest incorrectly and again demonstrated a cavalier attitude to the seriousness of the breach”.
“Taxpayers have a right to expect that the advice they are receiving from their tax agents is competent and that they are not being led into danger of breaching their tax obligations by claiming deductions which cannot be maintained,” Ms Grigg continued.
Mr Gao now has the right to apply for a review, and if successful, the termination decision will be set aside or varied allowing the applicant to recommence the provision of tax agent services.