Registered Tax Agents

22.83. The income tax law provides for the registration as tax agents of all persons who charge fees for the preparation of income tax returns or for transacting income tax business on behalf of taxpayers. At 31 March 1974, there were 19,432 individuals, partnerships and companies registered as tax agents.

22.84. The Act and Regulations provide for a Tax Agents’ Board in each State and for the constitution and conduct of these Boards, the registration and cancellation of registration of tax agents, and the imposing of penalties for offences against the provisions. Apart from the cancellation of a tax agent's license where, for example, he does not wish to continue as an agent or where a partnership or company is dissolved or liquidated, there are provisions for cancellation where the Board is satisfied that an agent has prepared a false return, neglected the business of a principal, been guilty of misconduct as an agent or is not a fit and proper person to remain registered. There is a right of appeal to a Court against the decision of the Board.

22.85. Where the Board finds a tax agent guilty of misrepresentation, neglect, incapacity or unfitness, the only disciplinary action it may impose, apart from reprimand, is to cancel his registration—a somewhat drastic step. There are obviously cases where cancellation is too severe a penalty but something stronger than a reprimand is called for. Accordingly, the Committee recommends that provision be made for other disciplinary action such as the imposition of a fine and suspension of registration for a period.

22.86. In view of the growth in the number of registered tax agents, with consequential increase in the number of disciplinary cases coming before Tax Agents’ Boards, and the additional disciplinary measures recommended in the previous paragraph, it is necessary that the present constitution of the Boards be reconsidered. The Boards at present comprise a Chairman, who is the officer in charge of the Commonwealth Sub-Treasury in the State, the Commonwealth Chief Auditor for the State and a person appointed by the Governor-General—normally a senior practising accountant. When the constitution of the Boards is being reviewed, consideration should be given to attaching greater weight to their disciplinary functions and less weight to their registration procedures. Moreover, one member, preferably the Chairman, should be an experienced legal practitioner.

22.87. The certificate relating to sources of information that a tax agent is required to complete on each return he prepares for a client includes the following, as set out in the Regulation:

‘(b) Have you satisfied yourself, and, if so, how, that the books of account, or other sources of information upon which the return is based, are correct and disclose the whole of the taxpayer's income from all sources?’

This question is frequently answered by a statement by the tax agent that he has not satisfied himself as to the accuracy of the return.

22.88. This question should be reviewed by the Commissioner in consultation with members of the accountancy profession and organisations representing tax agents. The purpose of the review should be to develop a question or series of questions that

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would go further towards securing a statement from the tax agent recording the steps he has taken to ensure the accuracy of the return covered by his certificate.