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					Correspondence received 9 May 2007 to 5 June 2007 from Michael Anstis

With respect to exposure draft

Number 1

At part 16 it says you are not liable to an administrative penalty if

You give to the entity all relevant tax information and the entity makes a statement.

However this never happens because the entity (tax agent) does not make a statement the tax payer does

I refer you to Grapsas v Unger 85 ATC 4490 (Young CJ)

"The only person who can be said to make a return in the strict sense is the person who signs the return"

" signature of the tax agent's certificate provided for on the form of return is irrelevant"

In my opinion the draft legislation should be changed to say c) the entity lodges the statement which
includes a signed declaration by the entity pursuant to s388-70 TAA53 (from memory)

Michael Anstis


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At 604-15 it says Sanctions for failure to comply with the Code of Conduct

My understanding is that sanctions can only be imposed by Courts.

Refer R v Kirby & Others 94CLR 254 in which the High Court determined that a fine imposed by a body (not
being a constitutionally valid court) was invalid because it was an exercise in judicial power

"S29a -- plainly confers jurisdictions which belong to judicial power -- it is punitive"

The word "sanction" is defined in Oxford dictionary to include "a penalty for disobedience -- punitive action"

I am not sure that the Board can impose sanctions on tax agents (since the Board is not a court and
sanctions implies punitive actions). I think the Boards only role is to determine whether tax agents should be
registered (if they meet various criteria in 602-30 for example) or not registered (if they don't) I think the
word sanction should be avoided

Rather than referring to sanctions I think it is better to include something in the legislation which links the
Code of Conduct to whether or not an agent is fit and proper (since if they are not fit and proper they should
not be registered if the not fit and proper status is only temporary they can be suspended). I think it is also
desirable to say that the Board may determine that an agent is fit and proper provided they are supervised or
do a course of education
Also there was a recent Federal Court case Shi v MARA. I think it would be advisable to check on
implications of this case for the draft legislation (it is possible to interpret decision in such a way to prevent
Board imposing supervision based on the current draft). I think above amendment will satisfy this

Michael Anstis


Just to add something to this earlier suggestion hu

recent High Court cas Albarran v MCAL Disciplinary Board at p21

'The function of the Board is not -- to find whether an offence has been committed and if so inflict a
punishment-. It is -- to assess whether someone should continue to occupy a statutory position --"

As stated hu should remove reference to sanctions and then I think no difficulty because purpose is to
ensure fit and proper persons do tax work



Last suggestion

The current legislation is aimed at preventing people claiming the cost of managing their tax affairs when it is
provided by someone other than a registered tax adviser (at least that is what Tax office policy says) The
legislation should be changed in the way I have suggested because current wording is obsolete and unclear
eg "recognised tax adviser" is not a recognised term and "advice about the operation of a Commonwealth
law" is an unclear reference because it is unclear that preparation of an income tax return is advice about a
Commonwealth law

The Current Legislation

Income Tax Assessment Act 1997

You can deduct expenditure you incur to the extent that it is for:
(a) managing your *tax affairs; or
(b) complying with an obligation imposed on you by a *Commonwealth law, insofar as that
obligation relates to the *tax affairs of an entity; or

You cannot deduct under subsection (1):
 (e) a fee or commission for advice about the operation of a *Commonwealth law relating to
taxation, unless that advice is provided by a *recognised tax adviser.

Suggested Change

Should be amended to say
(e) a fee or commission for a tax agent service or a BAS service unless that service is provided by a person
who is authorised under Part (whatever) of ITAA97 to provide that service

Michael Anstis

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