SMSF auditor banned after neglecting personal tax obligations

Mr Tomkinson, the sole director of WTM Financial Services, was found to have failed to lodge two income tax returns, 27 business activity statements (BAS) and 12 BAS in his capacity as trustee of the WT Martin & Associates Staff Super Fund.

He was also found to have failed to pay his employees’ superannuation for six quarters, and incurred a superannuation guarantee charge debt of $64,753.

The tribunal heard that while Mr Tomkinson had repaid his SGC debt in full, he continued to have an overdue integrated client account debt of $366,533 at the time of the hearing.

In appealing to the AAT, Mr Tomkinson contended that he had failed to attend to his personal tax obligations because he was “looking after clients” and “trying to tidy up the practice” following his business partner’s retirement.

He also explained that he had been involved in an unsuccessful financial venture, which took his focus away from his own tax and lodgement obligations.

AAT senior member Linda Kirk, however, was not convinced by his explanation, finding that Mr Tomkinson’s repeated breaches over several years were serious offences that were only resolved after pressure from the TPB and the ATO.

Ms Kirk also highlighted Mr Tomkinson’s failure to declare his outstanding tax obligations to the TPB when renewing his tax agent registration as a clear breach of the TPB’s code of professional conduct.

“This conduct is serious, not only because of the number of contraventions, but also the lengthy period of years over which they occurred,” said Ms Kirk. “Many of the delays in lodgements involved delays of hundreds of days. Whereas individually each contravention may be considered relatively minor, cumulatively they amount to serious breaches of [Mr Tomkinson’s] tax obligations.

“The evidence demonstrates that [Mr Tomkinson] took steps to rectify his non-compliance with his taxation obligations only once significant pressure was brought to bear on him, particularly the prospect of loss of his registration as a tax agent.

“In light of the evidence that [Mr Tomkinson] only complied with his tax obligations under threat of de-registration or after a payment plan for repayment of debts owed had been agreed with the ATO, the Tribunal cannot be satisfied… that [Mr Tomkinson] is a fit and proper person to be registered as a tax agent.”

In deciding on the period where Mr Tomkinson would not be allowed to apply for registration, Ms Kirk considered that he would not suffer a complete inability to earn a living due to his evidence as a registered mortgage broker.

Ms Kirk also relied on comparable recent decisions and decided that an 18-month period was appropriate.