In the recent case involving the old employee share scheme rules, it came to light that the taxpayer ( referred to as the ‘applicant’ below) had gone to his tax agent for advice, but the tax agent( who did not have sufficient experience in the area) had referred him to a financial planner.
Looks like the financial planner got in wrong, or the taxpayer misunderstood the advice, but whatever happened, the AAT took a dim view of the tax agent referring his client to the financial planner in the first place.
Below are the extracts form the judgement:
“In these circumstances, the applicant cannot be criticised for failure to make an attempt to have his tax affairs dealt with properly. The applicant consulted a tax agent. He then went to another person upon referral. He provided proper instructions to both the tax agent and the financial planner, within his own abilities to do so. That constitutes a reasonable attempt to comply with the law, or in other words, reasonable care.
The renaming question is whether the applicant tax agent took reasonable care. He took steps down that path in referring the applicant to someone else in an area beyond his expertise but his choice of adviser is questionable.
A financial planner is not a registered tax agent or practicing lawyer. It is only a registered tax agents and practicing lawyers who for the 2007 year were permitted to give taxation advice for reward.
Without more evidence as to the skills and attributes of the persons involved, it is difficult to see how someone who is entitled to give taxation advice for reward would be taking reasonable care in circumstances where the referral is to someone who is not so entitled.
One of the underlying principles of requiring tax agents to be registered is to protect those who need professional assistance in relation to their taxation affairs from being given advice and acting form those not equipped to give it. There is also no evidence as to the approach of the tax agent himself in the making his own assessment in giving advice to the applicant.
On the evidence led, the applicant has not discharge the onus of showing that both he and (his) tax agent took reasonable care in preparing his 2007 income tax return. “
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