A tax agent who failed to pay more than $860,000 in personal tax liabilities has seen the TPB’s decision to terminate his registration upheld by the Administrative Appeals Tribunal.
Tribunal upholds agent’s registration termination over $860k tax debt
Brisbane-based tax agent Grant McCarthy, the principal and sole director of McCarthy & Co, saw his registration cancelled by the Tax Practitioners Board (TPB) in March 2020 after it found that he was no longer a fit and proper person as a result of outstanding tax debts.
The TPB launched an investigation after Mr McCarthy failed to comply with a TPB order that required him to lodge all outstanding tax lodgements by 31 December 2018, ensure all future personal tax obligations were complied with, and pay his outstanding tax debts by 31 March 2019 or enter into a payment plan with the ATO.
Mr McCarthy then entered into a repayment arrangement with the ATO for a total debt of $860,167. This included an income tax debt of $373,074, client activity centre debt of $374,956 and a superannuation guarantee debt of $116,263.
However, he failed to comply with the arrangement following a missed lump-sum payment of $345,000.
In applying for a stay on the termination decision, Mr McCarthy cited personal circumstances as the key driver for his waning capacity to manage his debts. Among them, having three children with attention deficit hyperactivity disorder, his own mental and physical health problems, and financial struggles.
He contended that the payment arrangements with the Tax Office were conditional on his registration being reinstated by the TPB, drawing the ire of the tribunal.
“Mr McCarthy has effectively been holding his tax debt payment as a bargaining tool against the ATO, the TPB and the Tribunal,” said AAT member Dominique Grigg.
“It is clear that he will not pay the money owing unless the TPB, and now the Tribunal, overturns the TPB decision to terminate his registration.
“Neither the TPB, the ATO, nor the Tribunal are responsible for Mr McCarthy’s accumulation of such large tax debts.”
In upholding the TPB’s decision to terminate Mr McCarthy’s registration, the AAT noted that his lack of rigour in maintaining his tax obligations and his absence of contrition reflected poorly on his character and warranted a deregistration.
“The fact that a registered tax agent would have such an attitude is highly inappropriate, and weighs strongly against his being fit and proper,” Ms Grigg said. “Mr McCarthy should be well aware of the reasons penalties and high interest rates are imposed for late payments.
“If everyone decided it was reasonable to not pay their tax debts when due, the country would be in financial dire straits. Such an attitude as Mr McCarthy’s is irresponsible and immature, particularly for someone who is seeking to remain on the tax agents register.”
The tribunal also ruled that the TPB’s original four-year ban was inappropriate given Mr McCarthy’s family circumstances and has now reduced it to two years.
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