Business owner fined $40,000 for falsely claiming to be a registered tax agent

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A business owner who falsely claimed she was a registered tax agent has been fined $40,000 by the Federal Court after she unlawfully provided tax agent services to hundreds of people in the space of four years. 

Melbourne resident Arlene Caolboy was taken to court by the Tax Practitioners Board (TPB), which first contacted her in 2017 with concerns that she was advertising for and providing tax agent services when she wasn’t registered under the Tax Agent Services Act 2009

Following the court’s judgment, she will also be prevented from providing tax agent services or BAS services for three years while she is unregistered with the TPB. 

The court heard Caolboy had registered the business name ‘ABC Accounting Firm’ in 2013, and from August 2015 to August 2019, offered services related to personal tax, company tax, business activity statements, bookkeeping and accounting.

The business’ services were advertised on LinkedIn as well as online directory Places to go Melbourne.

While Caolboy had previously been employed by companies in bookkeeping roles, she was not registered as a tax agent or BAS agent, and had not applied for registration. 

According to agreed facts presented to the court, Caolboy provided tax agent services to more than 350 taxpayers, including lodging income tax returns, with clients typically charged $110 or $165. In total, her business received $81,000 from client fees between 2016 and 2018. 

When the TPB contacted Caolboy with concerns in 2017, she agreed to stop advertising or charging for tax agent or BAS services while unregistered. However, the court heard she continued to do so until 2019.

In total, the TPB sought penalties for 519 contraventions, with penalties ranging from $45,000 for contraventions up until June 2017 and $52,500 for those after that time. 

However, the court took Caolboy’s personal financial situation into account, as well as her cooperation with the TPB and a voluntary disclosure to the Australian Taxation Office regarding the cash income she received between 2014 and 2018. 

For these reasons, Judge Michael Wheelahan imposed a penalty of $40,000, to be paid to the ATO in eight annual instalments of $5,000, starting in 2023.

“I find that the respondent’s contraventions were calculated, and occurred for the purposes of achieving financial gain. Taken as a whole, the contraventions are towards the serious end of the spectrum,” Wheelahan said.

The taxpayers who paid for the business owner’s services were “vulnerable to the risk inherent in having their tax affairs managed by a person without the requisite qualifications”, he said, and Caolboy continued to advertise for, and provide, the services after telling the TPB she would no longer do so. 

“Were it not for the respondent’s cooperation, an appropriate penalty would reasonably have to be much higher than the $40,000 proposed having regard to the objective seriousness of the contraventions,” Wheelahan said.

The penalty represents a “significant price to pay for the contraventions, but without being crushing”, he added.  

“Against the contact of the respondent’s personal circumstances, the burden of the proposed penalty on her is in my estimation sufficiently high that others will be liable to be deterred from engaging in contraventions of a similar kind,” he added. 

Commenting on the judgment, TPB chair Ian Klug said the board was pleased the court “appreciated the magnitude and seriousness of the contraventions”, and the penalty was “an appropriate punishment”. 

“It is a clear message to any others providing tax agent services unlawfully that the TPB will take firm action,” he said. 

“However, we do take into account personal circumstances and, as demonstrated here, may recommend leniency where someone co-operates fully with us.”

The TPB also reminded taxpayers to check if their tax practitioner is registered via the TPB Register

SmartCompany was unable to contact Arlene Caolboy for comment prior to publication.

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