Findings:

1. 30-10(7) - You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently

Explanation:

On 19 January 2023, after completing an investigation, the Tax Practitioners Board (TPB) found that Guang Zeng breached Code 7 of the Code of Professional Conduct (the Code) in the Tax Agent Services Act 2009 (TASA) by failing to ensure that tax agent services he provided, or were provided on his behalf, were provided competently.
This included by:
1. preparing and lodging nine business activity statements (BAS) on behalf of clients for the quarterly period ending 30 June 2020 to include amounts at label 'salary, wages and other payments' (W1) purportedly for directors' fees for the 2020 financial year, in circumstances where, during an ATO review and audit, he
a. did not provide documents to ATO officers that substantiated that payments to the sole directors of the nine client entities were made in the June 2020 quarter
b. then lodged further BAS amendments for these clients reducing the W1 (and any W2) amounts back to zero
resulting in the ATO deeming the clients to be ineligible for Cash Flow Boost (CFB) payments and cancelling CFB payments
2. backdating commencement dates in payroll event forms lodged with the Commissioner of Taxation to create single touch payroll reporting roles, on behalf of eight clients, and thereby creating employment relationships on ATO records between the client companies and their sole directors for the purpose of supporting CFB eligibility created by the BAS lodgements above
3. incorrectly included directors’ fees in three client companies 2020 income tax returns, as well as their directors’ 2020 income tax returns, where minutes and records show the payments of these directors’ fees were either not made in the 2020 financial year or were not definitively committed for a quantified amount (for the purposes of Taxation Ruling No. IT 2534).
In making its decision, the TPB considered:
1. the errors made were more from incompetence or recklessness rather than intentional dishonesty
2. in September 2020, when the amendments were made, the CFB was well established, and the messaging was clear to not reclassify wages or payments
3. there appeared to be no reason or benefit in backdating the STP payroll event commencement dates other than in relation to obtaining CFB payments
4. Mr Zeng had identified himself as the person responsible for the conduct, stating the other company director and supervising agent was not privy to or engaged in these matters
5. Mr Zeng had acknowledged his behaviour and shown contrition to the TPB.
Based on Mr Zeng’s breach of the Code, the TPB decided to impose an Order requiring Mr Zeng to complete and pass a course of education in ethics.