FNSACC601 - Task 1 – Ethical considerations, conflict of interest and responsibilities of tax agents – code of professional conduct

Task 1 – Ethical considerations, conflict of interest and responsibilities of tax agents – code of professional conduct

Peter Rafter is 45 years old and is a registered tax agent practising in Mittagong for over twenty years.

In 2014, Mr Rafter met Mr William Emery who was 80 years old and retired who soon became not only a major client of Peter Rafter as a registered tax agent, but also a close friend.

Mr Emery had ceased the need to lodge annual tax returns and his ATO account had been marked as such.

However, Mr Emery owned a substantial private residence of six bedrooms and had significant cash reserves in various deposits.

On 20 February 2015, Mr Emery gave Mr Rafter access to a Bank of Queensland account from which Mr Emery conducted his day-to-day banking.

On 25 February 2016, Mr Rafter transferred $440,000 from Mr Emery’s account to an account under his and his wife’s name.

Mr Rafter verbally promised to pay Mr Emery cash interest of 3% per annum payable yearly in arrears, which he did at the end of each year.

On 24 January 2017 Mr Rafter transferred $160,000 from Mr Emery’s bank account to one operated by Mr Rafter only.

On 24 February 2017, Mr Rafter transferred $40,000 to Mr Rafter’s son Caleb’s bank account. Mr Rafter’s evidence was that this was for painting and decorative work on Mr Emery’s home. No quotes or tenders were sought nor to this date has any work been carried out.

All transfers represented loans to Mr Rafter made, apparently, with the approval of Mr Emery.

At no stage was an executed agreement made in writing between Mr Rafter and Mr Emery setting out the terms of the loans, and the loans were not secured against any asset. Nor did Mr Rafter ever advise Mr Emery to seek independent advice on the loans.

Mr Rafter said that he had contacted his solicitor who he advised him that there was no legal ban to the verbal arrangements with Mr Emery.

In October 2015, Mr Rafter entered into an agreement whereby he began using an area of Mr Emery’s home in Mittagong as an office for his business. He rented two rooms and shared use of a

storeroom for this purpose. There was no written agreement reflecting this arrangement. Mr Rafter did pay a cash rental each week to Mr Emery.

In March 2017, Mr Rafter and Mr Emery had a disagreement.

Mr Emery appointed new accountants, and on 31 March 2017, those accountants contacted Mr Rafter by letter seeking the provision of any documents he held on Mr Emery’s behalf. Mr Rafter failed to provide any documents, saying that there were no relevant documents to be sent.

Required:

This task requires you to identify and follow legislative and regulatory requirements by critically evaluating and researching the relevant concepts.

1. What are the ethical considerations and correct course of conduct Mr Rafter should have adopted?
2. Did Mr Rafter contravene the provisions of the Code of Professional Conduct under the Tax Agent Services Act 2009 (TASA)?