Background
The Tax Practitioners Board alleged that Apat Na Seasons Pilipinas Corporation prepared and lodged 14 Australian income tax returns for eight individuals between July 2020 and October 2022. The company allegedly charged between $220 and $275 for each return despite not being registered as a tax agent.
The company was joined as the second respondent in 2023 and served by email under substituted-service orders. It repeatedly failed to attend hearings or file a defence. Although it later retained a lawyer and indicated that it would challenge the Court’s jurisdiction, no such application was filed, its lawyer ceased acting, and the company did not meaningfully re-engage with the proceeding.
The Court’s Holding
Justice Hespe held that the company was in continuing default under the Federal Court Rules 2011 (Cth). The Court had jurisdiction because the tax-return services concerned people resident and physically located in Australia, and it was satisfied that the company had been properly served and knew about the proceeding.
Because no defence was filed, the pleaded facts were taken as admitted. Those facts established 14 contraventions of s 50-5(1) of the Tax Agent Services Act 2009 (Cth): the company provided tax agent services for fees while unregistered and knew or ought reasonably to have known the nature of those services. The Court entered default judgment and permanently restrained the company from providing tax agent services for a fee or reward while unregistered. It deferred determination of pecuniary penalties and ordered the company to pay the Board’s costs of the default-judgment application.
Key Takeaways
- A respondent’s failure to defend permits the Court to treat properly pleaded facts as admitted, although default judgment remains discretionary and must be granted cautiously.
- An overseas company may fall within the Court’s jurisdiction where its tax-agent services concern clients resident and physically located in Australia.
- The judgment established liability and imposed a permanent injunction, but did not determine the amount of any civil penalties.
Why It Matters
The decision shows that foreign location and non-participation will not prevent enforcement of Australia’s tax-agent registration regime where the services have a sufficient Australian connection. It also illustrates the Federal Court’s willingness to enter final liability orders after sustained procedural default.
For regulators and practitioners, the distinction between liability and penalty is important: the company’s 14 contraventions were established by default, while the financial consequences remained for later determination.