On 16 May 2014, in proceedings brought by the ACCC, the Federal Court ordered by consent that Taxsmart Group Pty Ltd, Taxsmart Franchising Pty Ltd and Resultsmart Pty Ltd (together, Taxsmart) repay $260,400 in franchise fees to five former Taxsmart franchisees.
The Court declared that Taxsmart engaged in misleading or deceptive conduct when it represented that Taxsmart was offering a graduate program and 12 months of employment to accounting graduates that would enable them to satisfy the requirements for registration as a tax agent.
The Court declared that Taxsmart did not have reasonable grounds for making this representation because Taxsmart had not made proper enquiries whether:
- the graduate program would enable graduates, with no prior experience in tax accounting, to satisfy the legal requirements for registration as a tax agent; and
- the graduate program was not capable of enabling graduates with no previous work experience in tax accounting to satisfy the legal requirements for tax agent registration.
The Court also declared that Taxsmart’s sole director at the time, Mr Andrews, aided and abetted Taxsmart in engaging in the misleading and deceptive conduct and is jointly liable for the repayment of the franchise fees.