Law

Tax Information Gathering, Resistance by Taxpayers & the ATO

Freedom of Information Act 1982 (Cth)

The Freedom of Information Act 1982 gives you the right to request access to government-held information. This includes information they hold about you or about government policies and decisions.

Important sections in a tax context:

  • 11 – right of access
  • 15 – request for access
  • 20 – forms of access
  • 21 and 22 – deferment, editing of access
  • 24 – refusal of access – diversion of resources
  • 29 – charges for access

› Exempt documents

  • 37 – public safety and enforcement of law exception
  • 38 – secrecy exception (eg if Div 355 of TAA applies)
  • 42 – LPP exception

Freedom of Information (FOI) Request

Access to information under the FOI Act can be granted in certain conditions. Generally a taxpayer can only obtain tax information about themselves (due to s 38 secrecy exemption and Div 355 of Sch 1 to the TAA 53).

Whereas, the discovery in Federal Court, requires legitimate forensic purpose and relevance. Often internal ATO documents are considered irrelevant in Part IVC proceedings.

Obtaining information from the ATO

Often ATO provides information voluntarily, therefore you can just ask. Litigation may bring more information out (e.g., under s 39B, ADJR or Part IVC). In which a taxpayer can issue notice to produce, summons, subpoena or discovery. Which must be for legitimate forensic purpose and have relevance. Because Part IVC proceedings are a review “de novo” (afresh), it is often held that internal ATO documents are irrelevant because the Court or AAT (not the Commissioner) is now the decision maker, so what the ATO thought about the law or the facts is irrelevant. There are cases that cover these issues. Published ATO policy documents (e.g., PSLAs) that describe the ATO’s approach to certain processes and will often explain the ATO’s conduct in a particular matter. While, a FOI request is often the path that will yield the most information from the ATO.

Commissioner’s Access powers

– Section 353-15 of Sch 1 of the TAA 53 (former s 263)
– Section 353-10 of Sch 1 of the TAA 53 (former s 264)
– Section 353-25 of Sch 1 of the TAA 53 (former s 264A)

s 353-15 Access to premises, documents etc.

The text of s 353-15 is a very powerful section. However, is not as commonly used as s 353-10, but still used. For instance in Project Wickenby, and other ATO investigations.

It must give the searchee a reasonable opportunity to claim LPP (or have it claimed). A Searchee cannot obstruct, but the ATO cannot prevent searchee from using its premises either.

Differences from Crimes Act 1914 search warrant under ss 3E-3S – warrant held invalid because did not comply with s 3H of Crimes Act (requirement to state name of issuing officer and handwritten attestation).

s 353-10 Commissioner‘s power 

The text of s 353-10 contains multiple different powers and can be a fishing expedition. Section 353-10, includes the right to legal representation.

Note that the meaning of “custody” and “control” is broad, as in case Smorgon.

This section overrides duty of confidentiality to clients, as in case Konza.

While, it does not override LPP and must give a reasonable opportunity for LPP to be claimed.

ATO information access (“Our approach to information gathering”) – sets out procedures for claiming LPP.

There is a case where the ATO was in unauthorised receipt of LPP material, as in case Donoghue.

Information leaks and LPP, as in the Glencore case LPP offers no protection against data leaks. *Glencore International decision on AUSLIT – The Glencore Documents. It makes for a breach of confidence and difficulty because documents are in the public domain (Transparency vs Privilege). We also know that the Paradise Papers are subject to legal professional privilege, however the outcome rests on incorrect premise, namely that legal professional privilege is a right.

s 353-25 obtaining information from foreigners Offshore information notices

Can a 353-25 notice be used to obtain foreign tax liability; answer is yes under 23-1 in ITAA 1953. Australia assists foreign revenue authorities, under our International Tax Agreements Act 1953. Information exchange under tax treaties is common. The OECD Multilateral Treaty includes 130 Countries, expanding information exchange, joint audits, tax exaiminations abroad. s 353-10 interview in foreign country, assistance in recovery/recovery of tax claims (Australian courts can sue on behalf on a foreign country, yet we don’t have good relations with all 130 countries, and some countries can be corrupt, questions whether we have sovereignty), freezing assets/measures of conservancy (foreign revenue claim), ect. Australian double tax agreements (Exchange of Information Articles) with other international tax authorities foster cooperation and prevent double taxation and fiscal evasion. Another treaty is JITSIC (Japan, UK, ect, Joint International Tax Shelter Information Centre).

Taxation Information Exchange Agreements (TIEAs). Each TIEA outlines the obligation between Australia and the non-OECD participating partner to help each other by exchanging correct tax information relevant to the administration and enforcement of their respective domestic tax laws (civil and criminal).

Multilateral Convention on the Mutual Administrative Assistance in Tax Matters (see OECD website) would be another example and is a very powerful treaty that includes information sharing, tax collection and other assistance.

Legal professional privilege

Legal professional privilege (LPP) protects certain confidential communications from disclosure without your client’s permission. LPP is a right not of lawyers but of clients, covered under Common Law rights and Evidence Act 1995 right and under Advice privilege and litigation privilege – See ss 117-119 of Evidence Act 1995 (Cth).

It is important to read case, Pratt Holdings, that involved third party communications and copies of documents. Protection against production, is not a right protected by injunction, such as in Glencore.

Waiver of privilege, both corporate and government lawyers need to be careful not to waive privilege without specific instructions, where a party’s conduct is inconsistant with the maintance of confidentiality, at common law and under s 122 – as in case Rich v Harrington and the in house counsel.

Another important case is ACC v Stewart considering Foreign lawyers. Foreign lawyers, both commercial advice and non-legal advice, these communications will not be privileged, a case for in house council.

Other Privileges:

-Privilege against self-incrimination, 8c 8d not compliance

-Witnesses, s128 procedures act can claim privilege

-Negotiation privilege s 131, settling tax dispute

Accountants Concession

In Australia tax advice is provided by lawyers and accountants, both look like legal advice, legislation is interpreted by these professionals, accounts advice is not protected under tax law, able to be obtained by the ATO, recognized by ATO by providing a concession (not always respected by ATO), on ATO site there is the accounts concession forms to claim. Accountants don’t get privilege as lawyers are more closely bound to ethical requirements, paramount duty to the court, tax accountants have a more mixed role in commercial advise.

Not a legal right (either common law or legislated), but a concession granted by Commissioner. Procedures are listed in “Our Approach to Information Gathering”, on the ATO website. Different types of documents – Source – Restricted source – Non-source – ATO “lifting” the concession – i.e., accessing restricted source or non-source documents (ie, the concession is not absolute). Decision to lift concession may be reviewable by Court under s 39B. See case 2017 White Industries Aust Ltd V Commissioner of Taxation. Case, lifting concession, only under exceptional circumstances, challenged under s 75 ADJR Act not dismissed under 39B, was unsuccessful for ADJR Act as it required that the decision made under the enactment, just a guideline. See 2011 Treasury Discussion Paper on “Privilege in Relation to Tax Advice”.

Part 4 A: Tax avoidance. Considered to be an exceptional circumstance, accountants’ concession doesn’t extent to under tax avoidance and concessions can be lifted even LPP in evidence Act, and in common law s 125, civil penalty, fraud, ect.

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