While the Australian Taxation Office (ATO) has formal powers to access documents and evidence, it prefers to cooperate with taxpayers to obtain these where possible.
The ATO outlines its approach to information gathering, and situations in which it may use its formal access powers.
The cooperative approach
The ATO prefers to gather information by simply requesting it from you. It claims that this minimises cost and disruption, and in most cases, it can gather the required information in this way.
When may the ATO use its formal access powers?
The ATO may use its formal access powers:
- If it can’t obtain the information it requires in a cooperative way.
- At the outset in specific circumstances, for example if it believes that upon receiving a request for documents, you may destroy them.
With its increased focus on international tax issues, the ATO may also use its powers to obtain offshore information.
What formal powers does the ATO have?
The ATO has powers to:
- Require you to provide information and documents. In general, the ATO prefers that information be provided electronically.
- Require you to attend an interview and provide information verbally. Situations in which the ATO may issue a notice to attend a formal interview include when they believe you may be involved in tax avoidance, or they need to ask wide-ranging questions.
- Gain access to your premises and documents. The ATO is authorised to have full and free access to books, documents, goods or other property. Penalties and prosecution may apply if you obstruct the ATO from gaining access or do not provide reasonable assistance.
Claiming legal professional privilege
In some situations, you may be able to claim your documents are protected by legal professional privilege. Concessions that may apply include:
- The accountants’ concession – applies to professional accounting advisers’ papers.
- The corporate board advice concession – applies to certain advice for a corporate board on tax compliance risk.
Where disputes arise about the ATO’s rights to formally access information in specific circumstances, it will engage technical specialists and consider alternative dispute resolution approaches to resolve the dispute as early as possible.
Key takeaways
The ATO prefers to take a cooperative approach to information gathering, and will only use its formal access powers if a cooperative approach fails to provide the required information, or in other specific circumstances. In some situations, you may be able to claim your documents are protected by legal professional privilege.
