There are consequences for any taxpayer who fails to comply with a notice from the Australian Taxation Office (ATO), whether they are an individual or one of the largest companies in the country.
Recently, McDonald’s Australia was convicted and fined for failing to provide documents to the ATO. We explore the details of this case as outlined on the ATO website.
Case background
On 26 July 2019, the ATO issued a formal notice requiring McDonald’s Australia to produce documents with a compliance date of 30 August 2019. However, despite continued engagement with McDonald’s to obtain the information and resolve the matter, the documents were not provided by the compliance date.
The prosecution
The matter was referred for prosecution by the Commonwealth Director of Public Prosecutions, which saw McDonald’s Australia plead guilty at the Downing Centre Local Court in Sydney to one count of failing to comply with an information gathering notice.
ATO Deputy Commissioner Will Day said that “Instances where taxpayers have failed to comply with requests for information rarely result in criminal convictions as most will work with us to meet their obligations. However, where taxpayers hold back necessary information or documents, the ATO will initiate prosecution action.”
The ATO’s engagement with big business
The ATO actively engages with the top 1,000 companies operating in Australia, which includes McDonald’s Australia. When the ATO cannot access the information it requires through this ongoing engagement, it may issue a formal notice.
Mr Day said that “We only issue formal notices to taxpayers to obtain information as a last resort; where a cooperative approach is no longer productive or where a taxpayers’ circumstances, history or behaviour warrant the use of our formal powers”. Mr Day clarified that the ATO issues approximately 70 formal notices to large businesses each year.
Key takeaways
The McDonald’s case demonstrates that big business is held accountable for failure to comply with reporting obligations, and more broadly highlights the importance of cooperating with the ATO when it requests information. Where the ATO cannot obtain the information it requires under a cooperative approach, it may use its formal access powers.
