So, the Australian Taxation Office (ATO) is looking into your taxation affairs or those of your business, whether it be during the course of a review, audit, or otherwise. In these circumstances, it is helpful to understand how the ATO can legally obtain information or documents about you or your business. This article will give you further insight into the ATO’s information gathering powers.
Information-Gathering Powers
The ATO has wide-ranging informal and formal information-gathering powers. Additionally, the ATO’s information-gathering principles govern its approach to obtaining information.
1. Informal Powers – Also Known as the ‘Cooperative Approach’
In the first instance, the ATO will usually seek your cooperation in providing the information and documents it seeks. For example, the ATO may informally request information from you, your advisors or your accountant by email or telephone.
The ATO can request a broad range of documents or information relating to past, current or future income years – such as copies of:
- tax returns;
- payment summaries;
- accounting data;
- working papers;
- contracts for the sale of a business or property; or
- related information.
The ATO’s preference is to obtain these documents and information electronically.
Continue reading this article below the form2. Formal Powers
If the ATO cannot obtain the information they require using the cooperative approach or consider that they should not use the cooperative approach at all, they may use their formal powers. Under the Taxation Administration Act 1953 (Cth), there are two broad categories of the ATO’s formal powers: notice and access powers.
Notice Powers
The ATO may send you (or a third party) a notice requiring you to:
- give information (to answer the ATO’s questions in writing, based on your knowledge or understanding);
- attend and give oral evidence (to attend an interview and answer questions on oath or affirmation); or
- produce documents in your custody or control (to send documents to the ATO).
Access Powers
In most cases, the ATO only uses its access powers if it cannot obtain the documents or information it requires under a cooperative approach.
For example, the ATO has powers to enter and remain at your business or residential premises. They also have full and free access to books, documents, goods and other property at all reasonable times. Additionally, the ATO can make copies of documents for their records, count, measure and weigh goods or other property. However, they cannot seize or remove your documents without your consent.
When an ATO officer attends your premises to exercise the ATO’s access powers, you should first request that they produce an authority signed by the Commissioner of Taxation stating that they are authorised to exercise those powers. If the ATO officer does not produce that authority, then they are not entitled to enter or remain on your premises.
Limits to the ATO’s Formal Information-Gathering Powers
In some situations, you may not disclose certain documents (in whole or in part) if they are protected by:
- legal professional privilege (where a taxpayer has utilised a lawyer in obtaining advice concerning their taxation affairs);
- the accountants’ concession (administrative concessions for professional accounting advisers’ papers); or
- the corporate board advice concession (certain advice for a corporate board on tax compliance risk).
Gathering Offshore Information
As more Australian taxpayers conduct international dealings and hold investments overseas, the ATO has increased its focus on international tax issues.
Therefore, the ATO can obtain information and documents offshore by:
- using a cooperative approach;
- using its domestic information-gathering powers for entities in Australia;
- issuing an offshore information notice; or
- exchanging information with other tax jurisdictions.
Key Takeaways
The ATO has broad informal and formal information-gathering powers. Therefore, it is important that you, your advisors or your accountant keep accurate records of all documents and information provided to the ATO throughout its information gathering process. If you need legal advice in responding to a request for information or complying with a formal notice from the ATO, contact LegalVision’s disputes lawyers on 1300 544 755 or fill out the form on this page.
Frequently Asked Questions
The ATO’s informal powers or cooperative approach is where they seek your cooperation in providing the information and relevant documents. For example, the ATO may informally request information from you, your advisors or your accountant by email or telephone.
Where the ATO cannot obtain the information they require using the cooperative approach, they may use their formal powers. Therefore, you should note that the ATO’s formal powers fall into two broad categories: notice and access powers.
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