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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. 

This informal approach can assist you in building a good and amicable working relationship with the ATO and also minimise the costs and disruptions to you or your business.

2. 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.  

Civil and criminal penalties may apply if you refuse or fail to comply with the ATO in exercising its formal information-gathering 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).

You have rights and obligations when the ATO issues you with a notice. Therefore, it is vital to understand why you have received the notice, how you should respond to it and what you can expect from the process.

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. 

Usually, the ATO will give you prior notice before exercising an access power. However, they may not give you notice beforehand in exceptional circumstances, for example, if they believe that someone may destroy documents.

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.

The ATO’s decision to use its notice or access powers is reviewable by the Federal Court. You also have the right to a ‘statement of reasons’ regarding the ATO’s decision.

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)

You will need to make a valid claim of the above privilege or concessions over a document (or part thereof) for them to apply. However, the ATO’s access powers are not limited by claims of confidentiality or privilege against self-incrimination. 

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

What are the informal powers of the ATO?

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.

What are the formal powers of the ATO?

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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