Access powers of the Australian Taxation Office

The Australian Taxation Office (ATO) has broad powers to access premises for the purpose of administering the taxation laws. In effect, the ATO has the ability to conduct what is commonly referred to as a ‘raid’.

The power is principally for the purpose of obtaining copies of documents and evidence. Whilst lawyers and accountants may have obligations of confidentiality to their clients, this access power will override those obligations. The power to access premises extends to the ATO engaging in ‘fishing expeditions’.

Access to premises may be with or without notice. Either way, ATO officers will provide a formal notice requiring access to premises and production of named categories of documents in a taxpayer’s possession or control. Access to premises without notice is normally where the ATO is of the view that documents are at risk of being destroyed.

Specifically, the access power authorises ATO officers to:

  • enter and remain on premises to undertake searches;
  • have “full and free” access to named categories of documents;
  • take copies of any documents; and
  • inspect or examine goods or other property.

This access power does not authorise ATO officers to:

  • remain on premises for an unreasonable period;
  • unreasonably interrupt business operations;
  • wander around at will interrogating staff; or
  • remove documents.

If you are subject to an ATO access visit, you should remain calm and co-operate, as it is an offence to impede the ATO’s access. A taxpayer is also obliged to provide reasonable facilities and assistance to ATO officers, such as using a photocopier.

If the ATO seeks to access your premises unannounced, you are permitted to:

  • ask for production of the authority of each person in attendance and to make a note of these authorities (the ATO will generally not allow them to be copied);
  • request a temporary suspension of the access while you obtain legal advice;
  • provide the ATO officers with a room or defined space from which they can work; and
  • keep comprehensive notes of the visit including which documents are copied by the ATO.

DBL Solicitors may assist at this stage by acting as a buffer between the ATO and the taxpayer and to alleviate some of the inevitable tension which will be experienced in the circumstances. A lawyer may also assist by preventing the ATO from taking copies of documents that are:

  • covered by legal professional privilege;
  • covered by an accountant’s concession; or
  • not covered by the scope of the notice.

Legal professional privilege is different to the general concept of client confidentiality. It applies specifically to communications between a lawyer and their client which have, as their dominant purpose, the provision of general legal advice or legal advice in relation to active or pending litigation. Such communications are protected from disclosure and may not be viewed or copied by the ATO on an access visit.

An accountant’s concession is an administrative concession that may not have the same force as legal professional privilege, but which may still offer some protection from copies being taken by the ATO on an access visit.

An accountant’s concession will not prevent the ATO seeking access to source documents such as contracts, transaction documents, agreements, ledgers, journals, working papers for financial statements (including consolidated financial statements), profit and loss accounts and balance sheets. These documents are able to be copied on an access visit.

An accountant’s concession ought to however prevent the ATO from taking copies of:

  • restricted source documents such as advice papers on how to structure or record a transaction or arrangement which were acted upon by the taxpayer, and where there was a need for frankness between the accountant and taxpayer;
  • non-source documents such as advice which:
    • is provided after a transaction has been completed where the advice did not affect the recording of the transaction or arrangement in the books of account or tax return;
    • relates solely to transactions or arrangements which the taxpayer has not, and does not intend to put into effect provided the advice does not materially contribute to an understanding of the overall tax strategy or the specific courses of action actually implemented by the taxpayer; or
    • was prepared solely for the purpose representing a taxpayer in legal proceedings (including an objection, appeal or AAT review).

On an access visit, the ATO will only seek access to restricted source documents and non-source documents in exceptional circumstances such as where tax fraud or evasion is suspected. A Deputy Commissioner must also approve the request for access.

If you are subject to an announced or unannounced visit from the ATO, do not delay in contacting DBL Solicitors for a confidential discussion.

Ben Trost
Senior Litigation Solicitor