7.1. This chapter considers the ATO's informal and formal information gathering approaches. It discusses the issues and concerns raised by stakeholders and makes several recommendations to ensure that the information gathering process promotes transparency and dialogue and seeks to minimise compliance costs.

Background

7.2. The ATO's approach to information gathering is set out in a number of its key publications. The Taxpayers' Charter, the Large Business and Tax Compliance (LBTC) booklet and the Access and Information Gathering Manual provide public guidance on how the ATO ensures it takes a fair, professional and (as far as possible) open approach to using its information gathering powers in the large market. The following principles are sourced from these documents:

  • Consulting with taxpayers first — preference to consult with taxpayers and to obtain information cooperatively. The ATO prefers to use formal powers only where necessary. For example, for higher risk groups where the need to understand the business is paramount; or when it's requested by the taxpayer, or where other attempts to obtain the required information have failed. There are, however, some situations where the ATO may adopt a formal approach in the first instance.
  • Telling taxpayers their rights and obligations — if the ATO is asking for information or documents, then it will inform taxpayers about their rights and obligations under the law as early as possible. It will also tell taxpayers why it is seeking access or information unless this may affect the audit.
  • Giving taxpayers prior notice — in most cases the ATO commits to let taxpayers know in advance that it intends to access a taxpayer's premises or documents and it is only in exceptional circumstances that it will not give prior notice (such as a reasonable belief that the documents may be destroyed).
  • Taking into account any possible costs to taxpayers — when the ATO decides what information or documents it requires access to, then it will also consider ways of minimising taxpayers' compliance costs.
  • Giving taxpayers time to comply — the ATO will provide taxpayers with a reasonable time to comply with its notices requesting information or documents. This will generally be 28 days although, in some circumstances, the ATO may negotiate a shorter or longer time period.
  • Respecting taxpayers' legal rights — the ATO commits to respect a taxpayer's right to claim legal professional privilege for certain communications between them and their legal adviser. In certain circumstances, the ATO will also allow some advice given by a professional accounting adviser to remain in confidence between the taxpayer and that adviser (the so-called 'accountants' concession'). Taxpayers may also choose to have a representative or adviser present at a formal interview.
  • Telling taxpayers when the ATO asks for third party information — if the ATO asks third parties about a taxpayer's affairs, the ATO will normally tell the taxpayer before it makes the enquiry, although there are certain circumstances where this may not occur such as where the ATO has already tried to obtain that information from the taxpayer.

7.3. The LB&I Compliance Manual1 provides further guidance to ATO staff on information gathering during a large market audit. It notes that effective information gathering is vital to both the quality and timeliness of any compliance activity result. It emphasises that appropriate planning including an understanding of evidentiary requirements, limitations and blockers and ways to overcome them and good communication with the taxpayer is highly relevant to the successful completion of a risk review or audit.2

7.4. The Manual states that the ATO's main approach is, wherever possible and effective, to use an informal approach to information gathering based on the risk hypothesis. Audit teams are encouraged to gather information in cooperation with the taxpayer that is relevant to testing the hypothesis, as that is the basis of the audit.3

7.5. Information gathering including informal information requests, formal information requests and dealing with legal professional privilege and accountants' concession claims is primarily undertaken by the Senior Case Officer with active participation and management by the Team Leader and Technical Leader. It may also involve input from other ATO personnel external to the audit team including Case Leaders, TCN and CoE staff, LB&I Access Network members, external consultants and experts to assist with the gathering of information.4

7.6. The Compliance Manual lists a number of aspects of the information gathering process that can cause delays in the timely and efficient collection of information or documents, including:

  • unclear information requests resulting in the wrong or inadequate information being supplied;
  • taxpayer-caused delays;
  • breakdowns in communication and relationship between the ATO and the taxpayer;
  • insufficient planning that does not effectively manage the ATO-taxpayer relationship;
  • escalating to a formal approach without appropriately considering and trying other options such as escalation to senior officers;
  • failing to escalate to a formal approach in a timely manner when an informal approach is not working, resulting in blown out timelines and a lack of information to make a valid decision;
  • information and documents subject to legal professional privilege and accountants' concession claims; and
  • the taxpayer has a matter before the courts and further action by the ATO could be construed as being in contempt.5

7.7. The Compliance Manual states that the planning of the information gathering stage of a risk review or audit is critical to the effectiveness and success of the ATO's compliance activities and in maintaining a positive relationship with taxpayers. The Manual lists a number of elements that support good planning:

  • developing a hypothesis that will make information gathering more purposeful;
  • building a clear understanding of the information required to test the ATO's risk hypothesis and how it should be obtained;
  • progressively refining information gathering requirements as the hypothesis is refined;
  • considering evidentiary needs including the development and progressive completion of the facts and evidence worksheet;
  • considering the taxpayer's business, the records the taxpayer is likely to keep, who is likely to control those records and who has custody of the records and whether the required information is publicly available;
  • identifying key personnel in the taxpayer's organisation that may provide relevant information;
  • developing contingency, risk and mitigation approaches including how to deal with claims for legal professional privilege and the accountants' concession; and
  • using appropriate tools and techniques to manage evidence.6

7.8. Whenever gathering information, the Manual states that it is important that the ATO discuss its approaches with the taxpayer and seek agreement on the process to gather the particular information. Those discussions should always include a discussion on informal and formal approaches and the circumstances that would trigger a shift from an informal approach to a formal approach. The circumstances should be agreed between the parties and confirmed in writing thus mitigating any potential delays in the future.7

7.9. The Compliance Manual reinforces that the starting point for planning information gathering is the initial (case selection) risk hypothesis. It states that it is critical that auditors link the information gathering to the hypothesis as it makes information gathering far more purposeful. Auditors must also progressively refine the risk hypothesis and use this as a framework for their ongoing information gathering.8

Informal information gathering

7.10. The Compliance Manual requires all auditors to use an informal approach to information gathering at the outset of a risk review or audit unless there are exceptional circumstances that require the use of formal powers.9

7.11. Informal information gathering is the process of gathering information without recourse to any formal powers — that is, without compelling the taxpayer to provide information, attend interviews or provide access under the relevant statutory provisions.10

7.12. Underpinning the informal approach are the assumptions that there is full cooperation between the ATO and the taxpayer and that full, complete, relevant and timely information is being provided. Cooperation is therefore more than meeting timeframes for the provision of information. It includes working together to ensure the efficient and timely progress of the compliance activity through the provision of full, complete and timely information.11

7.13. In the context of information gathering, the ATO expects that its auditors will act in a professional, courteous and respectful manner and demonstrate integrity, fairness and impartiality in the conduct of their duties. They are also expected to maintain an open dialogue and ensure information requests are clear and unambiguous. Likewise, the ATO expects large market taxpayers to actively engage with and assist the audit team in developing realistic plans, milestones and timeframes, to advise the audit team as early as possible of any delays in providing information and take all reasonable steps to provide the information requested including those relating to business context.12

7.14. The Compliance Manual states that informal requests for information, whether by interview or via written request, still have an expectation of a full, complete, timely and accurate response (although legally the taxpayer is under no obligation to respond to the request). It is expected that taxpayers will exercise the same level of diligence and best endeavours in meeting informal requests for information as they would if the information was requested using formal powers.13

7.15. The Compliance Manual also encourages face-to-face meetings as the preferred approach to initial requests for information so as to facilitate an agreed and effective information gathering process. This includes:

  • the auditor outlining what information is required and its relevance to the risk hypothesis; and
  • the taxpayer providing details of what information is available, when it will be provided and, if the information is not available but held by third parties, then agreeing on what is the most efficient method to obtain it.14

7.16. Where the informal information gathering approach is not leading to the timely provision of information then the Manual states that consideration should be given to escalating to a senior tax officer or adopting a more formal approach.15

Escalation to senior officers

7.17. The Compliance Manual notes that early intervention is critical in avoiding ongoing problems during the information gathering stage of a risk review or audit.16

7.18. In the first instance it is expected that a discussion should take place between the audit team and the taxpayer's nominated contact in order to identify and resolve any issues including the clarity and intent of the original request. Besides exploring the current issues the discussion should also canvass future action should resolution not be reached.17

7.19. The Compliance Manual states that the desire to maintain a cooperative relationship should not impede raising matters of concern during the course of the review or audit. The nature of a cooperative approach requires both parties to work together to resolve issues as they arise and failure to do so can lead to greater longer term damage to the relationship and achieving quality outcomes.18

7.20. Where problems cannot be resolved through a discussion between the audit team and taxpayer, it is open to either party to escalate the matter to more senior management.19

7.21. The aim of the escalation process is the timely resolution of any issues regarding the provision of information without resorting to the use of formal powers while maintaining a good ATO-taxpayer relationship. The escalation process should be discussed at the preliminary interview and should include the identification of escalation points within the respective organisations.20

7.22. At the end of the escalation process, if the matter is not resolved, each party should clearly understand each other's respective positions, the issues and the next course of action.21

Moving from an informal to formal information gathering approach

7.23. The formal approach involves compelling taxpayers to provide access to information under statutory provisions.22 The Compliance Manual notes that the use of the ATO's formal powers only occurs in a relatively small number of cases and generally only after the informal approach has not been successful. It also states that given the emphasis placed in the LBTC booklet on the importance of timely taxpayer cooperation and responses, the ATO's current approach is to escalate to the use of formal powers more promptly than it may have in the past.23

7.24. Where the informal approach and escalation to senior officers is not leading to the timely provision of information (either due to a lack of full cooperation or ongoing delays in providing information), the Compliance Manual states that the consideration and subsequent use of the ATO's formal information gathering powers is warranted, provided that the ATO has followed its commitments outlined in the Taxpayers' Charter and the LBTC booklet.24

7.25. The LBTC booklet sets out examples of where the ATO may adopt a formal information gathering approach either at first instance or in the course of a risk review or audit where the ATO believes that an informal approach is not leading to full cooperation. The booklet also sets out what taxpayers can expect when the ATO decides to use its formal powers:

  • treat the taxpayer fairly and, as far as possible, in a non-intrusive way;
  • give the taxpayer reasonable notice of the ATO's intention to use its formal powers;
  • clearly identify the objects of the examination and keep information requests relevant and focused;
  • explain why the ATO is requesting information; and
  • respect the taxpayer's rights to legal professional privilege or the accountants' concession, such that it will not adversely impact the ATO's view of a taxpayer's cooperation.25

7.26. The Compliance Manual also states that the intention to use formal powers and the reasons for doing so should be discussed with the taxpayer beforehand unless there is a good operational reason for doing otherwise. It notes that the process leading up to the use of formal powers must have included a full and frank discussion about the consequences of not meeting informal requests for information. In this discussion, the taxpayer must be advised that if the information is not provided in response to informal requests, the information may be requested using the ATO's formal powers. This discussion provides the opportunity to raise any issues, to escalate the matter if required but also to clearly understand why the use of formal powers is considered necessary.26

7.27. A decision to issue a formal ATO notice can be made by a duly authorised officer. In practice this generally rests with an executive level tax officer. It is normal practice for this officer to inform and consult with a senior executive tax officer before doing so. Procedures for the use of formal powers are contained in the Access and Information Gathering Manual that is published on the ATO website.27

7.28. In discussions with the IGT the ATO has confirmed this approach. The ATO stated that it needed to balance its preference to work informally and cooperatively with taxpayers against its responsibilities as a regulator to conduct compliance work efficiently. Where ATO experience and the circumstances indicate an informal approach is unlikely to be effective and will result in a delay in obtaining the full facts, the ATO will look to using formal powers at an earlier stage and, in some cases, from the outset of a case as is explained in the LBTC booklet.

Legal professional privilege and accountants' concession

7.29. Legal professional privilege attaches to confidential communications passing between a client and their lawyer if the communications were made for the dominant purpose of enabling the client to obtain or the adviser to give legal advice, or made in relation to litigation that is actually taking place or was in the contemplation of the client.

7.30. Legal professional privilege is the privilege of the client, not that of the lawyer, and may be waived as a right by the client only. Legal advice that is provided to other parties including auditors may mean that privilege is waived.28

7.31. If it is properly claimed, the ATO cannot compel the taxpayer to disclose the information (even with its formal access powers). However, if it is not claimed properly, the ATO can still require disclosure of the information using its access powers.29

7.32. The Compliance Manual and the Access and Information Gathering Manual provide guidance to ATO staff and taxpayers on how the ATO will assess the veracity of any legal professional privilege claims. They also provide instructions to auditors to ensure that privilege in relation to legal advice received by the ATO is not waived.30

7.33. The Commissioner has wide legislative powers to request access to most documents and legal professional privilege does not extend to communications in other confidential relationships like the one between accountants and their clients.31

7.34. As an administrative concession, the Commissioner has accepted that there is a class of documents which should (in all but exceptional circumstances) remain within the confidence of taxpayers and their professional accounting advisers. This is known as the accountants' concession.32

7.35. The Commissioner allows clients to claim exemption from access and information gathering powers in relation to certain documents prepared by external, professional accounting advisers.33

7.36. For the purposes of the accountants' concession, documents can be classified in three categories:

  • source documents (records of transactions);
  • restricted source documents (advice documents shedding light on transactions); and
  • non-source documents.34

7.37. Generally, the accountants' concession applies only to restricted source and non-source documents. However, the Access and Information Gathering Manual provides that in exceptional circumstances (such as where there is insufficient information to resolve the issue), an auditor may seek written approval from a relevant Senior Executive Service (SES) officer to such documents. The accountants' concession does not apply to source documents.35

7.38. The Compliance Manual requires that auditors contact a LB&I access network member as soon as a taxpayer indicates that they may be making an accountants' concession claim.36

Access to corporate board documents on tax compliance risk

7.39. While recognising that the Commissioner has the legislative power to request access to most documents, the ATO accepts that there is a class of documents which should, in all but exceptional circumstances, remain within the confidence of company directors and their advisers on tax compliance risk. The ATO calls these documents 'corporate board documents on tax compliance risk'. Full details of this policy as well as the process for dealing with taxpayers claims that particular documents are corporate board documents on tax compliance risk are set out in Practice Statement LA 2004/14.37

Submissions and consultations

7.40. All taxpayers and advisers support the ATO's need for information gathering and accept it is of paramount importance in the ATO's review of large taxpayers by allowing the ATO to better understand the entity and group structure or the facts pertaining to its activities.

7.41. A strong theme across nearly all submissions is that there is considerable room for improving the efficiency (taxpayers incurring significant and unnecessary costs associated with information gathering requests especially where the request is broad and there has been little engagement by the ATO around scope and purpose) and objectivity (searching for information to confirm the risk hypothesis rather than understanding the matter or transaction) of information requests.

7.42. Taxpayers and advisers have expressed a range of concerns relating to the information gathering process including the level of engagement, the scope of information requests, the timeframes for taxpayers to respond, the use of section 264 notices and the ATO's approaches to legal professional privilege and the accountants' concession.

7.43. The issues and concerns raised by stakeholders in the course of this review are outlined below.

Process

7.44. Taxpayers in submission and consultation with the IGT generally believed that the current information gathering process is very inefficient, unnecessarily costly to the taxpayer and poorly focused.

7.45. Taxpayers accept that in some instances responses to information requests have taken a considerable time (up to 6 months for some of the larger, complex requests). Taxpayers have said that while the ATO may point to this as taxpayer-caused delay, there are good reasons for these timeframes, including:

  • the broad and imprecise nature of the initial request that often leads to multiple follow-up requests;
  • lack of a project plan and the 'fishing' nature of questions resulting in significant waste of resources and duplication;
  • lack of understanding of business results in requests for information that are onerous and untargeted substantially lengthening the audit;
  • requests relating to arrangements that were put into place many years ago and as a result it is extremely time consuming to locate documents and find relevant information; and
  • ATO practice to request information for every year even where the issue under audit does not change for each subsequent year leading to a need to provide additional information.

7.46. A range of taxpayers and advisers believe that some of the ATO's approaches to information gathering (as catalogued below in greater detail) are not consistent with an open and transparent relationship or a cooperative exchange of information as set out in the LBTC booklet.

7.47. Taxpayers would also like to see greater accountability in the ATO's information gathering process. They feel aggrieved when they spend significant resources and time to provide information that is ultimately irrelevant or disregarded with no resulting consequences for the audit team. They believe that there is little appreciation of the resources required for information gathering, particularly in large business. They generally expressed a view that in reality tax is not the driver of transactions and that the bulk of the documents and requested materials will be located in many different areas of the business.

7.48. A number of taxpayers and advisers believed ATO information gathering should be modelled on techniques and processes used by external auditors. This involves developing a solid understanding of the business and then focusing resources on perceived risks, combined with regular discussion and interaction with the taxpayer. Taxpayers also wanted the ATO to take into account major transactions (such as acquisitions) or processes (like year-end) when seeking to request large amounts of information.

7.49. Taxpayers and advisers submitted that they were aware of their obligations to comply with ATO information requests on a full and frank basis and to assist the ATO with its enquiries in accordance with the law. However, they believed that it was fair and reasonable to expect that the ATO will afford them an equivalent degree of commitment to ensure the efficient conduct of an audit in line with the stated objectives.

Engagement

7.50. Many taxpayers asserted that the ATO does not readily engage with them to discuss and explain the reasons for seeking information and does not adequately consider the impacts of particular information requests. Some taxpayers also complained of receiving information requests without any prior dialogue or notice.

7.51. In particular, taxpayers and advisers strongly asserted that the ATO does not readily engage to discuss how the information requested relates to the ATO risk hypothesis and how the information provided has influenced the risk hypothesis. Some taxpayers have said that on some occasions the case officers themselves did not know why the requested information is relevant, merely saying that the need for the information was identified at a workshop with technical specialists and advisers.

7.52. Some taxpayers raised examples where ATO case officers have been unwilling to meet to discuss the key risks or information request despite numerous attempts. These taxpayers are left with the impression that ATO case officers simply want the information and are not interested in adopting a cooperative approach to information gathering. Where this arises taxpayers are unclear about how to escalate their concerns while others doubt whether escalating will have any benefit.

Scope of information requests

7.53. Stakeholder submissions raised strong concerns with the scope of information requests.

7.54. These requests were said to be often framed in very broad or imprecise terms through the use of expressions such as 'all materials relating to or requesting information that is largely irrelevant such as 'all bank account details for the period'.

7.55. On other occasions taxpayers said that they received unduly complex and detailed information requests with multiple clustered questions. Taxpayers have said that the ATO can also be unwilling to specify with sufficient clarity the particular documents in which they may be interested. Taxpayers also noted that every record of the business is not necessarily kept that may or may not relate to a given transaction. This places taxpayers in a very difficult position as it is a time-consuming and extremely onerous process to try to identify all the potential documents that fall under the information request with no clear understanding of the underlying purpose behind the request.

7.56. Taxpayers also indicated that broad and imprecise information requests were often accompanied by short timeframes, placing an unreasonable burden on taxpayer's internal tax functions. Taxpayers find it very difficult to comply with such requests absent a discussion with the ATO to confine its scope. In some instances, where a taxpayer sought to question the relevance or scope of a request they believed that the case officers drew an adverse inference regarding the taxpayer's level of cooperation.

7.57. Taxpayers expressed the view that the ATO appears more concerned about making sure no piece of information is missed rather than determining what information it requires to make an informed decision. Where there was insufficient clarity around the scope of information requests a number of stakeholders summarised the underlying concerns by saying that it contributes to a perception that the ATO either adopts a 'scatter gun' or 'smoking gun' approach to information gathering.

7.58. These stakeholders suggested that prior to requests being made for 'all transaction documents, emails and other records', the ATO should have a view on what the potential tax issues are and these should be clearly articulated to the taxpayer.

7.59. A number of taxpayers also suggested that the ATO's approach seemed to be just directed at proving their risk hypothesis, without any regard for difficulties involved in providing information (time and cost). These taxpayers believed that their responses to ATO information requests were only looked at to support the ATO's risk hypothesis, with any material that supported taxpayer views being largely ignored or discounted.

Relevance of information and documents sought

7.60. Taxpayers and advisers submitted that it is often unclear how the information requested is relevant to the risk hypothesis. This made it necessary for taxpayers and their advisers to query case officers as to the relevance of the information requested. There were also some examples where this was managed effectively and this tended to be in situations where the dialogue and engagement was high or there was strong senior relationship management.

7.61. Taxpayers were particularly concerned when the ATO requires detailed information for a transaction that took place a number of years ago without any guidance on how the information is relevant to the ATO's risk review or audit. Taxpayers state that such information requests impose an enormous compliance burden on them given that certain information would have been archived or not readily accessible and that key personnel may no longer be employed by the taxpayer.

7.62. Submissions also suggested that there is a tendency for the ATO to request information that is ultimately irrelevant to the risk or issue — but that for taxpayers the provision of such information is both time-consuming and costly.

7.63. Some advisers submitted that the level of documentation requested around transactions suggests a real lack of trust in taxpayers especially where there is little detail around the risk hypothesis or issue. By way of example, one adviser referred to an ATO request that required a large publicly listed taxpayer to provide bank details to demonstrate the actual movement of monies. The adviser asserted that unless the ATO's risk hypothesis alleged fraud then such documentation was irrelevant, but that the taxpayer was required to provide this information and incur unnecessary costs.

7.64. In another example raised with the IGT, an adviser referred to an audit where the ATO sought access to a large number of taxpayer emails. The taxpayer's adviser said that despite numerous attempts to obtain greater clarity on the relevance of the information, the ATO instructed them to provide the emails and allow the ATO to determine its relevancy. The adviser suggested that this conduct indicates that the ATO is merely looking for what they believe is a smoking gun and placing an enormous and potentially unnecessary compliance burden on the taxpayer. In such instances advisers are also unsure whether the ATO has formed a view on potential tax issues or whether they are simply gathering all the information they can as they are worried time is running out.

Availability of information requested

7.65. Taxpayers and advisers raised concerns regarding the ATO's request for information and documents that are unavailable, difficult to locate due to the passage of time or not generated in the ordinary course of business.

7.66. Taxpayers and advisers also expressed concern with the quantity of information requested by some audit teams. One taxpayer example related to an ATO request for information going back 11 years and covering 2,000 files. The taxpayer indicated that after significant discussions the ATO refined its request to information going back only three years and on specific entities. The taxpayer indicated that it was difficult for them to satisfy the burden of proof where the ATO seeks to go back so many years given the general unavailability of documents and also given that many of the people involved in the transaction would have moved on.

7.67. Taxpayers and advisers submitted that some audit teams have an unrealistic expectation of the processes that are adopted by taxpayers and the associated documents that are produced. For example, certain taxpayers suggested that some audit teams will request information relating to the precise purpose of funding that was put into place even though there is no apparent relevance of purpose of the loan to the risk or issue identified by the ATO. Taxpayers state that it is unreasonable from a commercial perspective to expect the relevant business unit to have reported on the precise way in which the funds were used in operating its business. To determine the precise purpose and use of the funds retrospectively would require a detailed forensic analysis of the expenditure of the relevant subsidiary, which would be a costly and time-consuming exercise that would serve no apparent purpose.

Project management

7.68. Taxpayers and advisers submitted that some information requests do not appear to follow any logical order and do not accord with any overall project plan. Rather, taxpayers assert that various lines of enquiry are pursued for a period of time where the ATO requests information regarding a particular issue and indicates to a taxpayer that it is critical and of high priority (even causing the audit team to threaten to use section 264 notices). After this information is provided there is often a new line of enquiry pursued with no clarification or resolution of the previous issue or any indication of the relevancy of that earlier information.

7.69. Taxpayers and advisers would like to see a distinct narrowing of the scope of information requested. Initial information requests would contain broad or general questions with subsequent requests narrowing the scope of the information to specific areas of concern. It was submitted that such a phased approach would lead to a far more efficient information gathering process especially for more complex issues. Taxpayers and advisers suggested that the ATO's assurance processes should monitor risk reviews and audits to ensure that this narrowing of scope is occurring.

7.70. Taxpayers and advisers have also expressed concern with the perceived random and continual nature of information requests with no prioritisation or narrowing in scope. In addition, they have said that the ATO does not track information requests and information that taxpayers have provided in a document that could be easily shared.

7.71. Advisers believed that there are few checks and balances between the front-line case officers sending the information requests and senior officers leading the review or audit. Some suggested that all decisions to issue information requests, including informal requests, should be reviewed by a senior level ATO officer before the information request is sent.

7.72. Repetition of requests for information provided previously to the ATO was another concern raised by taxpayers.

Costs

7.73. Taxpayers stated that the ATO does not often appreciate the significant resources and interruption to staff's existing duties caused by poorly targeted and ill-defined information requests. It was not uncommon for these costs to run into the hundreds of thousands of dollars with a few citing costs greater than $500,000 in dealing with a multitude of both formal and informal information requests.

7.74. Taxpayers have said that the ATO does not appreciate the assurance processes that they have to go through (such as review by external lawyers to ensure that the taxpayer did not waive legal professional privilege) every time they receive an information request. Where requests are broad, imprecise and poorly focused it imposes significant compliance costs on taxpayers. In addition, responses can become expensive not just because of the questions asked but because of the time and cost needed to carry out the 'negative assurance' processes (that is, to ensure that a document requested by the ATO does not exist).

Timeframes

7.75. Taxpayers and advisers submitted that the ATO often imposes unrealistic timeframes for the return of information, usually 28 days, irrespective of the level of complexity or the age of the information requested.

7.76. Taxpayers want greater understanding from the ATO in relation to the practical difficulty with gathering information that is a number of years old. Taxpayers and advisers believe this places further emphasis on the need for ATO risk reviews and audits to be contemporaneous.

7.77. Taxpayers and advisers raised concerns with the practice of issuing substantive information requests just before Christmas with the expectation that a response will be received by the end of January when many ATO staff return from leave. If a taxpayer does not meet the ATO timeframe, then taxpayers suggest that the ATO then asserts that the taxpayer is the party delaying the audit. Some have submitted that this practice is not within the spirit of the Taxpayers' Charter and demonstrates that the ATO does not factor in taxpayers' business imperatives and ignores the that fact that January is historically the busiest time for some taxpayers in attempting to meet their lodgement requirements.

7.78. A number of submissions noted long delays between the provision of information by taxpayers and ATO responses or follow-up. In one example, and after a full year had elapsed, the ATO made a request for an extensive amount of information and documentation (all emails, letters, facsimiles, diary or book entries, mandates or directions, records of meetings or telephone conversations, working papers, files, calculations, financial or mathematical models or formulae, fee invoices or schedules and any other documents relating to the transaction) and required a response within 28 days.

7.79. Some taxpayers expressed frustration at the volume of information required by the ATO on certain issues together with the timeframes for provision of this information. Taxpayers and advisers asserted that although the ATO often appears to do little with the information that taxpayers provide to them for long periods, the ATO has on a number of occasions only given taxpayers 28 days to respond to detailed information requests. They suggest that this indicates that the ATO applies different time standards to itself than it demands from taxpayers and does not understand or take into account the impact on taxpayers.

Section 264 notices

Purpose and circumstances of issuing notices

7.80. Taxpayers and advisers suggested the ATO's increasing use of section 264 notices, especially where the audit team did not first adopt an informal information gathering approach was also arising in a situation where there had not been any prior indication that the ATO would resort to issuing such formal notices.

7.81. Some observed that although the LBTC booklet states that information requests will be on an informal basis and formal powers will only be used if the informal process fails, they have had recent experience of the ATO issuing section 264 notices in a fully cooperative audit.

7.82. One example shared with the IGT is where the ATO issued section 264 notices notwithstanding that the audit had been ongoing for 19 months and the taxpayer had been assured that the information gathering stage was coming to an end. Of significant concern to the taxpayer was that they had endeavoured to fully cooperate with the audit team, received no prior indication of the use of the ATO's formal powers and had not received any draft discussion or position paper. The taxpayer was also concerned that the basis for issuing the section 264 notice seemed to be to ensure that the ATO had possession of as many documents as possible should the audit proceed to litigation. The taxpayer's advisers did not believe this was appropriate or contemplated by law notwithstanding the ATO's broad information gathering powers.

7.83. Other taxpayers and advisers submitted that the ATO issued amended assessments and then proceeded to request further information from them by way of a section 264 notice. In one instance a taxpayer indicated that the section 264 notices contained requests for information that had been previously provided to the ATO, suggesting that the ATO had not considered information already provided and raised concerns around the care taken by the ATO in the exercise of its formal collection powers.

7.84. Some taxpayers and advisers also raised concerns that some audit teams have suggested that they would issue a section 264 notice if the taxpayer did not extend the timeframe for amending assessments. One taxpayer indicated that they felt threatened by such an approach especially given prior cooperation and the broad information request.

Costs of compliance with notices and impact on taxpayers

7.85. Taxpayers submitted that being issued with a section 264 notice placed onerous obligations on the public officer to comply with the notice and that there is no justification for the ATO responding in this manner without prior discussion. Of particular concern to taxpayers is that the issuance of a section 264 notice may connote a level of non-cooperation (and potentially non-compliance) despite a taxpayer seeking to fully cooperate with an information request. Taxpayers in these situations have suggested that sometimes the audit team does not understand the difficulties they face in obtaining the requested information as key personnel may have left the taxpayer, documents may be overseas and often a taxpayer has to consider legal professional privilege issues so external advice may be required.

7.86. Taxpayers noted that the cost of complying with a section 264 notice can be significant. Taxpayers and advisers indicate that the cost and time involved in dealing with a section 264 notice was not so much in relation to the production of information but in the time it took to carry out the 'negative assurance' investigations especially if it involves the inspection of thousands of documents due to the wide scope of the notices and the age of the transaction.

7.87. Other taxpayers expressed concern where the ATO issues section 264 notices on advisers and third parties without the taxpayer having been asked for the information or being informed that the third party would be approached. Taxpayers are concerned that the issuing of such notices can cause significant damage to the commercial relationship between the taxpayer and the third party.

7.88. Given the potential for taxpayer reputational concerns in these circumstances, it was suggested that the ATO should limit the use of their formal powers to clear instances of non-cooperation. Where a taxpayer has been cooperative, the issuing of a section 264 notice should require pre-approval at the Deputy Commissioner level and only be authorised in circumstances where it can be established that there is a real basis for forming the view that not all relevant information had been provided in response to an information request.

Conduct of section 264 interviews

7.89. Taxpayers and advisers commented that section 264 interviews have not been conducted well, with many questions asked being either irrelevant or inadmissible in further disputes. They also questioned the usefulness of such interviews given the significant costs imposed on them (external lawyers and accountants, distraction for management) and the limited information from those interviews that actually finds its way into position papers. In one example, a taxpayer said that the ATO interviewed 16 people and produced over 2,000 pages of transcript but this information was never used as evidence. The taxpayer expressed frustration that no one in the ATO was held accountable over the time and resources spent by the taxpayer dealing with the ATO. Rather, the taxpayer was subject to further information requests.

7.90. Others observed that company directors and senior executives were brought into the information gathering process in instances where any information they provide could be sourced directly from other documentation, or it turns out that their involvement was irrelevant. Advisers have said that there is often no prior discussion regarding the scope and nature of information that the ATO wishes to obtain from company directors and senior executives leading to perceptions that these interviews are used as a bullying tactic.

Legal professional privilege and accountants' concession

7.91. Taxpayers and advisers suggested that legal professional privilege and accountants' concession claims can sometimes generate suspicion and negative inferences and that in some instances legal professional privilege and accountants' concession claims have become a major point of agitation between the taxpayer and the ATO even where the taxpayer has a clear and well-founded basis.

7.92. Some taxpayers and advisers expressed concern that the ATO's approach to handling legal professional privilege claims is not appropriate. For instance, a taxpayer submitted that the audit team would seek additional information on the nature and content of documents that were subject to a legal professional privilege claim in an effort to identify other issues for further investigation. The taxpayer said that they were informed by the audit team that the ATO needed to know the subject matter and issues that the taxpayer was taking advice on so as to identify potential risks. The taxpayer believes that this demonstrates an entrenched view that obtaining advice indicates some form of wrongdoing on the part of the taxpayer and reveals a lack of respect for the policy that underpins the doctrine of legal professional privilege. More importantly the taxpayer said that it does not assist in building trust in the ATO-taxpayer relationship. This is especially so where the audit team indicates that if this additional information on the nature and content of documents is not provided then there will be a level of inference drawn as to why it has not been provided which may carry over to the draft position paper.

7.93. Advisers have also expressed concerns with the ATO's approaches to accountants' concession claims, with the following comments being made:

  • the ATO wants access to audit files not just tax working papers, corporate finance statements and valuations;
  • the ATO makes very broad, substantial and burdensome requests for accountants' files;
  • audit teams asking for accountants' concession to be lifted globally where taxpayers are unclear why the ATO wants access to accountants' working papers anyway;
  • audit teams are not familiar with the rules, guidelines and process around the accountants' concession; and
  • a perceived lack of independence around management of accountants' concession claims — when advisers raise concerns with aspects of the audit teams conduct or actions, it is handled by a junior officer from the access team and often referred back to the audit team for comment and response.

7.94. Taxpayers and advisers submitted that delays in responding to information requests that are broad ranging and unfocused is often because a large number of documents need to be reviewed for legal professional privilege and accountants' concession claims.

7.95. Taxpayers and advisers indicated that the process of evaluating legal professional privilege and accountants' concession claims is extremely time-consuming and requires them to commit substantial resources (such as seeking advice from external counsel) on the appropriateness of claims prior to them being made. Taxpayers are frustrated when the ATO seeks to blame taxpayers for this delay notwithstanding the ATO's broad information request.

ATO comments on information gathering

7.96. The ATO in discussion with the IGT provided a range of specific comments on information gathering which have been included in this section. Given the importance of this particular matter for both parties the IGT has outlined some of the more important comments for mutual reference below.

7.97. The ATO commitment in the LBTC booklet is to engage with taxpayers in a cooperative manner to ensure that information gathering is conducted efficiently and in a way that minimises the costs to the taxpayer while enabling the ATO to obtain the documents and information it needs to perform its obligations as an administrator.

7.98. The ATO notes that the LBTC booklet sets out mutual obligations, as the efficiency and effectiveness of the information gathering process depends upon both sides working together.

7.99. The ATO acknowledges the concerns raised by taxpayers regarding the age of information requested. As the ATO works with the large market to obtain a more current picture of tax risks, it would like to see this issue diminish. However, there are some areas of the law and transactions where there is a requirement that taxpayers keep the relevant records for a number of years and taxpayers have an obligation to comply with those requirements (for example CGT events).

7.100. The ATO agrees that if certain practices that are not within the spirit or intent of the Taxpayers' Charter or the LBTC booklet (in the manner suggested by stakeholders to the IGT) do arise then this is not an appropriate outcome. The LBTC booklet commits the ATO to working cooperatively with taxpayers to ensure that information requirements can be satisfied taking into account their business needs and, as far as possible, minimising costs and delays.

7.101. ATO management indicated that if taxpayers are concerned that audit teams have not adequately taken into account their circumstances and they are unable to resolve this with the team, they are encouraged to escalate the matter to the senior officer nominated as their escalation point at the start of the case.38

7.102. The ATO advised that the issuing of formal notices does not necessarily imply a lack of cooperation from an ATO perspective. The LBTC booklet outlines circumstances in which these notices may be issued, including where a taxpayer requests it (which sometimes occurs where there is an offshore parent) or where the information relates to third parties.

7.103. In addition the ATO will use formal powers in situations where:

  • the informal process is no longer productive or where your circumstances, history or behaviour indicate that a formal approach is warranted; or
  • in some situations a formal approach may be adopted at the first instance, including where:
    1. you are a higher risk taxpayer;
    2. you have a history of being uncooperative;
    3. there are privacy, contractual, or confidentiality obligations (for example, former employees or third parties); or
    4. you request a formal approach in relation to third party information requests. In these cases, the ATO will work with the taxpayer to ensure that the information is sought efficiently while being mindful of the obligations of all parties.39

7.104. The ATO acknowledged that complex audits can take considerable time, especially where additional facts provided by the taxpayer as the audit progresses reveal the need for further enquiries. This can also occur where the taxpayer provides additional material or argument the ATO was previously unaware of, particularly at the draft or final position paper stage.

7.105. The ATO also said that taxpayers have the ability to influence the level of costs they incur, for example by engaging with the ATO in real-time to identify and mitigate tax risks and by providing early access to relevant documentation. The ATO noted that some taxpayers prefer to develop their own summaries of information in addition to that which the ATO requests, and this choice will usually involve additional cost for them when compared with providing the primary documents that the ATO has sought.

7.106. The ATO also suggested the Commissioner is entitled to seek all potentially relevant information and determine its relevance. If information is subsequently found to be superfluous or only indirectly relevant to the decision, the ATO suggests that this does not necessarily mean that seeking that information in the first place was inappropriate.

7.107. The ATO noted that it provides support to its compliance teams through the ATO Access Network as previously discussed with the IGT and also in reference to ATO responses to information requests. Where it is likely that a case will proceed to litigation, teams are also required to engage early with ATO Legal Services who assist the team to ensure that information gathering and other aspects of the case are conducted to ensure that evidentiary requirements are met.

7.108. ATO LB&I management also advised that it had established an Objections and Litigation network and that the LB&I Objections coordinator is working more closely with compliance teams to assist and support them in ensuring information gathering was appropriately targeted.

7.109. In addition to matters raised above the ATO also indicated that there are other reasons why a request may be framed broadly, including:

  • the ATO team may be seeking to develop a good overall understanding of the business and/or significant transactions occurring during a period;
  • the situation is one where in the ATO's view there has been a lack of cooperation in discussions about information gathering. In such cases, teams need to ensure they are able to obtain all potentially relevant information, and to avoid repeat requests, may well seek a wider range of information and documents than may have been requested had a more cooperative approach been taken previously; and
  • a need to understand transactions in a level of detail appropriate to the case. For example, the ATO may need to establish the flow of funds in transactions to have a proper appreciation of what has happened. Bank details help to evidence the flow of funds and are primary documents. The ATO advised that requests for primary documents of this nature should not imply a lack of trust. The ATO has an obligation to verify information to a certain level and that will vary depending on the case circumstances.

IGT observations

7.110. The IGT notes that information gathering in an LB&I compliance environment is a complex matter. Under a self-assessment tax system, the information required by the ATO to ensure that a taxpayer has correctly assessed their income tax liability resides with the taxpayer and third parties rather than the ATO.

7.111. During consultations with taxpayers and their advisers, there was recognition that information gathering is central to and of paramount importance to the ATO's compliance activities in this system. However, the manner in which the ATO gathers information from taxpayers has a significant bearing on the ATO-taxpayer relationship.

7.112. Where the ATO adopts a more transparent and cooperative approach to information gathering, the ensuing relationship is more likely to be productive and ongoing. However, where the ATO does not engage with taxpayers in an open, transparent and cooperative manner, it creates considerable uncertainty for taxpayers, increases their compliance costs and causes significant damage to the relationship between the ATO and taxpayers.

7.113. While taxpayers accept that the ATO should seek and obtain all the information that is required to make an assessment of a taxpayer's compliance, there is a strong belief that it should be required to do so in a way that minimises the costs to the taxpayer and does not require the production of unnecessary information.

7.114. The IGT found that the underlying principles behind the ATO's information gathering approach, as expressed in the revised LBTC booklet and Compliance Manual, are appropriate and balanced. For example, they emphasise the need to:

  • wherever possible, adopt an informal information gathering approach with constructive dialogue so that the ATO's information requests are clear and unambiguous;
  • ensure that information gathering is planned around the risk hypothesis and clearly stated evidentiary needs with auditors also progressively refining the risk hypothesis; and
  • notify and engage with taxpayers before moving to a formal information gathering approach so as to ensure there is transparency and due process when a decision is made to use formal powers (allowing for the LBTC booklet exceptions as listed).

7.115. The IGT believes that a major source of tension in risk reviews and audits is when the principles and commitments found in the LBTC booklet and Compliance Manual are not consistently followed during risk reviews and audits, especially where it leads to a breakdown in the consultative approach to obtaining information.

7.116. The IGT also found that there continues to be a tendency for some audit teams to rely on written queries when requesting information without any previous constructive dialogue with the taxpayer. This is at odds with the LBTC booklet which seeks to move away from an over-reliance on such written queries in the audit process towards a more 'face-to-face' and purposeful dialogue and has a significant impact on the efficiency of risk reviews and audits. As was noted in the Compliance Manual:

The most effective way to progress a case is to have face to face contact as frequently as possible, supplemented by written queries where necessary. It can be very difficult to phrase the 'perfect question' in written correspondence. Engaging in a conversation allows [the ATO] to work through issues without the undue delays that can occur if the same matter was raised in a written query or often several written queries. Wherever possible written requests should supplement information obtained through discussion rather than being the primary method to obtain information.40

7.117. The IGT considers that greater consideration must also be given to ensuring that those who are external to the audit team who provide guidance and assistance with the gathering of information (such as Case Leaders, technical specialists and other senior tax officers) remain accountable for how that information is collected and considered in the context of refining the risk hypothesis. For example, if a senior tax officer has been engaged in the planning for the information gathering and they advise the audit team that further information is required on a particular issue, then that senior tax officer must remain responsible for ensuring that:

  • the risk hypothesis is refined to reflect the information request;
  • the manner in which the information is requested minimises taxpayer compliance costs; and
  • after receipt and consideration of the requested information, the risk hypothesis is further refined to reflect this information and communicated to the taxpayer.

7.118. Discussions with ATO auditors also revealed some concerns with how taxpayers respond to information requests. Certain auditor teams expressed some frustration that information that should be readily available, especially at the risk review stage is often provided after much delay. This information is typically high level, pre-existing and would be prepared in the ordinary course of a taxpayer's business such as financial statements or a break-up of significant items on a taxpayer's income tax return or schedules.

7.119. Auditors expressed the view that the timely provision of information of this nature would allow them to quickly come to an assessment on whether a particular issue should be pursued further or whether no further action is warranted.

7.120. Auditors also expressed concern that some taxpayers, whilst responding to ATO requests, do so in a minimalist manner, possibly with the intent of delaying or frustrating the conduct of the audit.

7.121. The IGT supports the desire of ATO auditors to be able to quickly obtain key information and documentation that should be readily available at the outset of a risk review. The IGT considers that a fundamental aspect of a good relationship with the ATO must be the timely availability of this information especially where it is pre-existing and would be prepared in the ordinary course of a taxpayer's business.

7.122. The IGT considers that improved transparency, consultation and communication during the information gathering stage will significantly mitigate the issues and concerns raised by taxpayers and advisers in the course of this review. Importantly it will also minimise the significant taxpayer costs associated with information requests by allowing for the timely identification of scope, relevance and availability of the information.

7.123. Discussions with taxpayers, advisers and ATO auditors indicated that good consultation generally involved advance notice of information requests, constructive dialogue around the scope and relevance of the information requested and flexibility in meeting reasonable requests especially where the information is aged or not readily available. Following such a process greatly assisted in minimising compliance costs, while unnecessarily broad information requests lead to significant and unwarranted costs.

7.124. The IGT believes that this should be accompanied by enhancements in the ATO's assurance processes (such as its monthly reviews and IQF) to ensure greater conformance with the principles and commitments found in the LBTC booklet and Compliance Manual. As noted by the Compliance Manual, the shift from a cooperative to a less cooperative relationship is often difficult to judge as generally it is a result of a series of minor incidents or actions rather than a clearly identified point in time.41 Ultimately this is a question of judgement, to be exercised by those senior tax officers that have the delegated authority to request information pursuant to the Commissioner's formal powers.

7.125. Large business suggested that the move to use formal powers may have important reputational and commercial impacts. It is therefore important that when the ATO seeks to use its formal powers that expectations set out in the LBTC booklet and Compliance Manual have been met.

7.126. The IGT notes that auditors play a very important role in undertaking the Commissioner's duties. This role is not only critical to the Commissioner's adherence to the Federal Court rules for tax litigation, but fundamental to the ATO undertaking its risk review and audit functions in a professional, efficient and effective manner. As was noted in the ATO's Facts and Evidence Worksheet Guide:

That process of the identification of the issue, and the process of identification of and collection of the facts and material relevant to that issue, starts not during an appeal, not during trial and not even during preparation of trial...that process of ascertaining what the case is really about starts at the very earliest stage that the Commissioner deals with a taxpayer — whether that be through a risk assessment review, application for a ruling or an audit. As the High Court indicated, the ATO must identify 'taxable facts'. The ATO auditors must start the process of identifying the 'taxable facts'.

... the ATO and its advisers must acknowledge and accept the importance of the work done by the auditors and business line. The steps taken and questions asked by them will have a direct impact upon whether the legal and factual issues are correctly identified and investigated as early as possible. The processes adopted by the ATO and their legal advisers need to be focused and directed, and that process must commence at the earliest possible opportunity.42

7.127. Similar to the availability of technical specialists to assist in determining the ATO view or access specialists to assist with issues around legal professional privilege, the IGT believes that the ATO should provide greater legal support to auditors in determining the information and evidentiary needs for an audit.

Recommendation 7.1

The ATO should provide further details on its informal and formal information gathering processes, including its guidance on the section 264 notice issuance and legal professional privilege and accountants' concession claims, by publishing the ATO's 'Information Gathering in the Large Market' document on its website.

ATO Response

Agree.

We are currently reviewing the Information gathering in the large market paper to determine the most appropriate format for its publication.

Taxpayers and advisers can read details of our processes relating to section 264 notices, Legal professional privilege and the accountants' concession in the Access and Information Gathering Manual, which is available on our external website.

Recommendation 7.2

The ATO should incorporate appropriate checks and tests into existing assurance processes for informal information requests.

The ATO should:

  • provide the taxpayer with an information request;
  • give the taxpayer the opportunity to discuss the information request's scope, appropriateness and relevance with the ATO;
  • work with the taxpayer to identify acceptable substitute documents, where the documents requested are not readily available; and
  • make known to the taxpayer the reason for making the request, including a reference to the relevant risk hypothesis where appropriate (this may not be appropriate for certain third party information requests).

ATO Response

Agree in principle.

As you have noted in your report, the Taxpayers' Charter and LBTC booklet set out our commitment to work consultatively, cooperatively and our preference to use informal approaches wherever possible. Our Client Feedback Questionnaires and other feedback processes indicate that, in general, we have made significant improvements in this area.

In response to Recommendation 6.3, we noted that we are currently updating our monthly review process. This will include an appropriate focus on communication and engagement, including in relation to information gathering.

In relation to the third dot point in your recommendation, it should be noted that while we will discuss alternative information sources to assist in minimising compliance costs, there are times when we require specific documents and cannot always accept alternatives or substitutes.

Recommendation 7.3

To improve taxpayers' understanding and to provide transparency in the evidence gathering process, the ATO should provide more guidance on this process in the LB&I Compliance Manual.

ATO Response

Agree.

This will be achieved through our work to implement Recommendation 4.3, where we have agreed to publish the LB&I Compliance Manual. The manual is currently being revised and updated and this will include appropriate guidance on evidence gathering.

Recommendation 7.4

Where the ATO adopts a formal information gathering approach, the assurance processes need to ensure expectations set out in the LBTC booklet and Compliance Manual are properly met.

ATO Response

Agree.

This will be done in conjunction with updates to assurance processes referred to in our responses to Recommendations 6.3 and 7.2.

Recommendation 7.5

The ATO improve legal support to audit teams in preparing information requests and providing advice on the evidentiary needs of an audit.

ATO Response

Agree.

During the course of this review, we developed and commenced implementation of a number of changes that will improve technical and legal support for our teams in relation to preparing and managing information requests, including in relation to meeting evidentiary requirements.

These changes include:

  • strengthening the role of our technical networks within the business line to provide greater support to compliance teams
  • improved and earlier access to specialists outside the business line
  • revised arrangements for the engagement of Case Leaders

Recommendation 7.6

The ATO should in consultation with the Large Business Market consider whether an ATO publication be developed, that is more expansive than the LBTC booklet and yet narrower and more targeted in focus than the ATO's Compliance Manual, and is directed at 'Audit and Risk Review' issues with a taxpayer-specific audience.

ATO Response

Agree.

As part of our planned work to review and consult on the development of the next LBTC booklet, we will also work with our Large Business Advisory Group and other stakeholders, where appropriate, to determine the need for such a publication.


1 Please note that during the course of this review the ATO advised the IGT that the LB&I Compliance Manual is in the process of being revised and updated. The discussion and reference in this report are to the current version and may not be reflective of the revised version when it is released.

2 LB&I Compliance Manual, Chapter 11, p 4.

3 LB&I Compliance Manual, Chapter 11, p 7.

4 LB&I Compliance Manual, Chapter 11, p 7 and p 13.

5 LB&I Compliance Manual, Chapter 11, p 7.

6 LB&I Compliance Manual, Chapter 11, p 8.

7 LB&I Compliance Manual, Chapter 11, p 8.

8 LB&I Compliance Manual, Chapter 11, p 4.

9 LB&I Compliance Manual, Chapter 11, p 8.

10 LB&I Compliance Manual, Chapter 11, p 16.

11 LB&I Compliance Manual, Chapter 11, pp 17-18.

12 LB&I Compliance Manual, Chapter 11, p 18.

13 LB&I Compliance Manual, Chapter 11, p 16.

14 LB&I Compliance Manual, Chapter 11, p 16.

15 LB&I Compliance Manual, Chapter 11, pp 23-24.

16 LB&I Compliance Manual, Chapter 11, p 23.

17 LB&I Compliance Manual, Chapter 11, p 23.

18 LB&I Compliance Manual, Chapter 11, p 23.

19 LB&I Compliance Manual, Chapter 11, p 23.

20 LB&I Compliance Manual, Chapter 11, p 23.

21 LB&I Compliance Manual, Chapter 11, p 23.

22 Generally, for income tax purposes the formal approach involves using:

  1. Section 263 of the ITAA 1936 for access to buildings, places, books, documents and other papers;
  2. Section 264 of the ITAA 1936 for compelling taxpayers or individuals to furnish information, attend and give evidence (including sworn evidence) and produce documents; or
  3. Section 264A of the ITAA 1936 for requests for the production of documents or information where there is reason to believe that such information or documents may be held offshore.

23 LB&I Compliance Manual, Chapter 11, p 25.

24 LB&I Compliance Manual, Chapter 11, p 25.

25 Large Business and Tax Compliance, p 30.

26 LB&I Compliance Manual, Chapter 11, p 24.

27 LB&I Compliance Manual, Chapter 11, p 24.

28 LB&I Compliance Manual, Chapter 11, p 31.

29 LB&I Compliance Manual, Chapter 11, p 31.

30 LB&I Compliance Manual, Chapter 11, p 31.

31 LB&I Compliance Manual, Chapter 11, pp 32-33.

32 LB&I Compliance Manual, Chapter 11, p 33.

33 LB&I Compliance Manual, Chapter 11, p 33.

34 LB&I Compliance Manual, Chapter 11, p 33.

35 LB&I Compliance Manual, Chapter 11, p 33.

36 LB&I Compliance Manual, Chapter 11, p 33.

37 LB&I Compliance Manual, Chapter 11, p 33.

38 Large Business and Tax Compliance, pp 29-30, 44.

39 Large Business and Tax Compliance, p 30.

40 LB&I Compliance Manual, Chapter 11, p 16.

41 LB&I Compliance Manual, Chapter 11, p 23.

42 Facts & Evidence Worksheet Workshop Participant Guide, p 10.