Under section 264, the Commissioner may require any taxpayer
provide information (section 264(1)(a))
give evidence concerning their own or any other person's
tax affairs (section 264(1)(b))
produce documents and records relating to their own or any
other person's tax affairs (section 264(1)(b)).
The Commissioner argued that the deposits made into a joint
Commonwealth Bank account over a period of 8 years were assessable
income and issued amended assessments. The taxpayer objected on the
basis that the deposits represented loan repayments and were
therefore not assessable income.
In response, the Commissioner issued a section 264 notice
requiring the taxpayer to provide details of various bank accounts
and evidence of loans.
The taxpayer challenged the validity of the notice on the
Compliance would amount to self-incrimination.
Legal professional privilege applied in respect of professional
The request was misleading, confusing and unreasonable.
The notice was issued for the improper purposes of obtaining
admissions or pre-trial discovery or other advantage in future
The Full Federal Court rejected the argument that the notice was
subject to self-incrimination privilege because the taxpayer's
privilege claim was hypothetical and was not made in respect of any
particular requirement in the notice.
The Court also rejected the taxpayer's submission that the
notice was misleading or issued for an improper purpose. The notice
was issued pursuant to a proper function of the Commissioner. The
purpose of issuing section 264 notices is to allow the Commissioner
to gather information so that he can make a decision on the
The Commissioner issued two section 264 notices to ANZ Bank
requiring it to provide documents and information about customers
who had accounts with it or its subsidiaries in Vanuatu.
ANZ argued that the notices were invalid on the following
Compliance would breach common law confidentiality obligations
owed by the bank to its customers.
The requests sought information about customers in Vanuatu who
may not be Australian tax residents.
The notices were uncertain and oppressive.
The Full Federal Court upheld the validity of the first notice
but ruled that the second notice was invalid because of uncertainty
in the information it required ANZ to provide.
In reaching this conclusion the Court made several
Section 264 confers very broad investigative powers on the
Commissioner so that he can perform his responsibilities under the
A section 264 notice overrides any contractual obligation of
The request for information is not restricted to information
relating to Australian taxpayers.
The second notice was found to be uncertain because of the use
of the word 'officers'. It required ANZ to examine the
definitions of 'officer', 'director' or
'agent' by reference to applicable Vanuatuan legislation.
It was also uncertain because it did not sufficiently define, by
criteria or by reference to the information known by ANZ, the
information that ANZ was to produce.
What these decisions mean for taxpayers
The Commissioner has signalled his intention to increase the use
of section 264 notices as part of his audit and review
It is important for taxpayers to understand that they are
legally bound to respond to the Commissioner's request and
there are serious consequences for a failure to comply.
Recipients of section 264 notices also need to take care in
responding so that they do not inadvertently waive claims for legal
professional privilege or breach confidentiality requirements.
Taxpayers need to tread carefully so that they respond in a way
that complies with the notice but does not divulge information that
is not required by the notice or information that may be
Winner - EOWA Employer of Choice for Women Citation 2009, 2010
Winner - Australasian Law Awards Gold Employer of Choice 2011
Finalist - ALB Australasian Law Awards 2008, 2010 and 2011 (Best
Winner - BRW Client Choice Awards 2009 and 2010 - Best Australian
Law Firm (revenue less than $50m)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).