As a part of the ATO’s extensive information-gathering powers, it can compel taxpayers to furnish or produce certain documents. However, information and documents where the underlying communication is privileged do not have to be provided. Legal professional privilege (LPP) operates as an immunity from any obligation to disclose documents created by these powers.
Recently, the ATO released a protocol which contains its recommended approach for identifying communications covered by LPP and making LPP claims. While it’s voluntary to follow the steps outlined, it’s more likely that the ATO will accept LPP claims without further enquiries if the protocol is followed.
The protocol applies to both legal practitioners and non-legal practitioners and all LPP claims, regardless of the firm or business structure within which the service or engagement is provided.
The protocol itself contains three steps for taxpayers who receive an information-gathering notice and wish to make an LPP claim:
- assessing the full situation and all of the communications involved;
- explaining the basis of the LPP claim; and
- advising the ATO how the LPP claim was approached.
Legal professional privilege is a highly contested area and whether a document or information is subject to LPP can depend on the facts of your individual case. If you are issued a notice under the ATO’s formal information-gathering powers, as your advisor we will assist with the process and help work out which documents are subject to LPP under the new protocol.