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Section 264 notices

I have blogged previously about the ATO’s powers to force taxpayers to hand over documents and give evidence*. Recently I have applied the very narrow limitations imposed by the ANZ case in a number of s264 notices.


The powers of the ATO to issue these notices are very wide, but the ATO must get the wording of the notices right.  If the notice is vague, or uncertain, or in the words of the Full Federal Court if the notice “leaves too much of its meaning and application to be worked out by [the recipient]” then the notice will be invalid.
Objecting to a s264 notice on these grounds is not a final remedy.  The ATO can always re-issue a notice, even assuming that they agree with your argument that the notice is too unclear.  Furthermore, you must have very strong grounds because if you are wrong the ATO has the option to prosecute you for failing to comply.  Multiple offences can lead to imprisonment.
The broader issue is one of a recurring nature. The government has handed the ATO with an extremely large stick for investigating taxpayers, and for that matter, their advisers and service providers such as banks. The ATO can, and often does, use s264 notices for fishing expeditions. They are specifically allowed to do so. Because of their virtually unfettered power, in some cases the ATO officers are sloppy and lazy when drafting s264 notices.  The ANZ case makes it clear that because of the seriousness of the consequences of failing to comply with a s264 notice (ie jail time) the ATO must make the notices clear.  If the recipient has to guess at the ATO’s meaning, this is not good enough.
This is particularly so where the ATO is asking information of an accountant or lawyer with respect to their clients. If the adviser has to guess at the meaning of the s264, and guesses wrong (i.e. gives more information than the notice intended to the client’s detriment), it is likely the client would have a claim against the adviser for breach of express or implied duties of confidentiality.
If you receive a s264 notice and you are concerned as to its meaning and your duty to respond to it, please feel free to get in contact with me to discuss it.

* under section 264 of the Income Tax Assessment 1936 and section 353-10 of the Taxation Administration Act 1953

Posted in: Tax & ATO News Australia at 22 March 13

ATO has a broad power to access documents and obtain information

The ATO has a broad power under s264 (1)(a) of the Income Tax Assessment Act 1936(Cth) to request any person to furnish the ATO with information that the ATO may require.


In December 2010, the ATO issued ANZ Bank with two s264 notices requesting that ANZ provide details of more than 1,300 Vanuatu accounts held by Australia from its digital database called “Global Digital Warehouse”.
On 9 March 2012, the Federal Court of Australia handed down a decision in favour of the ATO that the two notices were valid. The Federal Court rejected ANZ’s submission that production of the information to the ATO would be oppressive, breach confidentiality and violate secrecy provisions enacted in Vanuatu.
ANZ then instituted an appeal in the Full Federal Court of Australia. On 12 September 2012, the Full Federal Court of Australia dismissed ANZ’s appeal and held that s264 authorises the ATO to issue a notice to ANZ requiring it to furnish information that is stored in Australia. The Full Court agreed with the Federal Court that the production of the information would not be oppressive, would not breach confidentiality nor breach the non-statutory obligations of confidence under the law of Vanatu.
While the appeal was dismissed, ANZ had a small victory in that the Full Court held that one of the notices was invalid due to uncertainty. However, due to the broad powers given to the ATO under s264, it is anticipated that the ATO will simply reissue the notice to obtain the information anyway.
This case demonstrates that s264 confers very broad investigative powers on the ATO. As such, this could implicate many other Australian businesses.
A notice under s264 should not be treated lightly. If you receive a notice, you are legally obliged to respond to the notice otherwise you may face serious consequences.  I would recommend anyone who receives such a notice to seek professional taxation advice immediately.

Posted in: Tax & ATO News Australia at 04 March 13


Tax & ATO News Australia

Author: David Hughes

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