Though we can use both formal and informal powers to gather information, where there is a commitment by you to fully cooperate with our requests we prefer to work informally to minimise cost and disruption to both parties.
We will use formal powers where the circumstances require it, such as when you request it, when informal requests for information have not been satisfied, or if we have not been able to use an informal approach to gain access to senior personnel to obtain an exact picture of an arrangement.
Having the full facts quickly, along with the relevant supporting evidence, enables us to establish our position and inform you of it as soon as we can. In our experience, delays in receiving information are one of the major causes of the timespan for a review or audit being extended.
Information includes documents evidencing an intention, election, choice, estimate, determination or calculation. 'Documents' can include paper and electronic communications including emails.
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We prefer an informal approach to gathering information based on you demonstrating your proactive support and action to meet our information needs. This means that you will assure or advise us:
- that searches for information within the large business group (including, where relevant, within its overseas associates) have been undertaken to the greatest possible extent
- that you have provided full details of what information is available to meet our requests, and when such information will be available
- if a staged approach to providing information can be undertaken
- that information provided is in user-friendly formats that enable us to readily analyse information or data
- when you encounter difficulties in meeting our timeframes and the actions you will take to mitigate delays.
When issues arise our compliance team will make every reasonable effort to resolve them and if necessary, refer the matter to more senior officers for resolution.
An informal approach to information gathering still means you are accountable for the accuracy and completeness of information you provide.
An appropriate record of our conversations, including meetings and interviews, is an essential part of the informal approach. In normal circumstances we will provide you with a summary of the key issues discussed and the agreed action items resulting from the meeting. With prior consent, we may make a verbatim record of important meetings and interviews.
It is an offence to make a false or misleading statement to a tax officer even if the conversation or interview is undertaken on an informal basis (under Subdivision B of Division 2 of Part III of the Tax Administration Act 1953).
Expectations during informal approaches
Informal approaches presume full cooperation. You can expect that we will:
- engage you in constructive dialogue so that our information requests are clear and unambiguous
- plan our information gathering around the risk hypothesis and clearly stated evidentiary needs – the plan will include agreed milestones and timeframes
- have face-to-face discussions with you to develop the key information gathering questions if appropriate
- actively manage information requests with timely escalation, if needed, when delays or unforseen events arise
- adopt a transparent process.
We expect that you will:
- engage in constructive dialogue with us
- meet agreed timeframes
- provide complete and timely information
- provide access to key decision-makers and senior personnel
- work with us to ensure that the compliance activity proceeds in an efficient and timely way.
In some cases relationships can be tested. The change from a cooperative to a less cooperative relationship is often difficult to pinpoint because it generally results from several incidents or actions rather than a clearly identified single point. We acknowledge that differences will occur; however, persistence, openness and a willingness to understand the other view or position will help in resolving any issues.
If there are any issues that need to be escalated, you will have access to senior level decision-makers.
Generally, when we decide that using formal powers is necessary, we will advise you that we intend to use them and the reasons for doing so.
We will use formal information gathering powers when the informal process is no longer productive or if your circumstances, history or behaviour indicate that a formal approach is warranted.
There are some situations where we may adopt a formal approach in the first instance, including where there:
- is a history of uncooperative behaviour
- are privacy, contractual, or confidentiality obligations – for example, involving former employees or third parties
- is a need to obtain an exact picture of an arrangement or transaction.
In other cases it may be necessary during the course of an audit or review to move from an informal to a formal approach. This can occur where:
- a reasonable level of cooperation is lacking
- there are ongoing or persistent delays in providing information.
For example, we would use formal powers where:
- the information provided informally only partially answers our requests
- a response has qualifying statements attached to it or is redacted without a valid claim for the corporate board tax risk advice concession
- access to senior personnel involved in the issues is restricted, for example, in cases where intention is an issue
- representatives request that all requests for information be put in writing and take a legalistic and literal approach to responding
- documents, people and other evidence are purposely placed outside our jurisdiction
- claims are made for legal professional privilege or that the accountants' concession or corporate board tax advice concession applies – without providing sufficient information to enable us to properly assess the veracity of the claims.
Expectations during formal approaches
You can expect that we will:
- treat you fairly and, as far as possible, in a non-intrusive way
- give you reasonable notice of our intention to use our formal powers in all but exceptional circumstances
- explain why we are requesting information
- clearly identify the objects of any examination
- keep information requests relevant and focused
- consider requests for an extension of time to comply with a notice
- keep records of your personal information safe and secure
- respect your rights and discuss with you the basis of any claims for legal professional privilege, the accountants' concession or that advice on tax risks to a corporate board is subject to an administrative concession in accordance with PSLA 2014/14. This will not adversely impact our view of your cooperation.
We expect that you will:
- provide a full response in a timely manner to all enquiries
- notify us if you have difficulty complying by the due date
- be prepared for any formal interview.
Though we can use both formal and informal powers to gather information, we prefer to work informally and build good relationships to minimise cost and disruption to both parties.