Reasons for issuing a notice
In most situations, we will only issue a notice after attempting to obtain the information by using a cooperative approach. In some cases, we may need to use our notice powers in the first instance.
We may decide to issue a notice when:
- we need to ensure the efficient use of our resources
- you have requested us to issue a notice to you
- your compliance behaviour warrants the issue of a notice
- there are privacy, contractual or confidentiality obligations, such as when a third party or another government agency possesses information relevant to our enquiries
- we are seeking oral evidence on oath or affirmation
- we have been unable to acquire the information using our access powers
- you have ignored a request or given an unsatisfactory response, such as an ambiguous reply
- we have genuine concerns that documents could be lost or destroyed.
Before issuing a notice, we will consider the importance and relevance of the information or evidence we are seeking. We try to ensure that:
- our notice is not made for information that is already recorded on our systems
- information you have already given is not sought in the notice – this does not include information we consider to be vague or incomplete, or where it appears you are making false or misleading statements
- the cost and disruption of the notice to both parties is minimised.
In cases where the information or evidence is held by you as well as a third party, we will generally seek to obtain the information from you first.
To ensure that community confidence in the tax system is maintained, we take firm action against those we suspect are involved in tax avoidance. In these circumstances we may:
- conduct our compliance activities without informing you
- issue our notice to third parties about your affairs without informing you or asking you directly.
Example – Issuing a notice due to previous conduct
One year ago, we conducted a risk review on John. Although John and his tax agent had discussions with us during the risk review, they did not give us the information or documents we requested.
This year John receives a notice of intention to audit letter from us. He is likely to receive a notice to give information during the current audit because of his history in failing to cooperate with us the previous year.
End of example
Cycle of a notice
Figure 4 shows the cycle of a notice. If we decide to issue a notice, it is prepared, authorised and issued. If the information is received by the due date we analyse it and may issue an assessment.
If we have not received the information by the due date we will either:
- give an extension of time
- refer the matter for prosecution.
Figure 4 Cycle of a notice
Enquiries about current or future tax affairs
In addition to past income years, our notices can require information about current or future years, or both. For example, our enquiries may involve gathering information and documents about the disposal of an asset before the relevant income tax return has been lodged.
This approach allows us to gather information earlier. It is also important for our understanding and knowledge of your tax affairs and the market and economic conditions in which your business operates. It allows us to detect risks early, respond to emerging problems as they arise and help ensure your compliance for the years under review.
This type of enquiry may take many different forms, including but not limited to:
- an enquiry, review or audit of your tax affairs before the associated reporting or lodgment requirements fall due
- gathering intelligence
- monitoring revenue collections
- enquiries from data analysis
- examining your tax planning for proposed legislation
- an audit into aggressive tax planning practices.