For your eyes only

binäre optionen profi trader Accountants often provide advice specific to tax law, but your client communications are not legally privileged. That needs to change. The idea of extending legal privilege to tax advice from professional advisers is not new. But in light of the changing legal landscape, ongoing need and repeated recommendations, it is worth seriously considering again. Case for legal backing

In its pre-Budget submission for the 2015/16 financial year, the Institute of Public Accountants recommended that the government introduces legal privilege for registered tax agents.

The basic argument is simple. The tax legislation makes an allowance for accountants to give legal advice specific to tax law. However, because they are not lawyers, any communications in relation to that advice are not privileged. If a lawyer gave the same advice, it would be.

opzioni binarie demo senza deposito trackid sp 006 “It doesn’t sit right in principle,” says Tony Greco, the Institute’s general manager of technical policy. “Lawyers are able to provide advice about the law. Tax law, at the end of the day, is just a bunch of laws confined to tax. “We have the same authority to provide advice, but you can’t give the client the same level of assurance that the relationship remains confidential.” Greco readily admits there is some limited protection in place, thanks to the Australian Taxation Office’s accountants’ concession. This is an administrative arrangement restricting access to accountants’ papers in “all but exceptional circumstances”. In practice, it requires a detailed form to be filled out to both make and justify a claim to confidentiality.

“It’s a bit ironic that the revenue authority is the one that provides the concession,” says Greco. “It is at their discretion, and we want to have something stronger than that.”

John Azzi, an academic at the University of Western Sydney, also sees the need for stronger legal backing. His research found that: “If the commissioner [of taxation] decides to lift the concession and access documents, the scope for overturning this decision is extremely limited.”

Rather than creating a right, all the concession does is create a weaker legal protection called a legitimate expectation. And, of course, the arrangement can always be abandoned or changed at any time by the tax commissioner.

Who deserves protection?

A distinction is often emphasised for lawyers: the privilege belongs to the client, not the professional. In the legal community, there has been a shift away from the phrase ‘legal professional privilege’ to the phrase ‘client legal privilege’. This not only clarifies the distinction, but comes from the wording used by the High Court and the uniform Evidence Acts. While the client is free to breach the confidence at any time, the professional must not. Privilege Street only runs one way.

With this in mind, it is perhaps more accurate to call for the privilege to be extended to the clients of tax agents. It is the clients who are potentially harmed by a forced disclosure to the ATO, and so it is the clients who deserve this protection.

This point was reinforced by a High Court case in 2010, with actor Paul Hogan and his manager John Cornell unsuccessfully seeking to stop their financial documents from  being made public, as part of a long-running battle with the ATO over alleged unpaid tax. The case confirmed that the accountants’ concession does not protect documents that are in the possession of someone other than the taxpayer or the adviser. The concession applies only to the accountant; privilege, however, would protect the client, whoever happens to be in possession of the confidential documents. On the backburner

The Australian Law Reform Commission first formally recommended privilege for tax advice in 2007.

It was a call picked up in 2011 by the then assistant treasurer, Bill Shorten, with a discussion paper aimed at “exploring the merits” of the idea. However, there has been little movement on the issue since that time.

Asked why the proposal hadn’t gained traction, Greco says it was likely due to opposition from the legal fraternity. But he also identifies a lack of political will. “There’s no votes in it,” he says. “Other priorities have got in the way and accountants aren’t exactly high on the list of recipients of anything these days.”

Greco says the legal environment has changed since 2007, too. With a code of practice for the tax community and obligations under taxation services legislation, there is a structure to which privilege could apply.

informatica operazioni binarie Limits and limitations

The IPA has suggested the preferred model would only apply to advice from registered tax agents who are members of professional associations. Greco argues that since about 85 per cent of the tax practitioner community is already linked with a professional body, this isn’t too drastic a limit.

“Some would argue it’s a vested interest,” he says, “but it’s more rigour on top of the tax legislation, and the professional bodies should be favoured because of that extra rigour.”

Finally, it’s worth thinking about the limits of confidentiality in the modern world. We live in the age of WikiLeaks, cloud computing and metadata retention. Documents and information are stored and vulnerable in new ways that are not yet fully understood.

Extending privilege could help make confidentiality more effective. It’s about having something strong to rely on if needed.

And it’s a protection that is long overdue. 

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