ATO releases new legal professional privilege protocol

The Australian Taxation Office (ATO) has published its legal professional privilege (LPP) protocol for taxpayers who do not wish to provide details of some communications.

ATO Deputy Commissioner Rebecca Saint said yesterday the new protocol had been developed to address ATO concerns where LPP claims were inappropriately asserted, either deliberately or through taking shortcuts, with the result that key materials, facts, and evidence were inappropriately withheld from the ATO.

Ms Saint said the ATO supported the right of all taxpayers to get high-quality professional advice and respected the right of taxpayers to keep their legal advice confidential if they chose.

However, she said the ATO also relied on ongoing engagement with taxpayers and their timely provision of information to establish the facts for review and audit purposes.

The protocol appears to have received guarded support in the legal profession, but the nation’s peak legal body said it believed more needed to be done to ensure confidentiality of privileged material continued to be protected.

Law Council of Australia President Tass Leveris said the Council appreciated the purpose and objectives of the protocol and the ATO’s attempts to assist advisers and taxpayers work through LPP matters.


“LPP is an important aspect of Australia’s system of administration of justice and facilitates the rule of law in the public interest,” he said. “The LCA commends the ATO on its willingness to consult on the development of the protocol and we are grateful for the opportunities we have been provided to contribute to this work over many years.

“Whilst the protocol correctly acknowledges that LPP is a fundamental common law right and the court is the ultimate decision-maker in respect of LPP claims, we must ensure LPP is always respected and not put at risk.”.

In the LCA’s submission on 19 November 2021, concerns were raised, among other things, about instances where the ATO appeared to be requesting information about the subject matter of advice, including information such as subject lines.

In the protocol, the ATO recommends the provision of particulars including “a title or subject line of the communication, except to the extent that disclosure of the title or subject line would also disclose the content of legal advice”.

Mr Liveris said: “As we highlighted in our submission, LPP belongs to the client and lawyers are obliged to maintain confidentiality over privileged material.

“The topic or subject matter upon which advice is given, or in respect of which advice is sought, is as much a part of the confidential communication as is the other parts of the content of that communication. For that reason, it is immune from compulsory disclosure.


“We are concerned that a government agency asking for this type of information can unwittingly lead a member of the public who is not regularly involved in the law of LPP to think that it is appropriate that this information be provided.

“If it were to be provided by a practising lawyer, it may put the lawyer in breach of his or her ethical duties to their clients.

Deputy Commissioner Saint said the ATO believed the new protocol supported the right of taxpayers to keep their legal advice confidential, while at the same time giving taxpayers a robust framework to enable the ATO to have confidence that all other relevant documents have been provided.

“Reckless LPP claims over non-privileged documents unduly hinder ATO investigations and lead to extended disputes about information gathering, instead of focusing on the resolution of the substantive issue,” she said.

“These issues have largely arisen in relation to privilege claims made by large businesses that have received a formal notice as part of a dispute or audit activity.

“However, the vast bulk of our engagements with large businesses are done without recourse to formal information-gathering powers.”


Ms Saint said the ATO had the power to compel the production of information and documents as part of its investigations.

“However, we cannot compel the production of information or documents where the underlying communication is privileged,” she said.

“The courts have supported the ATO’s view that we can request details of LPP claims. Whilst we respect and accept appropriate claims, we require sufficient information to be able to decide whether to accept, review, or challenge a claim of LPP.

“Failure to take reasonable care when making LPP claims in response to a formal notice may result in non-compliance with the notice.

“There can be serious implications for non-compliance with formal information gathering notices, including prosecution.”

Ms Saint said she believed the protocol would help taxpayers and advisors have confidence about their LPP claims and ensure that they were meeting their legal obligations under the notice.


Access the ATO legal professional privilege protocol.

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