Home » News » Court of Appeal rules the ATO is lawfully entitled to share information in case of taxpayer charged by the Commonwealth DPP for attempting to unlawfully obtain R&D tax offset

Court of Appeal rules the ATO is lawfully entitled to share information in case of taxpayer charged by the Commonwealth DPP for attempting to unlawfully obtain R&D tax offset

The matter concerns an individual charged by the Commonwealth DPP for attempting to unlawfully obtain a refund under the R&D Tax Incentive.

Before being charged, the taxpayer was compulsorily examined by the ATO.

The individual had applied to stay the proceedings against them partly by arguing that the ATO had unlawfully distributed transcripts of examinations with other government agencies (namely AusIndustry). The primary judge of the District Court agreed with the taxpayer, and the prosecution applied to the Queensland Court of Appeal, which overturned the primary judge’s decision in an order delivered on 3 April 2024.

The Court of Appeal also held that there was no reason to adopt a pseudonym for the individual.

Some notable extracts from the appeal decision include:

• The relevant provisions of the TAA give the Commissioner of Taxation the power to obtain information and evidence compulsorily (division 353, in particular, s 353-10). A person served with a notice under s 353-10 cannot refuse to attend, answer questions or provide information, including where to do so may incriminate them. The relevant provisions of the TAA also expressly deal with the circumstances in which such evidence or information, compulsorily obtained, may be disclosed and used (division 355). The starting point is an obligation to protect the confidentiality of taxpayers’ affairs (s 355-10(a) and the offence provision in s 355-25). However, that protection is qualified – it is subordinate to the statutory object of facilitating “efficient and effective government administration and law enforcement by allowing disclosures of protected tax information for specific, appropriate purposes” (s 355-10(b), and the exceptions provided for, inter alia, in s 355-50 and s 355-70)  
•  Section 355-50 of the TAA expressly authorises disclosure by a taxation officer to “any entity, court or tribunal” of protected information “in performing [their] duties as a taxation officer”.
• The disclosure of the transcript of the compulsory examination (or, as it seems, parts of it) to AusIndustry, was expressly authorised by s 355-50 of the TAA ;
• The respondent requested that this Court adopt a pseudonym in lieu of her name as the respondent to this proceeding. The request was made on the basis that, first, the primary judge had agreed to do so; secondly, she was concerned about the dissemination of confidential information related to research she has been involved in; and thirdly, she was concerned about the impact of the proceedings on her reputation. We are not persuaded there is any basis for adopting a pseudonym for the respondent’s name. The reasons why the primary judge acceded to the respondent’s request for the adoption of a pseudonym are not apparent but, in any event, are not binding on this Court; there is no question of disclosure of any confidential information in these reasons; and the possibility of reputational damage is simply a corollary of the principle of open justice.  

Swanson Reed supports the work undertaken by the programme regulators in upholding the integrity of the R&D Tax Incentive.

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