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4 April 2008 
 
Following on from the release of the ALRC's report entitled: Report Privilege in Perspective: Client Legal Privilege in Federal Investigations, the Institute is continuing to advocate for statutory privelege with respect to tax advice provided by appropriately qualified and regulated professional accountants. 
 
On 4 April, the Institute wrote to the Attorney-General, the Hon Robert McClellland MP, supporting the ALRC recommendations in this regard. A copy of this letter is attached here. 
 
This issue has also been raised with the Assistant Treasurer, the Hon Chris Bowen MP, on a number of occasions. 
 
13 February 2008 
 
The Australian Law Reform Commission (ALRC) Report Privilege in Perspective: Client Legal Privilege in Federal Investigations was tabled in Parliament on 13 February 2008.  
 
The ALRC has made 45 recommendations in its Report. In a media release issued by the ALRC, the Commissioner in charge of the Inquiry, Professor Rosalind Croucher, said that the central idea behind these recommendations is the need for a single federal statute addressing the application of privilege in all federal investigations.  
 
Among the key recommendations is the extension of legal privilege to advice on tax law provided by independent professional accounting advisers, where that advice is sought by the ATO. In effect, this would formalise the ATO’s ‘accountants’ concession’. This was proposed in the Discussion Paper and strongly supported by the Institute’s submission referred to above. The Institute welcomes this break through. 
 
A number of Institute’s other recommendations in our submissions, have not been accepted in the report. The most significant of our recommendations that was accepted, is that independent professional accounting advisers should not be limited to registered tax agents. We are pleased that the ALRC has recommended that such advisers should also extend to tax agents’ nominees or employees who are qualified tax accountants.  
 
The Institute now needs to continue working with the Government to ensure the implementation of the ALRC’s recommendations as well as seeking improvements to it. 
 
Background 
 
Prior to the Attorney-General formally requesting the Australian Law Reform Commission (ALRC) to conduct a review into client legal privilege, the Institute had already been seeking a form of statutory privilege to protect the confidentiality of the communications between suitably qualified and regulated non-legal tax advisors and their clients for some time. Our efforts included the following submissions to the Australian Taxation Office (ATO) and also the Department of Treasury:

• On 21 December 2004, a submission was made on the chapters 6 and 7 of the ATO’s Access and Information Gathering Manual, which discussed legal professional privilege and access to professional accounting advisors’ papers respectively. It should be noted that the concession granted by the ATO to the accountant is purely an administrative one and there is a significant risk that the accountants and the ATO have differing views in terms of whether the concession is available in certain circumstances. This submission discussed how those circumstances can be limited and, how the accountants’ concession could be improved more generally. 
   
  
• On 3 October 2006, the Institute lodged a submission to the Department of Treasury, which is in connection with the review of taxation secrecy and disclosure provisions. In this submission, the main focus was on the possibility of introducing a statutory privilege that protects and the confidentiality of the communication between suitably qualified and regulated non-legal tax advisers and their clients whilst fully supporting legal professional privilege in its current form.

• Recommendations on the means of Extending a Concession to Accountants and Registered Tax Agents 
  
• Rationale for reform of Client Legal Privilege 
  
• The Need for Statutory Codification 
  
• Client Legal Privilege and Corporates

• That the recommendations which would apply to registered tax agents be extended to their nominees and employees 
  
• The requirement that only a lawyer, and not a tax agent or its nominees or employees, should certify whether a tax advice document ought to be protected is not justifiable 
  
• Same requirement for certification by a lawyer only, in a pre-curial federal investigation is unwarranted

• What the “tax advice document” should include 
  
• Generally, neither the tax agent nor the client should be compelled to disclose oral advice 
  
• Civil penalty exception is only relevant to the civil penalties in the promoter penalty provisions 
  
• Proposal 6-3 should apply prospectively to any federal investigation.