It does not matter if in due course the scheme fails to provide that advantage - what is important is the taxpayer's intention in entering into the scheme. Often these commercial advantages prove illusory. Consequently, practitioners should be most careful to ensure that they cannot be said to be negligent in providing a client with inappropriate commercial advice. The Commissioner can also require a person to produce all books, documents and other papers in his custody or under his control which relate to such income or assessment. Practitioners have been concerned about the effect of their having to identify to the Taxation Office those of their clients who have entered into schemes on their relationships with those clients.
Legal practitioners have, however, a major advantage over accounting practitioners.
Since last June there have been two decisions involving the interaction of s.264 and legal professional privilege. The Taxation Office sought to know to whom that firm had provided advice in respect of non-complying superannuation fund arrangements. Coombes refused to comply with that request and the Federal Court agreed with Coombes that he did not have to. This was because Deacons Graham and James had circulated to clients a memorandum detailing the scheme. Had the Taxation Office been successful in obtaining the names of clients it would have been able to link that memorandum with those clients - this would have had the practical effect of disclosing communications between the firm and its clients.