Case: Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 116 ALR 535
Outcome: cited
The TAA contemplates that information might be disclosed to prosecutorial bodies or law enforcement agencies for the purposes of the tax law. Inherent in the secrecy constraints and the prescription of the conditions upon which information might be disclosed is the recognition that the Commissioner has information made up not only of information supplied by a taxpayer in the ordinary course of self assessment but information obtained by the Commissioner through the exercise of powers, for the purposes of the Act. The general administrative power comprehends that the Commissioner may seek to closely investigate particular arrangements put in place by a taxpayer and especially those involving complex structural arrangements reflecting interposed entities, offshore payments or receipts, inter-company transactions and other arrangements which might reflect tax related contraventions of the Criminal Law of the Commonwealth. The Commissioner may seek to pursue an investigation through his own officers or may seek to cooperatively engage law enforcement agencies especially the Director of Public Prosecutions or the Australian Federal Police (see Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 116 ALR 535). 110 In circumstances where the arrangements under examination involve complex financial analysis, no doubt the Commissioner's officers would undertake such investigation or analysis, form a view and where appropriate brief law enforcement agencies with an assessment of the consequences of the conduct. The failure to confer an express power upon the Commissioner by operation of the Criminal Code , the AFP Act or the Crimes Act does not lead to a construction that the Commissioner does not have the power to conduct an investigation of conduct which might express itself in the form of a contravention of the Criminal Law of the Commonwealth concerning tax related matters. The source and repository of prosecutorial power in respect of any particular offence is another question. 111 The role of law enforcement agencies in connection with the investigation of the possible commission of offences by taxpayers or the possible prosecution of taxpayers by law enforcement agencies does not lead to the conclusion as a question of construction of the ITAA 36, ITAA 97 or the TAA that only a law enforcement agency has power to investigate conduct which finds its expression in the commission of an offence and in particular, the commission of an offence against s 134.2(1) of the Criminal Code by conduct involving, as contended in this case, a deception to dishonestly obtain a financial advantage from the Commissioner by securing a reduction in the quantum of the tax debt owed to the Commissioner by entities associated with the directors Wilhelm and Dempsey. 112 The ITAA 36, ITAA 97 and the TAA establishes a regime, particularly having regard to the self assessment arrangements provided for by the tax legislation, by which all taxpayers are susceptible of audit or investigation, for the purposes of the legislation, by officers of the Commissioner, exercised in good faith according to the terms of the power, to seek to ensure as a matter of important public administrative policy and thus public confidence in the administration of the tax law, that taxpayers comply with the law relating to taxation. The administrative power is not exercised simply, although critically, to secure payment to the Commissioner of the contended tax debt due to the Commonwealth but to deploy resources to examine conduct of a taxpayer by which a tax liability under the Act may potentially not have been met or whether an assessment might be susceptible of adjustment, and determine by forensic examination and investigation of the particular arrangements, whether an offence necessarily connected with or arising under or by virtue of a tax law has arguably been committed. 113 One important aspect of the administration of the tax law in a civil society is that the Commissioner's power of investigation of tax related conduct that might involve a contravention of Commonwealth criminal law can not be foreclosed by payment by the taxpayer to the Commissioner of the amount of the unpaid tax (including interest and penalties) arising out of the conduct. Otherwise, a resourced taxpayer could simply pay his or her way out of an investigation by the Commissioner of whether a criminal offence also occurred.