JMA Accounting Pty Ltd v Michael Carmody, Commissioner of Taxation

(2004) 139 FCR 537; [2004] FCAFC 274

Full Court of the Federal Court

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Interrogate

Catchwords

1. Taxation
2. › Income tax
3. › Powers of Commissioner
4. › Access to documents
5. › Section 263 Income Tax Assessment Act 1936 (Cth)
6. › Search and seizure of documents held on computers
7. › Whether bulk copying of computer files without examination of relevance was reasonable
8. › Whether search must be conducted reasonably
1. Evidence
2. › Privilege
3. › Legal professional privilege
4. › Search and seizure
5. › Whether privilege infringed by copying document without reading it
6. › Whether officer may examine document to determine if privilege claimed
7. › Lawful violation of privilege
1. Administrative Law
2. › Exercise of statutory powers
3. › Reasonableness of exercise
4. › Whether unreasonable exercise of statutory search power renders exercise invalid or merely conditions manner of exercise
5. › Income Tax Assessment Act 1936 (Cth), s 263

Quick Take

Legal professional privilege is not infringed by the mere copying of a privileged document without reading it; the privilege protects against the reading of the communication, not the physical act of copying. ATO officers exercising s 263 powers are not required to reach an agreement with the occupier about privilege claims — they need only implement a reasonable proposal. However, bulk copying of electronic documents without any examination of relevance is impermissible; officers must make reasonable efforts to distinguish between relevant and irrelevant material, though they are not required to examine every individual file. The Full Court doubted the correctness of Citibank's holding that failure to provide an adequate opportunity to claim privilege renders the exercise of s 263 invalid.