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ATO releases draft protocol for legal privilege claims

The ATO has released a draft of its legal professional privilege protocol, outlining the recommended approach for identifying communications covered by LPP and making LPP claims to the ATO.

ATO releases draft protocol for legal privilege claims
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  • Juliet Helmke
  • September 24, 2021
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The protocol has been developed to assist legal professionals and their advisers when making legal professional privilege (LPP) claims in response to requests for information from the Australian Taxation Office (ATO). 

The protocol explains the ATO’s recommended approach for claiming LPP and provides information on what legal professionals can expect in different situations where they have claimed LPP. Following the recommended approach will be voluntary, but the ATO noted that doing so might instigate further questioning.

Under this proposal, taxpayers will be required to provide information on the legal issue they were being advised on, the dominant purpose for which the communication was made, and any other details relating to people who received the document or communication.

Taxpayers will also have to identify who they received legal advice from, whether that be legal practitioners, in-house counsel, non-legal persons or legal practitioners not acting in the capacity of legal practitioners. Different assessments will be required for each category.

The ATO intends to review and monitor the protocol over the next three years to understand how it is used, its effectiveness on the quality of LPP claims, and the impact on taxpayers and the Tax Office. Any material revisions to this protocol will be made at the end of the review period or on an “as necessary” basis and will be informed by the outcomes of the review and any feedback. 

Over the testing period, the ATO will be exploring the use of computer-assisted technology in processing and deciding whether or not to challenge LPP claims.

Public consultation on the draft protocol has commenced, with a deadline for written feedback set for 31 October. The ATO noted that separate workshops will be held with a number of key stakeholders.

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