Italia, Maria (2015) A taxpayer privilege for Australia. PhD thesis, Victoria University.

Abstract

This thesis articulates the legal reform required in Australia to establish an effective taxpayer privilege, for tax advice, whether provided by lawyers or accountants, by setting out the key criteria for the necessary legislation. The thesis shows that common law client legal privilege is the basis of the taxpayer privilege and examines the historical development, the rationale(s) and critical criteria for the recognition of the privilege. The thesis shows how privilege developed to become absolute, permanent and removable only by client waiver or the crime-fraud exception. Client legal privilege is justified by both the ‘utilitarian’ and ‘rights’ theories. The theories are not mutually exclusive and together they embrace the individual and societal interest in protecting confidentiality of financially sensitive communications, especially in the tax arena. Four common law jurisdictions: Australia, New Zealand, the United Kingdom and the United States are examined because they have similar common law origins and have influenced each other in developing client legal privilege upon each other. New Zealand and the United States have legislated for a taxpayer privilege. Their experience provides lessons for Australia. The United Kingdom has a limited protection for confidential tax documents held by the tax accountant. Tax advice is provided by two key professions, accountant and lawyers, and increasingly tax practitioners have dual qualifications. The role of the advisor in enabling the taxpayer to comply with the complex tax law in a self-assessment system is acknowledged by the Revenue authorities. The empirical evidence, scant as it is, demonstrates that sensitive financial information requires the protection of privilege if it is to be freely and frankly discussed with tax advisors. The thesis demonstrates that the emphasis needs to be on the advice provided by the advisor, rather than on the qualification of the advisor. This justifies the recommendation for reform in Australia.

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