Allowing documents to be removed for inspection
2006 changes to the Tax Administration Act 1994 and regulations give the CIR power to remove and retain documents for full and complete inspection.
Sections 3, 16C, 20D and 20F of the Tax Administration Act 1994, Regulation 4B and Schedule 2 of the Tax Administration (Form of Warrant) Regulations 2003
Changes have been made to the Tax Administration Act 1994 and the Tax Administration (Form of Warrant) Regulations 2003 to give the Commissioner the power to remove and retain documents for full and complete inspection. This power may be exercised only if the Commissioner has the consent of the dwelling occupier or a warrant from a judicial officer.
Previously, the Commissioner did not have the power to remove and retain documents for inspection without a taxpayer's express permission. However, this was not always feasible as a person could refuse to provide the requested document or could even destroy it. Although it is an offence to fail to provide information to the Commissioner when required to do so, some individuals have preferred to face a monetary penalty for not providing the information rather than be prosecuted for a more serious offence such as fraud or tax evasion based on the documents requested.
There are several reasons for giving the Commissioner the power to remove, retain and inspect documents. Having original documents satisfies the "best evidence" rule by which Courts may view an original document more favourably than a copy. It may also be necessary to forensically examine an original document. This may happen, for example, when there is a dispute about who created the document or whether the information contained in the document has been altered.
New section 16C of the Tax Administration Act 1994 authorises the Commissioner of Inland Revenue or an authorised officer to remove books and documents from a place accessed under section 16 and retain them for so long as is necessary for a full and complete inspection. This power may be exercised only if the Commissioner has the consent of an occupier of the place or a warrant.
A warrant is issued by a judicial officer on written application by the Commissioner. To issue a warrant, a judicial officer must be satisfied that for the Commissioner to carry out functions such as collecting tax or duty under any of the Inland Revenue Acts, removing books or documents from a place and retaining them for a full and complete inspection may be required.
Every warrant issued must meet the requirements in section 16(5) which apply to the issue of a warrant to access a private dwelling.
The Commissioner is required to produce the warrant on first entering a place and whenever subsequently reasonably required to do so.
The owner of removed books or documents may obtain a copy of the removed books or documents either at the time of their removal or at any reasonable times subsequently.
While in possession of the books or documents, the Commissioner may make copies of them. Those copies, once certified by the Commissioner, are admissible as evidence in Court as if they were the originals.
Section 16C allows the Commissioner to remove documents from any place accessed under section 16 of the Tax Administration Act, which contains the Commissioner's general power to access any premises. It is therefore necessary for the requirements of section 16 as well as those in section 16C to be satisfied. In particular, this means it may be necessary to obtain two warrants in relation to a private dwelling: a warrant to obtain access to the private dwelling under section 16 and another warrant to remove documents from the dwelling and retain them for inspection under section 16C. No warrants are necessary if the occupier of the dwelling gives their consent.
Section 3(1) of the Tax Administration Act 1994, which is the definition section of the Act, has been amended to define "full and complete inspection" and "judicial officer".
"Full and complete inspection" includes use as evidence in court proceedings. It is implicit that a right to "full and complete inspection" also includes the right to perform forensic tests and other actions within the ordinary meaning of the word "inspection".
"Full and complete inspection" has also been defined to exclude removal of documents to make copies under section 16B. This ensures that the power under new section 16C is separate from, and does not affect, the section 16B power.
The definition of "judicial officer" has been amended to apply to new section 16C of the Tax Administration Act. A "judicial officer" is a person who is a district court judge, justice, community magistrate, or registrar of a district court.
Consequential amendments have also been made to sections 20D(4)(a) and 20F(2)(a), which relate to the disclosure of tax advice documents.
Tax Administration (form of Warrant) Regulations 2003
New regulation 4B provides that a warrant issued under the new power in section 16C must be in the form set out in Schedule 2.
New Schedule 2 of the Regulations sets out the form of a warrant which is issued by a judicial officer to enable the Commissioner to exercise the new power to remove, retain and inspect documents.
The amendments apply from 18 December 2006.
Other sections in this legislation
| Offshore investment | Tax rules for PIEs | Tax on geothermal wells | Australian superannuation fund exemption | New rules for selecting SSCWT rates | Allowing documents to be removed for inspection | Military and police allowances | New rules for spreading income on the sale of patents | Organisations approved for charitable donee status | Consolidated groups and foreign losses | Assessments by the Commissioner | GST and financial services | GST on fringe benefits | GST grouping rules | Taxation of business environmental expenditure | Family assistance provisions | Rewrite amendments | Tax depreciation treatment of patents | Fringe benefit tax | Depreciation formula | Economic rate of depreciation | Calculating depreciation rates | Election to depreciate | Transitional residents | Death and asset transfers | New GST due date | Limit on refunds and allocations of tax | The imputation system and companies | Reverse takeovers | Changes in GST taxable periods | Miscellaneous technical amendments |