Published on 01 Oct 10
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
In 2008, the Australian Law Reform Commission indicated that consideration should be given to extending legal professional privilege in tax matters to the wider tax profession, rather than restricting it only to advice from the legal profession, as is currently the case. In considering the form that the recommended extension should take, the ALRC canvassed the approached in other comparable jurisdictions, focusing mainly on New Zealand's non-disclosure right. An alternative model mentioned, but not analysed in great detail, is the United States' tax adviser's privilege, which differs primarily from the New Zealand rule in that the former imports the common law privilege into statute, compared with the latter's creation of a separate statutory right.
This paper analyses the United States' rule with a view to assessing its suitability for Australia. The conclusion reached is that the general premise is suitable for Australia if the premise for an extension is to achieve uniformity of treatment for tax advice, regardless of the adviser's professional association. The limitations written into the United States' rule, though, should not be replicated in Australia, since these aspects of the tax adviser's privilege undermine the objective of identical treatment (since these limitations do not apply to the common law), also creating a number of practical problems.