12 Mar 12 Section 264 notices valid - ANZ
The Federal Court (Landerer J) has held that two notices issued to Australia and New Zealand Banking Group Limited (ANZ) by the Commissioner under s 264 ITAA 1936 are valid. The notices required ANZ to produce certain information about customers who have or who have had accounts with it or any of its subsidiaries in Vanuatu.
ANZ maintains a digital database in Australia called the “Global Information Warehouse” (GIW). The GIW contains certain information in respect of bank accounts in Vanuatu held by customers of ANZ Vanuatu. The GIW receives information electronically transmitted by ANZ Vanuatu from its information technology system in Vanuatu to the GIW in Australia in accordance with the terms and conditions under which that information was provided to ANZ Vanuatu.
ANZ argued that the notices were invalid for three reasons.
First, ANZ argued that if it were to comply with the notices it would breach certain common law confidentiality obligations owed by it to the relevant customers of ANZ Vanuatu, as well as certain secrecy provisions enacted in Vanuatu. It submitted that s 264 does not authorise the Commissioner to issue a notice that would require it to breach these obligations or provisions.
Secondly, it argued that because the notices seek information in respect of all customers in certain categories who have or have had an account in Vanuatu without limiting the information sought to customers who are or might be liable to pay income tax in Australia, they were invalid. Given that the notices do not limit the information sought to such customers, ANZ argued that the notices require it to determine which customers might be liable to pay income tax in Australia. Accordingly, it submitted that the notices could not be regarded as having been issued for the purposes of either the ITAA 1936 or the ITAA 1997, and so were not authorised by s 264.
Thirdly, it argued that each notice was uncertain.
The Court rejected ANZ's arguments in relation to each of the three grounds. The Court said, at paras 187-189, as follows:
"In my view s 264 authorises the Deputy Commissioner to issue a notice to an Australian company asking it to furnish information that is stored in Australia. There is no reason to read s 264 as subject to a foreign law purporting to have extra-territorial effect in circumstances where the relevant information is held by an Australian company in Australia. In any event, I do not think that disclosure of the information would breach the non-statutory or statutory obligations of confidence under the law of Vanuatu.
I reject ANZ’s argument that the notices were not issued for a proper purpose. In my view s 264 allows the Deputy Commissioner to issue notices that may require the disclosure of information relating to persons who are not liable to pay income tax in Australia, providing that the notices are issued for the purposes of the ITAA, including the ascertainment of whether an individual or entity is liable to pay Australian income tax. ANZ has not established that the notices were issued for an improper purpose.
I also reject ANZ’s argument that the notices are uncertain. In my view the notices are directed to information contained in the GIW. ANZ is required to produce information stored in the GIW that meets the criteria set out in the notices. It matters not that the information produced may not be information relating to the affairs of persons who are or may be liable to the assessment and payment of income tax in Australia. It also does not matter that ANZ cannot verify the accuracy of the information contained in the GIW."
Australia and New Zealand Banking Group Limited v Konza  FCA 196 (Federal Court, Landerer J, 9 March 2012).