CANBERRA: Australia’s tax collector has announced a crackdown on lawyers who misuse legal privilege to protect their clients.
In a post on its website, the Australian Taxation Office (ATO) said it was preparing to launch “range of (legal) cases in the short to medium term” against offending lawyers who would face a maximum penalty of 10 years imprisonment.
Under Australian law, courts and law enforcement agencies cannot compel legal practitioners to disclose communications with their clients.
However, ATO alleges that lawyers are using the power to shield their clients from convictions for tax evasion, protecting thousands of documents sought by the agency.
“It’s just multiple orders of magnitude over what you’d expect for an ordinary privilege claim,” Deputy Commissioner Jeremy Hirschhorn told News Corp Australia on Wednesday.
“The thing we have seen hints of, which I hope not to be the case, is the firm helping the client discover its non-tax purpose.
“The firm says, ‘Here’s some we prepared earlier which you may find useful’, which are then presented to the commissioner as the real justification.
He said that the ATO would target a small number of legal practitioners at Australia’s leading firms.
The use of privilege has become a major challenge for government agency’s to overcome in recent months.
National Australia Bank (NAB) in August 2018 unsuccessfully claimed privilege over documents related to its fee-for-no-service misconduct that it did not want scrutinized by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Service Industry.
The Australian Securities and Investments Commission (ASIC), the nation’s corporate regulator, is currently fighting financial services giant AMP in the Federal Court over AMP’s refusal to produce its own fee-for-no-service documents, over which it has claimed legal privilege.
