In a lengthy decision handed down on Fri 9.3.2012, the Federal Court has held that notices issued by the ATO under s 264 of the ITAA 1936 to Australia and New Zealand Banking Group Limited were valid.
The bank had been issued with 2 notices requiring it to provide certain information about customers who have or who have had accounts with it or any of its subsidiaries in Vanuatu. ANZ argued that the notices were invalid for 3 reasons:
- 1.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;
- 2.that because the notices sought 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;
- 3.that each notice was uncertain.
The bank sought an order in the nature of prohibition preventing the ATO from taking steps to enforce compliance with the notices. It also sought an order in the nature of certiorari quashing or setting aside the notices, and a declaration that each of the notices was invalid on the basis they were not authorised by s 264, and a declaration that ANZ was “not capable of complying” with the notices within the meaning of s 8C(1B) of the TAA.
The ATO cross-claimed seeking a declaration, or alternatively an order pursuant to s 16(1)(c) of the ADJR Act, that both notices were valid, and a declaration, or alternatively an order pursuant to s 16(1)(c) of the ADJR Act, requiring ANZ to furnish the Commissioner with the information sought in each of the notices.
The Federal Court dismissed the taxpayer’s appeal and the Commissioner’s cross-appeal. The Court considered there was 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.
Lander J said ANZ did not establish that the notices were issued for an improper purpose.
The Court also rejected ANZ’s argument that the notices were uncertain and was of the view that the notices were directed to information contained in a digital database the bank maintained in Australia. It said it did not matter that ANZ could not verify the accuracy of the information contained in the database.
(Australia and New Zealand Banking Group Limited v Konza [2012] FCA 196, Federal Court, Lander J, 9 March 2012.)
[LTN 47, 9/3]