In late June 2022, the ATO finalised its ‘voluntary’ Protocol for claiming legal professional privilege (LPP) – see related TT article. It had conducted ‘consultation’ on the draft Protocol it issued back in September 2021. At the same time as releasing its final Protocol, it released a ‘compendium’ of the points raised in various submissions and the ATO’s response, to those points. In addition to providing a link to this Compendium, I’ve embedded a ‘pdf’ copy, in this article (which might be more convenient but it will also guard against losing this document, should it no longer be on the ATO’s website (for what ever reason).

The Compendium groups the consultation points made under the following 14 headings and sets out the ATO’s response beside each item.

Cost of compliance
Compliance time
Particulars – standard
Particulars – additional
Waiver
Exceptions to LPP – improper purposes
Duties of legal and non-legal practitioners
Firm or business structure (viz: ‘multi-discipline’ practices, etc….)
Communications that are not usually privileged
Scope of protocol
Protocol terminology
General issues
Guidance to ATO staff
Computer-assisted technology

ATO steps back from a fight (at least with some exculpatory words)

The Compendium – In item 4, the ATO says that it not ‘expect [taxpayers] to waive privilege’ or expect legal practitioners to ‘advise their clients … contrary to their professional obligations’ (‘professional obligations‘ being a phrase used in s39 of the Legal Profession Uniform Law in setting out the offence the ATO could commit, if it exerts undue influence on lawyers to breach, amongst other things their ‘professional obligations’ – see related TT article). Item 4 and the ATO’s response are set out below.

Item 4 – The ATO should consider the Protocol from a client perspective and ‘seasoned vs less seasoned’ practitioners or taxpayers.

ATO’s Response – Additional paragraphs have been included in the final Protocol (see paragraphs 11, 34 and 35) to emphasise that:

- - taxpayers are not expected to waive privilege when following the Protocol
  - taxpayers are encouraged to seek legal advice if there is a risk of waiver, and
  - the Protocol does not intend for legal practitioners to advise their clients in a manner contrary to their professional obligations.

The Protocol clauses referred to, as having been added (and which conspicuously ‘step back’ from pushing too hard) are as follows.

11. If you do not follow this Protocol, there is no presumption that your LPP claims are invalid or will be challenged by the ATO.

- - We appreciate that, in some circumstances, taxpayers may decide to adopt none, or particular parts, of this Protocol and not follow all of the recommendations in their entirety.
  - We request that you explain to us where you depart from this Protocol.
  - If you do not follow the approach (which is an avenue available to you as this Protocol is voluntary in nature) and you do not explain why you have not followed the approach, you should expect that we are likely to make further enquiries.

34. You are not expected to waive LPP when following this Protocol. Where practitioners are assisting clients with LPP claims, as part of responding to a formal notice, this Protocol does not intend for practitioners to advise their clients in a manner contrary to their professional obligations.

35. We consider that providing the recommended particulars to us, of itself is unlikely to result in an unintended waiver of privilege and we will generally not seek production of the underlying communication on this basis.

- - In the unlikely event that privilege is inadvertently waived, this is likely to operate as a limited waiver as against the Commissioner but not as against the rest of the world.
  - There may be some exceptional or limited situations where you form the view that providing some of the particulars in paragraphs 38 to 40 of this Protocol could amount to a waiver.
  - To the extent that any particular would reveal the content of the advice you received, we do not expect it to be provided. We encourage you to consider seeking legal advice if you believe there is a risk of waiver of privilege.