Taxpayer’s representative: when a “formal notice” is (sometimes) the reasonable next step

A taxpayer’s representative contacted our office after the ATO issued formal information gathering notices (Section 353-10 of Schedule 1 to the Taxation Administration Act 1953) during an audit. They considered the ATO had moved too quickly to a formal approach and asked that the notices be withdrawn in favour of informal requests, along with an opportunity to meet and better understand the ATO’s concerns.

We investigated by independently reviewing ATO records, seeking further information from the ATO, and testing whether the ATO’s stated rationale was supported by evidence. The ATO explained that it had resorted to formal notices after earlier informal requests were repeatedly delayed, affecting the timeliness and progression of the audit. We asked the ATO to evidence this position and considered examples where responses had taken extended periods.

Having regard to the reasons provided — and the supporting timelines — we formed the view that the decision to use a formal notice was not unreasonable in the circumstances.

This case is a useful reminder that while formal powers should be exercised carefully, they can be an appropriate tool where repeated delays are materially affecting administration.