ATO can access Family Law documents

It may be surprising to discover that the Australian Taxation Office has access to financial information disclosed in Family Court proceedings. But whether or not the ATO is permitted to use the information they discover from Family Court proceedings is another matter entirely and one that was investigated in a recent decision of the Family Court of Australia (Commissioner of Taxation v Darling & Anor [2013] FamCA 118 [1 March 2013]).

Justice Macmillan dismissed an application by the Commissioner of Taxation in which the Commissioner had sought leave to be released from his obligation not to make collateral use of documents filed in the Family Court proceedings.

Facts of the case

The main Family Court proceedings included property settlement and/or maintenance orders between Mr and Mrs Darling. As a result of an ATO audit of the husband’s tax affairs, the ATO approached the Registrar of the Family Court in December 2009, seeking access to documents filed by Mr and Mrs Darling.

ATO Officers were given permission to inspect the Court file by the Registry Services Manager. The ATO then requested copies of various documents that its officers had tagged during their initial visit, however, that request was denied on the basis that the Regional Registry Manager was not “persuaded of the nature of the proper interest held by the ATO”.

Following an exchange of submissions between the ATO and the husband’s legal counsel, the Regional Registry Manager subsequently provided the ATO with consent to copy various documents tagged by the ATO Officers.

Having gained access to the documents, and permission to copy the documents, the ATO was then barred from using the documents for a purpose not related to that litigation, as a result of an implied obligation. The Court noted that the implied obligation is intended to preserve the parties’ privacy and to encourage full and frank disclosure. Justice MacMillan said: “Both concepts are of particular importance and sensitivity in relation to the proceedings in this Court.”

However, it was still possible that a party, such as the ATO, could be released from that implied obligation. It is open for any party to seek leave of the Court to use the documents for another purpose. But in this case, it was found that the Commissioner was required to first identify whether there were any “special circumstances” relied upon by the Commissioner which warranted or justified the release sought.

The Court dismissed the ATO’s application as it was not satisfied that the ATO had specified documents in which the release was sought, nor had the ATO specified the purpose for which the release was sought. As a result of those two omissions on behalf of the Commissioner of Taxation, the Court was not satisfied that there were any special circumstances relied upon by the ATO to justify the release.

In this judgement, the Court relied upon the following points:

1. There was no evidence as to the nature of the audit of the Husband’s affairs or what information may be required to complete that audit;
2. There was no evidence as to what information had been obtained and why that information would be insufficient to complete the audit. This was particularly significant given the wide powers the Commissioner has to obtain information; and
3. There was no evidence adduced as to the basis of the belief that the documents would be relevant either generally or in relation to specific documents.

His Honour concluded that his dismissal of the Commissioner’s application to be released from the implied obligation was due to the fact that the Court was not satisfied that the release was necessary to enable the Commissioner to fulfil his statutory function.  

Comment from Streeterlaw Principal Mark Streeter:

“It is important our clients know what happens to documents produced in the course of litigation. Authorised agencies, such as the ATO, are able to access these documents and this applies in every Court proceedings. But this case’s point of difference is that the Family Court are particularly sensitive about the use of their documents because of the nature of the jurisdiction and the importance of each party before the Court in producing fully and completely the documents required.” 

Written by Mark Streeter

The Director of Streeterlaw, Mark has been practicing Law since 1994. He has attained his Masters of Law in 1999 and in 2006 was awarded his Specialist Accreditation in Commercial Litigation. Mark is a member of ARITA, a graduate of the AICD and a member of AICM. A member of STEP, Mark enjoys working in the area of Wills and Estates. In 2020 Mark is the Chair of STEP NSW.

Call us on 02 8197 0105 to book an appointment with Mark Streeter!