CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43


As many of our clients will know, legal professional privilege (LPP) is a fundamental feature of our legal system. LPP preserves the confidentiality of communications between a client and lawyer that have been prepared for the dominant purpose of providing legal advice, or for the dominant purpose of actual or anticipated proceedings.[1] As there is no statutory exclusion, provided there has been no waiver[2] (and the communication was not prepared for an illegal or improper purpose[3]), then LPP will remain a valid ground upon which to resist providing information to the Federal Commissioner of Taxation (Commissioner).

In recent times, the Commissioner has taken a more aggressive attitude towards taxpayer claims of LPP because, in his view, taxpayers (and their advisors) have exploited it by asserting LPP over communications that were not prepared for the dominant purpose of providing legal advice or for actual or anticipated proceedings.

Earlier this month, Justice Moshinsky of the Federal Court delivered his judgment in the case of CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43.

Brief background to case

As part of an audit, the Commissioner issued CUB with a compulsory notice under s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) (TAA), requiring CUB to furnish certain information. CUB refused to provide some of the requested documents on the ground of LPP.

The Commissioner insisted on further particulars for the documents over which CUB was claiming LPP, including the title of the documents (subject line for emails), the authors and the recipients of the documents, so that he could assess the basis of CUB’s LPP claim.

CUB refused to provide this additional information on the basis that such information was itself subject to LPP. CUB instead offered to provide details of the process it had applied in identifying documents that it considered were subject to LPP. It also offered to test a representative sample (or all the documents) with an independent reviewer. The Commissioner did not consider that details of CUB’s process would assist and was not yet in a position to determine whether he desired to have the claims tested by an independent reviewer.

Subsequently, after some back and forth, the Commissioner issued a further compulsory s 353-10 notice purportedly requiring CUB to provide the very information it refused earlier (title of documents, author of documents, name of persons to whom documents were communicated etc).

Section 353-10

Section 353-10 of Sch 1 to the TAA confers on the Commissioner the power to require a taxpayer to give information, attend and give evidence or to produce documents in a person’s custody or control, provided that the requested information is ‘for the purpose of the administration or operation of a *taxation law’.

CUB’s grounds

CUB sought judicial review of the Commissioner’s decision to issue this further s 353-10 notice and claimed the notice was invalid. CUB’s first three grounds were all related and can broadly be summarised as follows: rather than requiring this information for the (proper) purpose of the administration or operation of a taxation law, the Commissioner instead requested the information for the improper purpose of determining the validity of CUB’s LPP claims.

CUB’s fourth ground contended that the requested information (the title, subject matter, author and recipient of the documents) was itself privileged. Depending on how a document was classified, this fourth ground would require consideration of as many as 4,431 documents. This judgment does not yet consider this last ground and was solely focused on whether the notice was valid.

Court findings on grounds 1-3 (Moshinsky J)

Requested not to determine claim but to determine whether to accept or challenge claim

The Court found that CUB did not establish that the Commissioner issued the subsequent notice for the improper purpose (or improper substantial purpose) of determining CUB’s LPP claims. Rather, the Court found that the Commissioner did so for the (proper) purpose (or substantial purpose) of obtaining information that he considered necessary to determine whether to accept or challenge CUB’s LPP claims. The decision seems to suggest that if the Commissioner sought the particulars in order to determine the LPP claim, then the notice would not have been valid – although this was not discussed in detail (presumably because the Court found that the notice was not issued for that purpose).

Despite some of the Commissioner’s communications directly supporting CUB’s position (because those communications included wording to the effect that he was seeking to determine the claim of LPP), the Court ultimately held that those communications cannot be taken in isolation. Instead, when viewed in context, it is apparent that the Commissioner only sought the particulars in order to determine whether to accept or challenge CUB’s LPP claims. The context included: (1) the Commissioner’s other communications directly stating his desire to determine whether to accept or challenge; (2) that the particulars sought would in any event be insufficient to determine the LPP claim; and (3) there would be no need for an alternative dispute resolution process (also referred to in some of the Commissioner’s communications) if the Commissioner actually thought he could himself determine the claims. As a result, CUB was not able to establish that the Commissioner’s purpose was to determine the LPP claim.

Particulars requested in order to administer a taxation law

The Court also found that the Commissioner considered that the documents remained relevant to the statutory functions he was carrying on and so the notice was issued for the (proper) purpose of ‘the administration of a taxation law’. The term ‘taxation law’ is defined to mean, among other legislation, ‘an Act of which the Commissioner has general administration’.[4]

After considering applicable authorities, His Honour determined that there are very few limitations on the Commissioner’s ability to issue such a notice, the only restriction being that it is issued for the purpose of the administration or operation of a taxation law, which is very wide given the information he requires in order to perform his statutory duty of ascertaining taxpayers’ taxable income. The power extends to permitting the Commissioner to make preliminary inquiries that may not even appear relevant and may even in the end prove not to be relevant.

In other words, unlike other contexts where it is necessary to show that the information is at least relevant, the Commissioner can basically use his compulsory information-gathering powers to go on a ‘fishing expedition’[5]. It is noteworthy that this case did not consider whether the Commissioner can use the power to ‘fish’ for information that may be useful to a Pt IVC court proceeding, which arguably would be in contempt of court and would also be problematic because presumably at that point he also would have completed his statutory function (and is functus officio)[6] – but those issues will be discussed another time as they were not relevant in this case.

Seeking the title, subject matter, author and recipient of each document fell within the Commissioner’s role of seeking to administer a taxation law and so was permitted by s 353-10. This was held to be so because the Commissioner’s receipt of that information would then assist him to determine whether to challenge the LPP claim. And by challenging the LPP claim, he could end up receiving the underlying documents, which would in turn help him in performing his statutory duty of ascertaining CUB’s taxable income.

Relevance of Commissioner’s statement of reasons

There was some argument about the relevance of the Commissioner’s statement of reasons, and CUB submitted that no weight should be accorded to them. However, the Court noted that the ATO officer gave affidavit evidence that the statement of reasons accurately recorded his reasons and CUB elected not to cross-examine the deponent. In any event, the authorities show that a statement of reasons is evidence of the subjective views held by, and the findings made by, the decision maker – and the statement is evidence that is to be weighed and assessed like any other evidence.

Take away

The Commissioner continues to take a hard line on LPP claims and will not automatically accept a claim. In advance of formally challenging or referring to an independent arbiter, he will continue to press for particulars so he can, at least to an extent, self-assess the legitimacy of the claim.

The fundamental issue as to whether the particulars sought in the s 353-10 notice (subject, author and recipient) themselves constitute LPP was not the subject of this judgment; we will monitor this case with interest to see if that issue is resolved / clarified.

The limitations on the Commissioner issuing a s 353-10 notice are minimal because all he has to show is that it was issued for the purpose of the administration or operation of a taxation law. The threshold for invalidating a notice is likely as difficult as invalidating an assessment, which basically requires demonstrating bad faith / maladministration[7] – a very high threshold.

Although we will need to wait and see, it appears that the Commissioner will seek a court precedent that information such as title, subject, author and recipient of documents is not protected by LPP. The Commissioner did concede that supplying such information would not amount to a waiver, but that may form part of CUB’s submissions as to why the particulars sought are subject to LPP – because supplying such particulars in other instances without that concession may result in taxpayers inadvertently waiving privilege.

Additionally, the Court may determine that such a question cannot be answered at that level of generality, as perhaps whether such information is subject to LPP will depend on the nature of each document. This would not suit the Commissioner.

[1] See s 118 and s 119 of the Evidence Act 1995 (Cth) and that it extends beyond a rule of evidence to a substantive right: see Baker v Campbell (1983) 153 CLR 52; Glencore International AG v Commissioner of Taxation [2019] HCA 26 at [21]

[2] Osland v Secretary to Department of Justice (2008) 234 CLR 275

[3] Attorney – General (NT) v Kearney (1985) 158 CLR 500

[4] Section 995-1 of the Income Tax Assessment Act 1997

[5] See CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43 at [70]

[6] Minister for Immigration and Ethnic Affairs v Bhardwaj (2002) 209 CLR 597; also see Taxation Ruling TR 2011/5

[7] Noting that invalidating an assessment is different from succeeding in a Part IVC proceeding by proving that the (valid) assessment is excessive – see Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146


For further information regarding the above, please contact the author Jeremy Makowski, Special Counsel, at, or any member of our Tax team.


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