Woellner, Robin, and Bevacqua, John (2017) The ATO, conscious maladministration, and stolen information. Australian Tax Review, 46 (1). pp. 26-47.

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Abstract

In the first instance hearing of the Federal Court case of Donoghue v Federal Commissioner of Taxation (2015) 100 ATR 893; [2015] FCA 235 (Donoghue), Logan J held that the Commissioner's use of privileged material in order to levy tax assessments on Donoghue amounted to conscious maladministration, rendering those tax assessments invalid as a deliberate failure to administer the tax law according to its terms, applying the reasoning of the High Court in Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; 69 ATR 41; [2008] HCA 32 (Futuris).

On appeal, the Full Federal Court overturned Logan J's decision, holding that the case was not about legal professional privilege at all, but rather concerned potential actions for breach of confidence and (particularly) the operation of s 166 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). The High Court refused Donovan's application for special leave to appeal to the High Court.

This article critically evaluates the reasoning in Donoghue at first instance and beyond. It assesses the ramifications of the case, in light of recent decisions, for the prospects of a successful challenge to a tax assessment. More broadly, it considers the extent of the shield of protection for the assessment process provided by s 166, and (briefly) the implications for ATO processes.

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