The ATO is issuing section 264 notices on dividend access shares

08 November 2013 Topics: Tax and revenue, Professional advisers

We understand the ATO is preparing to issue section 264 notices to some accountants, requiring the production of documents relating to dividend access shares.

It is vital that a section 264 notice is dealt with promptly. There are very limited opportunities for seeking an extension of time or challenging a notice on the grounds that the timeframe for responding is difficult, but there is some precedent for extensions being granted where the taxpayer has to produce documents (rather than attend an interview).

If an extension is needed, then it is important that the application is made as soon as possible after receipt of the notice and is backed up by legal submissions.

A failure to comply with a section 264 notice is an offence, punishable by a fine or (for multiple breaches) imprisonment.

A section 264 notice will not compel a person to produce documents subject to legal professional privilege. However, anyone receiving a section 264 notice needs to be careful that any documents claimed to be subject to legal professional privilege are actually privileged according to the law.

Given the recent ATO publications and audit activity around dividend access shares, clients may want to review their use of any dividend access shares in the past. The ATO is generally subject to a four year amendment period, but there are exceptions to this. For high risk arrangements, there are opportunities for reductions in penalties for voluntary disclosures in certain circumstances.

Please contact us immediately if you receive a section 264 notice and require assistance or would otherwise like to discuss.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.