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    ARTICLE - Australia

    McDonalds in a beef with Australian Taxation Office

    Recently, McDonald’s Australia found itself in a beef with the Australian Tax Office (“ATO”). It had failed to provide documents to the ATO and found itself to exposed to a penalty.

    11 Mar
    The McDonald’s case demonstrates that even large companies will be held accountable for a failure to comply with its legal obligations

    The Background

    In July 2019, the ATO issued a formal notice to McDonalds. This noticed required them to produce documents within a deadline of one month.

    However, unlike so much of McDonalds’ fast food, the requested documents were nowhere to be seen at the due date.

    As such, the matter was referred by the Commonwealth Director of Public Prosecutions. McDonald’s entered a guilty plea to the single count of failing to comply with an information gathering notice.

    The ATO and big business

    The ATO tells us that it actively engages with the thousand biggest businesses that operation within the country. Unsurprisingly, this includes McDonald’s Australia.

    Generally speaking, the ATO will only issue formal notices to taxpayers to collect information as a last resort. For example, where a cooperative approach is no longer productive or where a taxpayers’ circumstances, history or behaviour warrant the use of our formal powers.

    The ATO clarified that it issues approximately 70 formal notices to large businesses on an annual basis.

    Key…ahem… takeaways

    The McDonald’s case demonstrates that even large companies will be held accountable for a failure to comply with its legal obligations. Where the ATO cannot secure the information it requires on an information basis it may use its extensive, formal powers.

    In a nutshell – What are the ATO’s formal powers?

    The Commissioner may by notice in writing require you to do any of the following, as outlined in the key legislative provisions:

    • Give information to the Commissioner which they require for the purpose of the administration or operation of a taxation law;
    • Attend and give evidence before the Commissioner, or an individual authorised by the Commissioner, for the purpose of the administration or operation of a taxation law;
    • Produce documents to the Commissioner – any documents in your custody or under your control for the purpose of the administration or operation of a taxation law.
    • Give information, attend and give evidence, and produce documents – the Commissioner may require you to do any or all of the above, as outlined in section 353-10 of the Taxation Administration Act 1953;
    • Give information about rights or interests in property – further information is provided in section 354-5 of the Act.

    If you have any queries about this article, or the matters discussed more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

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