I didn't draw a connection between an audit and a s264 notice. An audit only happens when its called an audit. The ATO will tell you if its an audit. Most ATO enquiries are pre-audit activities. Datto's response is something that can trigger an audit out of a simple enquiry.
A s264 notice is ONE of the Commissioners tools to gather information. It can be about an industry, a taxpayer and a broader exercise to gather information on participants to a practice or a scheme. Its unusual for it to be used for a single taxpayer. Its usual for it to be used for gathering information and evidence from others. As Rob agrees most third parties will require possession of that notice to comply with privacy etc laws. I would be more concerned with a s353-10 notice (s353 of
Schedule 1 of the Tax Administration Act). They are after something when one of those is used.
My reply was in respect of Datto's view of telling ATO to jump if they ask for substantiation information. Datto you are correct they will deny the deductions and yes you could object. However as a taxpayer you really don't want to take that aggressive approach with the ATO. You don't need to. You dont want to. You are likely to **** off the person who could trigger a higher level review for the sake of producing the receipts requested. That's like telling a cop to go stuff himself and write you a ticket. He will... Possibly more than one. He could defect the car.
The ATO response may be to conduct an intensive review of ALL deductions for say two years. Or broaden their enquiries and ask things of your employer or review entities associated. Finding trivial issues you haven't complied with. They will find things. It will chew up your time and be a nuisance. Your refund will be delayed. Penalties etc...They may find you were reckless etc....
For those not quite on the up with the English language my response was about the tone you convey in dealing with those who work at the ATO. They are doing their job and have exceptional powers IF they need them. Don't give them a reason. Be polite, be helpful and be very sparing with words you say.
The professional advisers out there all know what I mean when I say its wise to say very little but what you do say needs to be co-operative. In true audit situations then my advice is to have legal representation.