On Tuesday 26.10.2021, the House of Representatives Standing Committee on Tax and Revenue released a report entitled 2018-19 Commissioner of Taxation Annual Report. The terms of reference were that the Committee was to inquire into and report on the ATO’s 2018-19 Annual Report – however, the report’s recommendations are focused on the administration of the tax system more broadly and it makes a number of interesting recommendations – including to when debts are payable, beefing up the IGTO, capping an unlimited amending power, shifting the onus onto the Commissioner in some cases and a Taxpayer Bill of Rights.
The Chair of this Committee is a Mr Jason Falinski MP. He might be a very useful person to approach, for suggestions regarding the ATO or tax law.
The Committee made 19 recommendations, including the following.
- Legislative amendments to provide taxpayers with protections when dealing with debts – specifically, to ensure that a debt is not payable until a final determination is made by a relevant dispute body or court. (Recommendation 11 – see below.)
- Legislation to be introduced to shift the onus of proof to the ATO in relation to allegations of fraud or evasion after a certain period has elapsed. (Recommendation 12 – see below.)
- Reducing the statutory timeframe for cases involving fraud or evasion to 10 years after the issue of an assessment by the ATO (ie in s 170 of the ITAA 1936). (Recommendation 13 – see below.)
- The ATO aligns the interest rate it charges taxpayers on any loans for tax liabilities, to the interest rate paid by the Federal Government. (Recommendation 14 – see below.) [Of course existing interest penalties are already based on a short term Government borrowing rate – the problem is the amount of the uplift, and how hard it is to get those uplifts reduced – remitted.]
- The ATO should develop an Australian Taxpayers’ Bill of Rights that clearly outlines taxpayers’ rights and obligations. (Recommendation 16 – see below.)
- Upgrading the Inspector General of Taxation to an office based on the “Taxpayer Advocate” as developed in the USA. It also reinforces the need for the renamed body to retain its independence. (Recommendation 19 – see below.)
[LTN 206, 26/10/21]
List of Recommendations – in Report
2.90 The Committee recommends that the Australian Taxation Office increases its levels of transparency and communication about its compliance activities to better foster community trust and confidence in tax administration in Australia.
2.91 The Committee recommends that the Australian Taxation Office raises awareness and educates taxpayers and tax professionals about its products, regulations, and the complaint process to minimise unmet needs for independent tax advice and better protect taxpayers.
2.92 The Committee recommends that the Australian Taxation Office records in its annual reports a breakdown of resourcing both by business areas and job family to increase transparency in the allocation of resources and accountability for resources and funding allocated to special programs and taskforces, and that resources are matched with activities and outcomes.
2.93 The Committee recommends that the Australian Taxation Office adopt the definition of ‘complaints’ as per the Australian and New Zealand Standard AS/NZS 10002:2014 Guidelines for complaint management in organisations, to adequately and consistently capture complaints data.
2.94 The Committee supports the Inspector-General of Taxation and Taxation Ombudsman’s Recommendation 1(d) from the Review into Taxpayers’ Charter in 2016 and recommends that the Australian Taxation Office categorises complaint cases in line with the principles of the Taxpayers’ Charter.
2.95 The Committee recommends that the Australian Taxation Office provides more detailed reporting for each financial year to reflect:
- the number of complaints, feedback and compliments received; and
- a differentiated reporting of complaints resolved within the 15 business days target timeframe, and those resolved within the adjusted timeframe negotiating with the taxpayer.
2.96 The Committee commends the Australian Tax Office for work already commenced on modernising the Australian Business Register. The Committee urges the Federal Government to consider the use of blockchain and other leading technologies to optimise the use of the registry, and minimise ongoing costs of maintaining the Registry. Such technical deployments should also future proof the work currently being undertaken by the Australian Taxation Office.
2.97 The Committee recommends that the Australian Tax Office publish a report into the economic activity gap and its analysis on an annual basis.
2.98 The Committee recommends that the Australian Government establish a cross departmental team with the intention of drawing up Australian standards for data collection, definition and formatting to further enable the open data objectives of the Australian Government.
2.99 The Committee recommends that the Australian Charities and Not for Profit Commission review its regulatory burden on all organisations but especially those reporting to more than one regulatory body.
3.75 The Committee recommends that the Australian Taxation Office ensure that debts are not be payable by the tax payer until a final determination is made by the relevant dispute body or court. If the Australian Taxation Office fears that funds will be removed during an enforcement action, it should apply as all other plaintiffs do for a court ordered injunction.
3.76 The Committee reiterates Recommendation 7 from the Tax dispute inquiry report and recommends that legislation be introduced to shift the onus of proof to the Australian Taxation Office in relation to allegations of fraud or evasion after a certain period has elapsed.
3.77 The Committee recommends amending section 170 of the Income Tax Assessment Act 1936 (Cth) to reduce the statutory timeframe for cases involving fraud or evasion to 10 years after the issue of an assessment by the Australian Taxation Office. The Committee also recommends that the period of review of evidence requested by the Australian Taxation Office should be harmonised with the record keeping requirements. The amendment should contain provisions to extend the period on a case-by-case basis.
3.78 The Committee recommends that the Australian Taxation Office aligns the interest rate it charges taxpayers on any loans for tax liabilities, to the interest rate paid by the Federal Government.
3.79 The Committee recommends that the Australian Taxation Office enhances its staff awareness about taxpayers’ rights through guidance and training, including in the management of complaints, objection and disputes, and in their engagement with vulnerable taxpayers.
3.80 The Committee recommends that the Australian Taxation Office develops and promotes an Australian Taxpayers’ Bill of Rights that clearly outlines taxpayers’ rights and obligations.
3.81 The Committee reiterates Recommendation 4 of the 2015 Tax dispute report, that suspicion or finding of fraud or evasion be made by an officer from the Senior Executive Service.
3.82 The Committee reiterates Recommendation 9 from the 2015 Tax dispute report and recommends that the Australian Taxation Office conducts earlier engagement with taxpayers in cases of fraud and evasion, and align the process to that of the tax avoidance process.
3.83 Specifically, the Committee recommends that the Australian Tax Office provides taxpayers with information about suspicion of fraud or evasion, inviting them to provide a submission to ensure that the auditor has access to comprehensive information, ensuring that taxpayers are informed about their rights and the appeal process.
3.84 The Committee also recommends amending the makeup of review panels to include independent members, and that they be chaired at the Deputy Commissioner level or above.
3.85 The Committee recommends the Inspector General of Taxation be renamed the ‘Taxpayer Advocate’, and that the role aligns more closely with the powers and structure of the United States Taxpayer Advocate, based on the needs of the Australian tax system.
3.86 The Taxpayer Advocate must continue to have the freedom and independence enjoyed by the current Inspector General of Taxation.