ATO Implementing Inspector-General’s Recommendations

by Mary Swire, Tax-News.com, Hong Kong

24 March 2011

The Australian Assistant Treasurer has released a report compiled by the Inspector-General of Taxation (IGT) into the Australian Taxation Office's implementation of agreed recommendations, and announced that the Tax Office has advanced the vast majority of these.

The Tax Office previously agreed to implement (either in part or in whole) 41 of the 45 recommendations made in the six Inspector-General reports this review analyzed. In this latest report, the Inspector-General acknowledges that the Tax Office has implemented or made significant progress towards implementing 38 of the 41 agreed recommendations.

In the report the Inspector-General notes the Tax Office's progress represents a positive outcome, commenting that it has been responsive to the earlier reviews, as shown by the improvements made in its administrative practices and approaches.

One of the things the report focused on was the communication to taxpayers of the changes brought about by the implementation of recommendations. The Inspector-General explained: “The level of change associated with the recommendations that have been implemented by the ATO has necessitated a pro‑active approach in communicating with taxpayers. A number of methods have been used to complete this which reflects the ATO’s continuing efforts to improve its interactions with the tax community”.

This was particularly the case in the area of the ATO’s management of Goods and Services Tax (GST) audits for large taxpayers. For example, the ATO has provided taxpayers with a consolidated guide on the manner in which voluntary disclosures can be made, the type of information to be provided by a taxpayer and the resultant effect on tax, penalties and interest charges. Also, the ATO has clarified via a law administration practice statement its position on when a GST audit has started and the circumstances in which this will occur orally or by letter.

The ATO has also been proactive in updating taxpayers about the availability of test case funding with the release in 2009 of a revised booklet on the ATO’s test case litigation program. A dedicated webpage on the ATO website was established for the booklet. A number of changes were incorporated into the booklet to provide further clarity for taxpayers about the criteria of cases eligible for funding and included more comprehensive guidance on the process involved with cases taken to the High Court. A flow chart describing the test case funding process was also included following representations from a leading professional association to provide further clarity for taxpayers.

The Inspector-General also said that he recognizes the efforts undertaken by the ATO in advising taxpayers of the changes following on from IGT reviews, saying: “The level of information communicated has on the whole been done in a practical and accessible manner via a range of approaches. It is important for these efforts to continue as further changes arise in connection with the recommendations”.

This report is the second of two reviews undertaken by the Inspector-General to examine the Tax Office's implementation of the agreed recommendations from all Inspector-General reports provided to government up until October 2008.

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