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Part 2: Performance report

The performance report for the IGT is divided into two sections:

Reviews conducted during the financial year

The following table lists the reviews conducted during the 2012-13 financial year.

Table 1: IGT reviews and their status as at 30 June 2013
IGT reviews Status as at
30 June 2013
Review into the ATO’s use of early and Alternative Dispute Resolution Report publicly released
Review into the ATO’s use of benchmarking to target the cash economy Report publicly released
Review into improving the self assessment system Report publicly released
Review into the ATO’s management of transfer pricing matters In progress
Review into aspects of the ATO’s use of compliance risk assessment tools Final stages of review
Review into the ATO’s administration of penalties In progress
Review into the ATO’s compliance approach to individual taxpayers — income tax refund integrity program Final stages of review
Review into the ATO’s compliance approach to individual taxpayers — use of data matching Final stages of review
Review into the ATO’s compliance approach to individual taxpayers — superannuation excess contributions tax In progress
Review into the ATO’s implementation of agreed recommendations arising out of reports published between August 2009 and November 2010 In progress

The reviews that were completed and the reports of which have been released publically during this financial year, namely: the ADR, benchmarking and self assessment reviews, have been described in Part 1 of this report.

A brief description of the reviews that were commenced during this financial year is set out below:

The IGT can make more comment on these reviews, when they are completed and publicly released by the Minister.

More details on progress of reviews and access to publicly released reports are available on the IGT website.

Outcome 1
Improved tax administration through community consultation, review, and independent advice to Government

The role of the IGT is to improve the administration of the tax laws for the benefit of all taxpayers.

Key strategies to achieve Outcome 1 are:

The IGT has two outputs which are derived from statutory requirements. These are:

  1. identification of systemic issues for inclusion in the work program; and
  2. provision of independent advice to Government on the administration of the tax laws.

The scope of the work program is determined by the IGT. However, the IGT Act also provides that the Minister may direct that a matter be included on the work program and that the IGT may consider requests to conduct reviews from:

The Commissioner of Taxation has statutory independence in his administration of tax laws. The IGT does not hold any powers to direct the Commissioner in this regard.

The way in which the IGT’s advice to Government contributes to the achievement of the outcome of improved administration of tax laws takes several forms.

First, the provision of advice to Government may be policy in nature and lead to legislative change to address an identified systemic issue.

Second, and more commonly, the Commissioner may independently address systemic issues identified by the IGT during a review or following the release of a review report by the Minister.

Third, improved administration of tax laws can also be achieved without formal advice to Government by direct day-to-day interaction between the IGT and the ATO.

Output 1.1.1
Issues identification, work program and review action

Issues identification

The IGT is in constant dialogue with the broader tax community. Issues are regularly raised by stakeholders through this dialogue. The IGT then works through these issues and assesses what action is required. Some issues are more appropriately addressed by other government agencies and these are referred to them. Issues that are then appropriate for consideration by the IGT are placed on a potential work program list — this process is discussed in more detail in the next section.

Work program

The IGT engages with the community to identify and prioritise those issues or topics on the potential work program list, which provide significant opportunity to improve the administration of the tax system for all taxpayers. This prioritisation process means that the work program as finalised is a smaller sub-set of the potential work program.

Topics on the potential work program list that are not included on the final work program are maintained on the IGT reserve list. Topics on the reserve list may be elevated into the active work program where opportunity and resource availability combine to allow review.

The IGT periodically refreshes his work program to ensure it remains focussed on the community’s main concerns. In this respect, the IGT will commence consultation on his forward work program early in 2014. The topics for future review will be announced following this consultation.

The new work program must be flexible in actioning specific reviews to take account of competing priorities that may arise due to various factors.

Ministerial direction is a factor. The Minister has previously directed the IGT to undertake several reviews, including the so-called ‘U-turns’ review and the review into the ATO’s Change Program.

Government agency reviews are also a factor. This arises where other agencies announce or consider reviews that may have a degree of overlap with a proposed IGT review. In these circumstances, it would be more efficient for the IGT to defer making a decision to commence such a review until the insights of the other agency’s review are made available. In particular, as discussed in Part 1, one of the main purposes of the annual meeting amongst the Commonwealth Auditor-General, the Commonwealth Ombudsman and the IGT is to ensure any such overlaps of our respective reviews are avoided.

Resourcing is another factor. A review’s timing and scope is also very difficult to pin-point as they are often determined by the bespoke nature of each undertaking as well as the priorities afforded by various parties and the small nature of the IGT office. The IGT actively seeks to mitigate the tension between the need for flexibility and undue delay through regular project management review.

Work program details including updates can be located on the IGT website.

Review action

The next step is to action the specific review and thereafter finalise that review by reporting to the Minister with findings and recommendations for improvement.

To action a specific review, the IGT publishes on his website the terms of reference for the review along with submission guidelines or consultation plans. These materials invite submissions from interested parties.

Following the receipt of submissions, the IGT obtains relevant information and considers the emerging issues. Views are formulated and discussed with the ATO and other interested parties. This ensures that recommendations for improvement are evidentiary-based and consider relevant stakeholders’ views.

Descriptions of the review action that took place during this financial year are set out in the ‘Reviews conducted during the financial year’ section above and in Part 1.

Performance information

Reviews in progress at the start of, or commenced during, the financial year

At the start of the 2012-13 financial year, the benchmarking and self assessment reviews were in progress.

An additional seven reviews were commenced during the year:

Reviews finalised

By year end, the benchmarking and self assessment reviews were finalised.

The IGT review reports are performance outputs that are discussed in section 1.1.2 further below.

Reviews in progress as at the end of the financial year

The IGT has seven reviews in the stages of completion as at 30 June 2013. As the reviews are in progress the IGT is not in a position to report details on findings or recommendations at this time. These reviews are:

Conferences and seminars

During the 2012-13 financial year, the IGT has addressed a number of conferences and seminars, consistent with our key strategy of creating broader public awareness of the IGT as an avenue to raise tax administration issues. Attendance and participation in these various engagements has also allowed the IGT to undertake comparisons with our foreign counterparts, which have enhanced our capabilities and objectivity.

The key speaking engagements undertaken during the 2012-13 financial year are set out in the table below.

Table 2: Key speaking engagements
Date Organisation Type of function Location
2 July 2012 The Institute of Chartered Accountants in England and Wales Seminar UK
13 July 2012 The Institute of Chartered Accountants in Australia (ICAA) Seminar Adelaide
13 July 2012 Carnegie Mellon University Convocation Adelaide
18 July 2012 Deloitte Presentation to Tax Partners and Directors Sydney
17 August 2012 Greenwoods & Freehills Seminar : Alternative Dispute Resolution Melbourne
21 August 2012 Greenwoods & Freehills Seminar: Alternative Dispute Resolution Sydney
27 August 2012 CCH Australia Corporate Tax Advisers Network Event (CTMN): ATO Round Table Melbourne
30 August 2012 Curtin University Lecture Canberra
9 October 2012 The Tax Institute Seminar Sydney
11 October 2012 The Tax Institute The Tax Institute’s 51st Victorian State Convention Lorne
28 October 2012 Law Council of Australia Law Council of Australia’s Annual Tax Workshop 2012 Melbourne
8 November 2012 CCH Australia CCH Gateway Forum Perth
8 November 2012 University of Sydney Master of Taxation Administration Presentation Sydney
9 November 2012 American Bar Association International Tax Enforcement Conference USA
13 November 2012 CCH Australia CCH Gateway Forum Brisbane
15 November 2012 CCH Australia CCH Gateway Forum Sydney
16 November 2012 CCH Australia CCH Gateway Forum Newcastle
19 November 2012 PricewaterhouseCoopers (PwC) PwC Discussion Group Luncheon Sydney
21 November 2012 CCH Australia CCH Gateway Forum Adelaide
22 November 2012 CCH Australia CCH Gateway Forum Melbourne
23 November 2012 ICAA ICAA National Tax Conference Sydney
29 November 2012 PwC PwC Discussion Group Luncheon Melbourne
13 February 2013 Institute of Public Accountants (IPA) IPA Burwood Professional Development Forum Sydney
14 February 2013 The Tax Institute Financial Services Taxation Conference Gold Coast
26 February 2013 Akolade Australasian Transfer Pricing Forum 2013 Sydney
11 March 2013 CPA Australia CPA Innerwest Accountants Discussion Group Sydney
12 March 2013 PwC PwC Luncheon Presentation Perth
12 March 2013 Curtin University Lecture Perth
26 March 2013 The Tax Institute International Tax Directors Forum Sydney
28 March 2013 Deloitte Property Heads of Tax Luncheon Sydney
18 April 2013 CEO Forum Group International CFO Forum Melbourne
22 April 2013 ATAX, University of New South Wales (UNSW) ATAX 25th Anniversary GST Conference Brisbane
17 May 2013 University of Melbourne Comparative GAAR Conference Melbourne
18 June 2013 Corporate Tax Association (CTA) CTA’s 2013 Annual Convention Melbourne

Output 1.1.2
Independent advice to Government — tax laws administration

The IGT provides independent advice to Government. The nature of this advice is primarily provided via review reports that are given to the Minister. It may also take the form of directly briefing the Minister — see Division 2 of the IGT Act.

The review reports detail IGT findings and outline recommendations for the improvement of tax administration. Review reports are provided to the Minister after providing the Commissioner of Taxation with the opportunity to make a submission — see section 25 of the IGT Act.

Once the Minister receives the IGT report, it must be published either by tabling in both Houses of the Parliament or otherwise, within 25 sitting days of receipt — see section 11 of the IGT Act.

Performance information

The following information sets out the action taken in relation to IGT review reports.

Reports with the Minister as at the start of and during the financial year

At the start of the 2012-13 financial year, the report of the ADR review was with the Minister.

During the 2012-13 financial year, the reports of the benchmarking review (sent on 16 July 2012) and self assessment review (sent on 24 August 2012) were delivered to the Minister.

Reports publicly released by the Minister during the financial year

During the 2012-13 financial year, the Minister publicly released the reports of the ADR, benchmarking and self assessment reviews on 31 July 2012, 4 October 2012 and 13 February 2013, respectively.

Copies of publicly released reports can be obtained from the IGT website.

Reports remaining with the Minister as at the end of the financial year

There are no reports remaining with the Minister as at the end of the 2012-13 financial year.

Outcomes

Historically, the Commissioner of Taxation has accepted fully or in part the vast majority of the IGT’s recommendations. This trend continues for reviews publicly released in 2012-13, with the Commissioner accepting fully or in part 46 of the 48 recommendations made to the ATO — refer to Table 3 below.

The outcomes of these reviews, combined with feedback from community stakeholders and the ATO, provide clear evidence that the role of the IGT is achieving its objectives and is improving aspects of tax administration for the benefit of all taxpayers.

Table 3: Recommendations in publicly released IGT reports during 2012-13
IGT review Number of recommendations accepted fully, in part or in principle by the ATO Number of recommendations requiring Government consideration Number of recommendations disagreed by the ATO
Review into the ATO’s use of early and Alternative Dispute Resolution 20 1 1
Review into the ATO’s use of benchmarking to target the cash economy 11 0 0
Review into improving the self assessment system 15a 19a 1
Total 46 20 2

(a) 33 recommendations were made in this review; however, two recommendations contain parts requiring consideration by both the ATO and the Government.

Financial performance

The IGT received an unmodified audit report on the 2012-13 financial statements from the Australian National Audit Office. These statements can be found in Part 4 of this report.

The IGT ended 2012-13 with a surplus of $53,303 compared with a surplus of $373,762 in 2011-12.

The agency has sufficient cash and reserves to fund its liabilities as and when they fall due.