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Review into improving the self assessment system

A report to the Assistant Treasurer

August 2012

Table of Contents


Telephone: (02) 8239 2111
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Australian Government - Inspector-General of Taxation crest

Level 19, 50 Bridge Street
Sydney NSW 2000
GPO Box 551
Sydney NSW 2001

24 August 2012

The Hon. David Bradbury MP
Assistant Treasurer and Minister Assisting for Deregulation
Parliament House
Canberra ACT 2600

Dear Minister

Review into Improving the Self Assessment System

I am pleased to present my report of the review into improving aspects of the income tax self assessment system.

This review arose largely due to an emerging global trend amongst revenue agencies to bring compliance activities forward and, in some cases, prior to lodgement of returns. It seems that the pendulum is swinging back from pure self assessment to a quasi-full assessment system, without many of the perceived benefits of the former regime. The review has focused on areas in need of most attention which were highlighted by a wide range of individual and business taxpayers, tax practitioners and their representative bodies.

Overall, I have made 33 recommendations directed at improving taxpayer certainty, reducing compliance costs and rebalancing taxpayer protections. Almost half of these are directed to the Government whilst the remainder are directed to the ATO.

A key area identified for improvement, amongst others, is the augmentation of existing public consultation processes with tripartite tax law design teams (comprising ATO and Treasury senior officials as well as paid external tax experts) who are engaged to provide advice on the proposed tax law, relevant explanatory memoranda and the nature and timing of ATO advice.

I have also made recommendations relating to key features of the current self assessment regime including, the penalties and interest regime, the Commissioner’s administrative discretion, amendments periods and the ATO’s advice framework.

The ATO has agreed, either in full, in part or in principle, with the vast majority of the recommendations made to it. The main disagreement, relating to declaring e-tax and a reinstated TaxPack as public rulings, gives rise to uncertainty particularly for individual taxpayers.

I offer my thanks to taxpayers, tax practitioners and their representative bodies for their time in preparing submissions and discussing issues with myself and my staff. I also thank the ATO and Treasury officers for their professional cooperation and assistance.

Yours faithfully

[SIGNED]

Ali Noroozi
Inspector General of Taxation


© Commonwealth of Australia 2012

ISBN 978-0-642-74845-4

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