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Review into aspects of the Tax Office’s settlement of active compliance activities

A Report to the Assistant Treasurer

October 2009

Table of Contents


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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

20 October 2009

Senator the Hon Nick Sherry
Assistant Treasurer
Parliament House
CANBERRA ACT 2600

Dear Minister,

I am pleased to present to you my report on the review into the Tax Office’s settlement of active compliance activities. This report has been prepared under section 10 of the Inspector-General of Taxation Act 2003.

My office has worked extensively with the Tax Office to agree on a significant range of actions aimed at improving Tax Office settlement administration, including closely related ‘upstream’ active compliance matters.

Overall, I believe that settlements are a necessary and important feature of tax administration. Providing they are appropriately administered and there is community confidence in the integrity of the system, settlements are an efficient and effective means of finalising many cases. I would be concerned if action was taken to reduce access to settlements as a means of resolving tax disputes.

In examining the basis for concerns raised by interested parties, I found that although the Tax Office has a substantial framework of policies and procedures for the conduct and finalisation of active compliance activities and settlements, there were a number of areas with scope for improvement. In this regard we have made 24 recommendations, with all of which the Tax Office has agreed. These recommendations are not only aimed at improving settlement administration but are also intended to increase community confidence in the transparency, consistency, correctness and integrity of settlement decisions and the upstream processes. The Tax Office’s detailed comments are set out in Chapter 4.

In accordance with current practices, I will review the implementation of this work at a future date.

The Commissioner of Taxation has also commented positively on this review’s process and outcomes. His formal response is reproduced in Appendix 3. I welcome these comments and intend to build on this goodwill to further improve my office’s and the Tax Office’s handling of my reviews.

I also offer my thanks to the support and contribution of professional bodies, business groups and legal practitioners to this review. The willingness of many to provide their time and expertise in preparing submissions and discussing the issues with my office is greatly appreciated.

[SIGNED]

Ali Noroozi
Inspector-General of Taxation


© Commonwealth of Australia 2009

ISBN 978-0-642-74563-7

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth.