The management of tax disputes
A report to the Assistant Treasurer
Table of Contents
Telephone: (02) 8239 2111
Facsimile: (02) 8239 2100
Level 19, 50 Bridge Street
Sydney NSW 2000
GPO Box 551
Sydney NSW 2001
30 January 2015
The Hon Josh Frydenberg MP
Canberra ACT 2600
Review into the management of tax disputes
I am pleased to present you with my report of the above review which was undertaken at the request of the House of Representatives Standing Committee on Tax and Revenue (the Committee) to assist with the large business and high wealth individual (HWI) themes of its Inquiry into Tax Disputes (the Inquiry). The Inquiry had been referred to the Committee by the then Acting Assistant Treasurer, Senator the Hon Mathias Cormann.
The underlying cause of the concerns raised, with respect to the ATO’s management of tax disputes, is a lack of independence between its original decision makers and its officers reviewing such decisions upon the taxpayer’s request. Arguably, the ATO has had the least amount of separation between these functions when assessed against revenue authorities of comparable jurisdictions. It is, therefore, not surprising that many taxpayers felt that their cases were not being independently reviewed and that the system was not treating them fairly and equitably.
In response to these concerns, the ATO has recently begun to take action mainly with respect to large businesses and HWIs. In this report, I acknowledge these recent improvements and recommend further structural separation which would include the establishment of a separate and dedicated Appeals Group to be headed by a new Second Commissioner. The Appeals Group would be responsible for managing pre-assessment reviews, objections and litigation for all taxpayers including small businesses and individuals. Such separation provides the highest level of independence whilst retaining the review function within the ATO. It facilitates a fresh and impartial review of the taxpayer’s case whilst ensuring that any settlements are adequately scrutinised and in the best interest of the community.
I recognise that creating a separate agency rather than a new Appeals Group within the ATO would provide the ultimate level of independence, however, I am of the view that such a course of action should only be pursued if significant concerns persist after the recommended structural change has been implemented.
I offer my thanks for the support and contribution of professional bodies, tax practitioners and taxpayers. I would also like to thank the Committee and the ATO for their professional cooperation and assistance in the conduct of this review.
Inspector-General of Taxation
© Commonwealth of Australia 2015
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