The new investigation by Inspector-General of Taxation and Taxation Ombudsman (IGTO) Karen Payne comes after she noticed that ATO correspondence may not clearly advise taxpayers and their representatives of their rights to review, complain and appeal decisions made and actions taken by the ATO.
The investigation will prioritise ATO communications which concern debt decisions, as well as individuals and small-business taxpayers who are unlikely to have significant financial resources to appeal taxation decisions.
According to the IGTO, the right to review, complain and appeal decisions is an important feature of procedural fairness and is consistent with the Taxpayers’ Charter.
Ms Payne will examine whether ATO written communications to taxpayers and their tax agents appropriately provides complete information on formal and informal review rights available to taxpayers.
“In some cases, the correspondence includes information on formal review rights with no reference to taxpayers’ rights to an internal ATO review or the ability to lodge a complaint with the ATO or the IGTO,” said the IGTO’s term of reference.
“As a result, taxpayers may not be fully aware of their review rights and, importantly, may only be made aware of options that may incur significant court and professional fees.”
Chartered Accountants Australia and New Zealand tax leader Michael Croker said the review was timely, given the ATO’s role in delivering a range of COVID-19 measures such as the cash-flow boost, JobKeeper and early access to superannuation.
“Inevitably, COVID-19 relief has created winners and losers, and the ATO is conveying tough messages about eligibility. The ATO’s Integrity Unit is also now out and about contacting some businesses and individuals questioning whether they were entitled in the first place,” Mr Croker said.
“Having worked so hard to help clients access COVID-19 stimulus benefits, some accountants now find themselves defending a client’s continued entitlement or helping with voluntary disclosures to the ATO.
“In a stressful COVID-19 environment, it’s so important that those contacted by the ATO know their rights. Getting it wrong can destroy livelihoods.”
Mr Croker also noted that taxpayers should be made aware of the various avenues to dispute or question a decision made by the ATO, including directly approach the Tax Office, contacting the IGTO, or through the Administrative Appeals Tribunal or Federal Court of Australia.
“Although the ATO does what it can to make compliance with the tax law easy, the foundations of Australia’s tax system are notoriously complex. Mistakes happen. ATO decisions aren’t always right, either because it doesn’t have all the facts or there’s a legitimate, contrary legal interpretation,” Mr Croker said.
“Taxpayers — especially those who don’t have deep pockets — need to know that there are low-cost, speedy avenues to seek redress.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.