GIC remissions framework must balance 'integrity with empathy', says CPA

Tax Ombudsman Ruth Owen handed down her review of the ATO's management of GIC earlier this week, concluding that the ATO's approach to GIC remissions had not met community expectations and had led to unduly harsh outcomes for taxpayers. One of the main concerns raised in the review was the inconsistency of the ATO's remission decisions.

CPA Australia tax lead Jenny Wong said the findings aligned closely with concerns raised by members over several years, particularly regarding the treatment of taxpayers engaging with the system but experiencing genuine financial difficulty.

“We welcome the ATO’s acceptance of all recommendations and its ongoing work under the Redefining Concessions Project,” Wong said.

“This project has the potential to deliver a more coherent, consistent and transparent framework for taxpayer relief.

“However, process reform alone is not enough. Empathy and proportionality must be defining features of how these concessions are applied in practice.”

Wong said interest charges wereintended to support compliance, not to exacerbate financial distress for individuals and small businesses who are making genuine efforts to meet their obligations.

“Taxpayers who engage early, provide information and enter into payment arrangements should feel the system is working with them – not against them,” Wong said.

“GIC remission decisions must take into account the lived experience of taxpayers, particularly those acting in good faith to engage with the ATO while confronting genuine financial hardship.”

CPA Australia said it had consistently raised concerns about inconsistent processing of remission requests, unclear communication and outcomes that do not adequately consider the circumstances that led to payment delays, including illness, natural disasters, fraud, or financial shocks beyond a taxpayer’s control.

These issues became more significant since GIC became non-deductible from 1 July 2025, substantially increasing the financial impact of ATO decisions on small businesses and individuals already under pressure.

CPA Australia said the report by the Tax Ombudsman rightly highlighted the importance of clearer guidance, better communication and more consistent decision making, including decision letters that properly explain outcomes, address the evidence provided and acknowledge personal circumstances.

“Applying the same evidentiary burden to small debts as to large or complex cases undermines fairness and creates unnecessary cost and stress,” Wong said.

“A proportionate approach would support sustainable compliance while reducing administrative inefficiency.

The professional body said the ATO's Redefining Concessions Project, which aims to refresh the ATO's approach to remission of interest and failure-to-lodge penalties, was another important step forward.

"Its success will ultimately be judged by whether taxpayers and advisers see a more human, predictable and transparent approach on the ground,” Wong said.

CPA Australia said it planned to work constructively with the ATO as the reforms are implemented, including the post‑implementation review recommended by the Tax Ombudsman.

“Trust and voluntary compliance depend on fairness. A concessions framework that balances integrity with empathy – and supported by clear guidance, well‑trained decision‑makers and meaningful explanations – will strengthen confidence in the tax system and deliver better long‑term outcomes for both taxpayers and the ATO."