A review of the effectiveness of the ATO’s communications of taxpayer rights to complain mounted by the Inspector-General of Taxation and Tax Ombudsman, Karen Payne, found that the ATO could be doing more to make taxpayers aware of their rights, and recommended the Taxpayer Charter include an explicit right to be informed of their right to review, complain, and appeal an ATO decision.
“An express right would ensure that the ATO proactively communicates this information so that taxpayers can be better informed,” Ms Payne said. “This is our first recommendation in the report – and a fundamental or foundation recommendation for all our recommendations.”
The report highlighted that while taxpayer rights through the ATO dispute process aren’t legislated, they are outlined in the Taxpayer’s Charter, a topic on which Tax Office staff aren’t required to undergo ongoing or mandatory training.
“The ATO has stated publicly on its website that it is committed to following the Taxpayers’ Charter in all its dealings with the taxpayer community,” Ms Payne said.
“Indeed, the Taxpayers’ Charter states that the ATO will “outline [the taxpayer’s] options if [they] want a decision or action reviewed including, legal review rights and the formal complaint process”.
She said that IGTO’s investigation found that in order for the objective to work in practice, taxpayers would first need to be aware of the rights that lead to such options, and how they can exercise those rights to challenge decisions.
“An express obligation within the Taxpayers Charter for the ATO to communicate taxpayer rights could produce material improvements for the taxpayer experience and fairness in the tax system,” Ms Payne said.
On the release of Ms Payne’s review, the ATO agreed to each of her recommendations, which have for some time garnered widespread support across the tax profession.
“We are delighted that the ATO have agreed to all of our recommendations,” Ms Payne said. “We note that based on recent polling, the community also appears to support a right to be informed of their taxpayer rights.”
The results of a recent survey conducted by Tax & Super Australia found that 58 per cent of respondents said the ATO did not clearly state a taxpayer’s full rights and options if they wanted to dispute a decision, while some 82 per cent of practitioners said it was something they would have to do on behalf of a client.
Just 1 per cent said that a taxpayer would find it “very easy” to dispute an unfavourable ATO decision without the help of a tax professional.
The largest cohort of respondents, at 48 per cent, said it would take an individual taxpayer “considerable effort” to go it alone against the ATO, and 40 per cent said this would be “near impossible”.
ATO acting chief law officer, Kirsten Fish, welcomed Ms Payne’s recommendations in a statement on Thursday (14 October), of which many were already being reviewed, but stood in opposition to encouraging taxpayer complaints.
“With respect to your recommendation that the ATO encourage a dissatisfied taxpayer to lodge a complaint, we are further considering the risk that this may encourage the lodgement of a complaint in preference to the exercise of a statutory review or appeal right,” Ms Fish said.
“Given complaints are limited in their ability to resolve substantive tax issues, it would not be appropriate to encourage a complaint at the expense of the exercise of statutory review rights, particularly given the time frames governing those rights.
“There may be cases where it is appropriate for complaint channels to run parallel to a taxpayer exercising their statutory review rights.”
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.