The House of Representatives standing committee on tax and revenue has this week released its Commissioner of Taxation annual report.
The report, which focused on matters stemming from the 2018-19 financial year outlines 19 recommendations to deliver better services to taxpayers and improve the efficiency of the administration of Australia’s tax system.
Among the 19 recommendations is a call for the ATO to provide increased levels of transparency and communication about its compliance activities. By doing so, trust and confidence would be improved in tax administration in Australia, the report noted.
In a similar vein, a recommendation was made for the ATO to record in its annual reports “a breakdown of resourcing both by business areas and job family to increase transparency in the allocation of resources and accountability for resources and funding allocated to special programs and taskforces, and that resources are matched with activities and outcomes”.
Another key recommendation centred around upgrading the Inspector General of Taxation to an office based on the “Taxpayer Advocate,” as developed in the US.
“The Taxpayer Advocate must continue to have the freedom and independence enjoyed by the current Inspector General of Taxation,” the report flagged.
Meanwhile, the report also made two recommendations relating to combating fraud and/or evasion.
The first of these recommended that legislation be introduced to shift the onus of proof to the Australian Taxation Office in relation to allegations of fraud or evasion after a certain period has elapsed.
The second recommended amending section 170 of the Income Tax Assessment Act 1936 (Cth) to reduce the statutory time frame for cases involving fraud or evasion to 10 years after the issue of an assessment by the ATO.
“The Committee also recommends that the period of review of evidence requested by the Australian Taxation Office should be harmonised with the record keeping requirements,” the report said.
“The amendment should contain provisions to extend the period on a case-by-case basis.”
Commenting off the back of the report, Elinor Kasapidis, senior manager, tax policy at CPA Australia, said: “There’s a massive asymmetry between the ATO and taxpayers, in respect of [its] size, information and resources. This report highlights the importance of reviewing and rebalancing this dynamic from time to time.
“Australia has one of the most complicated tax systems in the world.
“When it comes to disputes, debt and proof, taxpayers can face an uphill battle to assert their rights, and legal advice and representation are costly.”
Ms Kasapidis said the report further demonstrates the need for the Tax Office to address fraud and tax evasion head-on.
“A number of the recommended changes would have little impact on the profession. The report is heavily focused on fraud and tax evasion,” she explained.
Speaking specifically to the US-approach recommendations, Ms Kasapidis said: “The report recommends a number of features from the United States tax system which may not be all that suitable for Australia. In the US, the dynamic between the Internal Revenue Service and taxpayers is quite different.
“The ATO is, for the most part, held to a very high standard of accountability. Enshrining taxpayers’ rights in a bill of rights may not deliver much additional benefit given that Australia already has a Taxpayers’ Charter.
“The greatest impediment taxpayers currently face in upholding their rights is a lack of knowledge and resources.
“Unless something is done to increase taxpayers’ access to justice, it’s possible that nothing would change.”
Emma Ryan is the deputy head of content at Momentum Media and editor of the company's legal publication, Lawyers Weekly.
Emma has worked for Momentum Media since 2015 and has been responsible for breaking some of the biggest stories in corporate Australia. In addition, she has produced exclusive multimedia and event content related to the company's respective brands and audiences.
A journalist by training, Emma has spent her career connecting with key industry stakeholders across a variety of platforms, including online, podcast and radio. She graduated from Charles Sturt University with a Bachelor of Communications (Journalism).