Tax Ombudsman hands down GIC remission review findings

“One of the main concerns raised in this review is inconsistency of the ATO’s GIC remission decisions,” the Ombudsman’s report read.

“This is due, in large, to the ATO’s guidance to taxpayers and its staff which has been too vague. This has led to unfair outcomes with some genuine and deserving applications rejected and others that should rightly be declined being approved.”

Owen’s review found that the ATO had failed to clearly communicate when it tightened its approach to GIC remission in late 2023, leaving taxpayers confused and frustrated. The balance of GIC owed to the ATO (185 per cent) outpaced the growth in uncontested tax debt (94 per cent) by almost double between 2019 and 2025, the Ombudsman found.

ATO guidance on how and when GIC should be remitted was also confusing, with one survey finding that 81 per cent of taxpayers and 67 per cent of tax practitioners found the ATO’s GIC Practice Statement to be “confusing and unhelpful.”

Furthermore, a lack of consistency in ATO decision-making was prompting tax agents to ‘shop around’ for GIC remissions, calling the ATO multiple times until they reached an agent who would grant them a remission.

"We submitted three identical GIC remission requests for a client and two related entities.... While two requests were granted, the other request involving the larger amount was denied in full," one practitioner reported to the Ombudsman.

The review found that GIC remission requests had different success rates depending on the medium used to submit them. Requests submitted over the phone were approved 92 per cent of the time, while 76 per cent of written requests were approved.

These inconsistencies stemmed from poor internal procedures amongst ATO staff that administered GIC remissions, the Ombudsman noted.

“The ATO review also highlighted that staff administering GIC remissions by phone were generally not following internal guidance or procedures,” the review read.

“This suggests a high degree of non-compliance, due to unclear guidance or feeling pressured to agree while on the phone to a taxpayer or representative.”

Furthermore, an internal 2024 review concluded that officers did not understand the information required to make a decision. The ATO had since made changes to address this.

In a bid to boost taxpayer education and increase transparency regarding GIC remissions, the ATO released a series of case studies in January to clarify common situations that warrant a GIC remission. It also shifted penalty remission requests online to a dedicated team to improve consistency.

The Ombudsman also made a series of recommendations for the ATO to address concerns about inconsistencies, which the Tax Office accepted in full.

Firstly, it suggested the ATO conduct regular calibration settings to ensure staff were equipped to handle complex GIC applications. It also said the ATO should clarify its internal guidance on when officers should request more information when assessing GIC requests.

The Ombudsman also said the ATO should prompt officers to consider whether ‘special circumstances’ such as serious hardship or vulnerability applied at the earliest stage possible.

In her review, the Ombudsman also found that the ATO’s approach to tax debts was making it difficult for even well-meaning taxpayers to service their debts. As interest is compounded daily, small debts could quickly become unaffordable, minimising taxpayers’ ability to make a full repayment.

Furthermore, the ATO’s GIC remission letters were described as “generic, unhelpful and [lacking] empathy” in the review. Letters did not explain how decisions were made, whether evidence was missing or incomplete, or taxpayers’ options for next steps. The ATO agreed to improve its letter templates to address these issues.

“Interest charges (and the ATO’s increasing refusal to reduce or refund them) is contributing to growth in tax debt, increased financial stress for Australia’s struggling families and small businesses, leading to a loss in confidence in the tax system,” Owen said of her broader review.

“The ATO’s decision-making isn’t meeting community expectations. In particular, it is impacting too harshly on some taxpayers trying to do the right thing in repaying their tax debts.”