Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Tax and Revenue, I present the committee's report entitled Tax Disputes, together with the minutes of proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—Disputes between taxpayers and the Australian Taxation Office are an unavoidable feature of our tax system. This inquiry has come about because stakeholders and taxpayers have expressed deep concern that the tax office does not always use its powers in a judicious manner and does not always treat taxpayers fairly and with respect. The committee acknowledges there have been improvements. Over the past four years, the tax office has demonstrated a trend to settle matters earlier. The current commissioner has embarked on a project of reinventing the tax office. However, the severity of outcomes for some taxpayers convinced the committee that an inquiry was warranted.

The committee commenced the inquiry in June 2014 with a focus on small taxpayers and individuals. The committee requested the Inspector-General of Taxation to conduct a similar inquiry concentrating on large taxpayers and high-wealth individuals. One of the key issues in the inquiry was the degree of separation between auditors and objection officers. Over the last 20 years, both of these functions have been within the compliance area of the tax office. The committee received evidence that objection decisions are now less likely to demonstrate independence or that a taxpayer's matter has been freshly examined.

Recently, objections for entities with a turnover above $100 million annually have been transferred to the legal area in the tax office. The committee's recommendations build on this reform. The committee believes that an additional second commissioner should be created that manages objections and appeals and that there should be stricter controls on communications between auditors and objection officers. This has been a prior recommendation of the Inspector-General of Taxation in relation to large taxpayers and high-wealth individuals.

Another important matter is how the tax office manages cases involving fraud and evasion or alleged fraud and evasion. The committee received evidence that auditors sometimes allege fraud or evasion without turning their mind to the question of whether fraud or evasion actually exists. The taxpayer then has the burden of proof against an allegation for which the tax office may have had only limited evidence. The committee believes that findings or allegations of fraud or evasion should only be made by an officer from the Senior Executive Service. The committee would also like to see the burden of proof on these issues switch back to the commissioner once the statutory record-keeping period for taxpayers has expired.

Two other major issues in the inquiry were that the tax office occasionally refuses to engage with taxpayers and that the tax office can sometimes make unreasonable requests for information from taxpayers in terms of both volume and deadlines. The committee has made recommendations to address both of these issues.

Many people contributed to this inquiry. I would especially like to thank the previous chair of the committee, the member for Bennelong. This member's leadership helped establish the committee and contributed to the quality of the evidence and goodwill during the inquiry. I would also like to thank the Inspector-General for conducting his review of disputes from the perspective of large taxpayers and high-wealth individuals The Inspector-General's report was released last month and the committee has referred to it at various points in this report. Further, the Inspector-General has built up a body of work that the committee was able to refer to during the inquiry. The committee has taken the opportunity to reiterate some of the Inspector-General's prior recommendations. I would like to take this opportunity to thank my fellow committee members and the individuals and organisations who assisted the committee by making submissions and giving evidence. Finally, on behalf of my fellow committee members, I would like to thank Mr David Monk and the staff at the secretariat of the Committee on Tax and Revenue for their commitment and diligence throughout this inquiry. The committee believes that the tax office is a well run, highly professional organisation and that the vast majority of disputes are handled in an appropriate and fair manner. The committee does not wish to see this report as lessening the tax office's role in collecting revenue legally due. However, there is scope for improvement and full implementation of the committee's recommendations will produce a fairer tax system, leading to better outcomes for taxpayers and also for the tax office. I commend the report to the House.

Report made a parliamentary paper in accordance with standing order 39(e).