Thursday, 21 February 2019
Standing Committee on Tax and Revenue; Report
On behalf of the Standing Committee on Tax and Revenue, I present the committee's report entitled 2017 annual report of the Australian Taxation Office: fairness, functions and frameworks—performance review, together with the minutes of proceedings, and I seek leave of the House to make a short statement in connection with the report.
I am pleased to present the Standing Committee on Tax and Revenue's review of the Australian Taxation Office's 2017 annual report.
This report has a subtitle which highlights the topics of interest to the committee in this review: the ATO's fairness to taxpayers and tax professionals, and how its functions and frameworks service that core commitment.
According to the ATO's 2017 annual report, the reinvention program has delivered against the goal of improving voluntary compliance over the tax year. Tax lodgements were up again strongly—a positive outcome for the ATO.
Nevertheless the 2016–17 reporting period was a challenging one for the ATO. Prolonged IT system outages in late 2016 and early 2017 left tax professionals without service access for lengthy periods. In May 2017 the revelations of Operation Elbrus rocked ATO confidence in its internal integrity management.
Then, as the committee commenced its annual report review in March 2018, there was an acceleration of bad press as the ATO fought off allegations of systemic unfairness to small business and performance driven debt action, later televised in an ABC/Fairfax media expose in April 2018.
These developments strengthened the committee's resolve to conduct a more rigorous performance review of the ATO's progress against reinvention values and objectives—to test the ATO's annual reportage against the experience of the taxpayer in the community.
The committee's inquiry attracted 30 submissions, 18 of these from taxpayers in dispute with the ATO, as well as from tax professionals assisting them. The committee has made 37 recommendations to ensure that there is consistent agency-wide benchmarking and reportage against core reinvention commitments on fairness to taxpayers and on digital functionality.
The report also recommends for improved data disaggregation on small business debt, including on garnishees, the restructuring of the ATO's appeals, dispute resolution and compensation processes, refinement of key aspects of tax law, and improvements to the ATO's communications and information strategies.
This annual report inquiry was unusual perhaps in that it drew on events after the reporting period to scrutinise ATO reportage in its annual report after the annual report for 2017–18 had been tabled.
The committee was pleased to see that while some of the measures recommended were not met in entirety as anticipated, the committee's scrutiny process had resulted in some improvements to comparative data on debt, and in farness measurement.
The committee thanks the taxpayers, tax agents and small business representatives who participated in the inquiry. The committee is also grateful to the ANAO and the retiring Inspector-General of Taxation , Mr Ali Noroozi, for their candid advice on the deficiencies in the current reportage on the costs and benefits of the reinvention program to taxpayers.
The committee also heard from experts in governance and in our compliance system who supported the committee's view that in a digital world, it is more important than ever that the ATO listens to and is responding to the concerns of taxpayers and tax professionals.
The recommendations made in this report intend to adjust the imbalance of power perceived by taxpayers in their engagement with the ATO, and regain their trust in our tax system.
I would also mention at this time that many members of the public, even those who are tax professionals and have a deep commanding of tax law, find it very difficult to access the committee system of the parliament. Therefore, it might be worth considering what more we can do to encourage members it the community to express directly to members of this House how legislation can be improved and the practical impacts of legislation that we pass here. It was, to me, particularly noteworthy that despite the wide-scale outages at the ATO and the mass loss of income that tax agents suffered, very few either knew or were willing to stand before the parliamentary committee to tell us of how it had cost them personally and their businesses practically. Therefore, I think there is more that we can do in this regard. Having said that, the work of the committee secretariat is superlative. Their performance, as always, has been fantastic.
I commend the report to the House.