Published on: 20 Oct 2022
SYDNEY, Thursday, 20 October 2022: Karen Payne, Inspector General of Taxation and Taxation Ombudsman (IGTO), today opened up about the importance of integrity as it pertains to the functions, powers and duties of the Australian Taxation Office (ATO). She argued data-driven processes are key to improving the tax system at The Tax Summit 2022, presented by The Tax Institute.
“I’m really interested, particularly in my role now as the ombudsman, in seeing how we can use our data to improve the system,” Payne said.
“If you're not capturing reliable data, which we're advised is not being done – partly because it is a manual system – then how are you ever going to identify where the opportunities are for improvement? And I'd like to encourage that we should move to that [data-centred] mindset to actually improve our tax administration system.”
According to Payne, objections to an assessment, even if sent via email, are not being properly recorded because the process is paper-based and totally manual. She said this creates questions about the quality of the data that is available for monitoring the objection process and improving the system.
“Why are more than 50% of individuals having to object to amend their own assessment?” Payne asked. “I think that's odd, and I would like to know more about that.”
Having more data and better integrity of data is key to improving the system and bringing it up to speed with the 21st century, Payne insisted.
Legislations that impacted the IGTO’s investigations
During the keynote, Payne also referenced legislation that impacted the IGTO’s investigations, including:
“The Exercise of the General Powers of Administration review [is the one] I am most interested in because I think it offers some wonderful opportunities and benefits to improve decision-making,” Payne said.
The little-understood role of the Tax Ombudsman
During her keynote, Payne also unpacked the mysterious role of the Tax Ombudsman. In an age where the ATO and TPB (Tax Practitioners Board) have wide-reaching statutory powers, the function performed by the IGTO’s office provides a vital means of ensuring that taxation laws are applied fairly and in a way that is consistent with community expectations and fairness.
“We [the IGTO] contribute to the overall integrity and transparency of the tax system,” she said. “People are more willing to engage with the tax system where they trust in its integrity. And if you've got a self-assessment system of taxation, you need people to be voluntarily complying.”
The IGTO typically investigates under two circumstances: one, somebody brings their concerns or their complaint about tax administration to them (in which case the IGTO would conduct an independent investigation and provide the individual or business with a report) or two, the IGTO see a trend emerging in complaints, or through their engagement with stakeholders, and looks into whether there is a systemic issue at play.
“If I have to give you one word to say what it is that the Ombudsman does, [it’s] ‘investigate,’” Payne explained.
Taking inspiration from New Zealand’s tax model
Payne believes it would be beneficial for Australia to take inspiration from New Zealand’s Tax Administration Act because of how it lays out the general powers of administration. “They have duties on care and management. The Commissioner is charged with care and management of the taxes covered by global revenue acts and with such other functions as may be conferred.”
To summarise, the Commissioner is expected to collect the maximum amount of tax possible, but within the limits of the law. Payne quoted the following from the relevant Parliamentary Act:
“This is the overarching framework: it is the duty of the Commissioner to collect, over time, the highest net revenue that is practicable within the law having regard to this, having regard to the resources that are made available to the Commissioner, having regard to the importance of promoting compliance, especially voluntary compliance by all persons within the Inland Revenue acts and also to have regard to the compliance costs to be incurred by persons.”
Payne concluded that this is not the only framework or “formulation of words” that could be beneficial, but it is one way. “It provides more clarity and is a better framework than our Act, which says the Commissioner has general powers of administration.
“It’s important this is in the Act, so the parliament is directing the Commissioner and all of these tax officials, [saying] you must have regard to integrity, and you must have care management responsibilities of the Act. And this is how we as a parliament expect you to administer the laws.”
Payne joins a compelling speaker line-up of the nation's most forward-thinking minds at The Tax Summit, including former Prime Minister, The Hon Malcolm Turnbull AC, Atlassian Work Futurist Dominic Price and Allegra Spender MP. With a theme of “Shine Together”, The Tax Summit is being held at The International Convention Centre (ICC) Sydney and sees attendees, ranging from taxation specialists, accountants, newcomer tax professionals, business leaders as well as anyone with an interest in the latest issues impacting businesses on a local and global scale.
The Tax Institute (TTI) is the leading forum for the tax community in Australia. It is committed to furthering tax education, representing its members and continuously improving the tax system for the benefit of all. Its newly launched Graduate Certificate in Applied Tax Law is an ideal stepping-stone to a specialist post-graduate qualification in tax. TTI selected four subjects to provide a strong knowledge of the key tax compliance requirements in the Australian tax system, as well as an in-depth understanding of Australian commercial law. For professionals working in an accounting or legal role with an interest in tax, this is a great opportunity.
About Karen Payne, Inspector General of Taxation and Taxation Ombudsman
Karen was appointed Inspector-General of Taxation & Taxation Ombudsman commencing on 6 May 2019. She leads the Taxation Ombudsman complaints management service for taxpayers and advisers and the Inspector-General of Taxation’s review and public reporting function, both of which are directed at improving the tax administration system for all taxpayers.
Karen was previously a Member of the Board of Taxation as well as the inaugural Chief Executive Officer of the Board of Taxation. She was formerly a partner with MinterEllison, specialising in corporate and international tax for mergers and acquisitions, and capital raising for the financial services, mining, energy, and utilities sectors. She brings a wealth of experience and extensive networks to the role of Inspector-General having worked with a range of government and private stakeholders as well as the legal and tax profession, and many industry bodies.
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Azadeh Williams – Founder & Managing Partner, AZK Media