In a media release issued on 21 February 2013, the Assistant Treasurer, Arthur Sinodinos, announced the release of the following 3 reports by the Inspector?General of Taxation:
- Review into the Australian Taxation Office’s compliance approach to individual taxpayers – use of data matching;
- Review into the Australian Taxation Office’s compliance approach to individual taxpayers - income tax refund integrity program; and
- Review into aspects of the Australian Taxation Office’s use of compliance risk assessment tools.
The Assistant Treasurer has provided the following summary of the outcome of the 3 reviews.
REVIEW INTO THE AUSTRALIAN TAXATION OFFICE’S COMPLIANCE APPROACH TO INDIVIDUAL TAXPAYERS – USE OF DATA MATCHING
In the data matching review, the Inspector -General found that the ATO’s data matching program was generally effective in detecting instances of omitted income and that the ATO was undertaking work to enhance its processes, including manual reviews of certain cases before audits are commenced.
The Inspector-General’s report also identified a number of areas for improvement. The suggested improvements form the basis of the 13 recommendations directed to the ATO in the report.
The ATO has agreed with all recommendations with one qualification on recommendation 2.2 regarding consideration of remission of the shortfall interest charge, due to delay in commencing the data matching activities.
REVIEW INTO THE AUSTRALIAN TAXATION OFFICE’S COMPLIANCE APPROACH TO INDIVIDUAL TAXPAYERS - INCOME TAX REFUND INTEGRITY PROGRAM
The Inspector-General initiated his review of the ATO’s income tax refund integrity program following concerns of unexpected delays in processing income tax returns held by the ATO for review under the Income Tax Refund Integrity Program.
The appropriate implementation of the Inspector-General’s recommendations should result in more expedient processing under the Income Tax Refund Integrity Program. Furthermore, taxpayers and tax agents will experience improvements in communication from the ATO and will be provided with clearer lines of escalation in the tax dispute process.
The Inspector-General made 13 recommendations to the ATO. The ATO has agreed in full to 12 of these recommendations whilst agreeing to one recommendation in principle. In respect of the latter, it will require prioritisation of changes to IT systems and business processes.
The Inspector-General also notes that the ATO has decreased case actioning times in 2012?13.
REVIEW INTO ASPECTS OF THE AUSTRALIAN TAXATION OFFICE’S USE OF COMPLIANCE RISK ASSESSMENT TOOLS
In his report on the ATO’s use of risk assessment tools, the Inspector-General recommended the adoption of a set of guidelines to assist the ATO to design more effective risk assessment tools for the future. In addition, the Inspector-General made recommendations to improve existing risk assessment tools with which taxpayers have raised most concern.
The Inspector-General made 16 recommendations to the ATO and the ATO has agreed with all of the recommendations.