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26 Jun 08 Joint Committee of Public Accounts and Audit report on Tax Administration

In December 2005, the Joint Committee of Public Accounts and Audit resolved to inquire into tax administration. The terms of reference included self assessment, compliance, rulings, complex legislation, penalties and interest, and pay as you go (PAYG). On 26 June 2008, the Committee tabled its report ("Tax Administration") in Parliament. The Committee has made 18 recommendations. The conclusion to the report's Executive Summary states:

"The main challenge in Australian tax administration is the complexity of the tax system. Under self assessment, this has imposed significant compliance costs on taxpayers and pushed large numbers of taxpayers into using tax agents. In effect, complexity has increased the tax burden. A simpler system will deliver savings to both taxpayers and government and allow entrepreneurs to focus on growing their business, rather than complying with arbitrary tax rules."

In a media alert issued on 26 June 2008, the Chair of the Committee, Sharon Grierson, said: "Governments in Australia should consult more with relevant stakeholders in the early stages of developing tax policy...simple, widely agreed tax policy will deliver simpler legislation and a simpler tax system. This will reduce taxpayer risk. The federal government’s current tax review, Australia’s Future Tax System, is an obvious vehicle for achieving this."

The media alert also states: "The report also recommends that the Tax Office accept court decisions, either at first instance or on appeal. The recommendation arises out of the Essenbourne case, decided in the Federal Court in late 2002. Instead of appealing, the Tax Office stated that it did not accept the decision and would bring another test case to determine if Essenbourne was correct. In early 2007, the Full Federal Court published its decision in Indooroopilly, confirming Essenbourne. The Tax Office’s actions therefore prolonged uncertainty for taxpayers for a period of over four years."

For a copy of the report, No 410, June 2008, go here

For a copy of the media alert, go here

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