Tax debt interest and account fraud top of Ombudsman’s list

Tax Ombudsman releases list of systemic reviews for the coming financial year.
A green table fades from the foreground into the background with three gold coins sitting on the right hand side. Each coin features a little wooden block, and the blocks have a letter that spells out tax,

The Tax Ombudsman will review the Australian Taxation Office’s approach to tax debt interest (known as the general interest charge or GIC) and its management of compromised tax accounts in the coming year, as part of her forward work plan announced on Monday.

Tax debt and ATO’s treatment of taxpayers with tax debt are a major source of complaints to the Ombudsman. The application of interest, especially on larger debts, can very quickly make them impossible to pay back. The ATO has very publicly stated that it is toughening up its position on remitting interest when a debt is being paid back or is in a payment plan; the Ombudsman will be reviewing ATO’s process and procedures, and whether their stance on remission is fair, reasonable and applied consistently.

Ruth Owen, the Ombudsman said “The general interest charge is important to deter non-compliance and late payment, but it should not be used to penalise taxpayers with legitimate reasons for payment delays. Our review will build on the work the ATO is already doing to find ways we can make this aspect of tax administration fairer and
more transparent for all taxpayers.”

The second review announced will focus on how the ATO manages compromised tax accounts. Many Australians have found themselves victims of scammers and fraudsters accessing their tax file numbers and other personal details to carry out their crimes, compromising their tax accounts and leaving victims with the consequences.

A report by the Ombudsman last year highlighted the importance of bank account integrity and made recommendations about how the ATO manages the risk of fraudsters changing bank account details in legitimate taxpayer accounts. However, taxpayers are still reporting difficulties unlocking their accounts after they have been compromised. This new review will respond to those concerns and investigate whether the ATO is helping taxpayers with easy and low-cost access to the services they need to protect their accounts and put things right.

Ms Owen is looking forward to digging deeper into an issue that clearly resonates with the community in the next year.

“This is a great example of why the work that we do is so important,” she says. “Our first review looked at one aspect of identity fraud in the tax system and when we consulted on our work plan for the next year, tax professionals and taxpayers all agreed that this was an area where more can be done. It’s an issue that affects large numbers of regular taxpayers and I’m really pleased that we can look into it and help make things better for everyone as a result.”

In 2026, the Ombudsman will also look into how the ATO engages with and supports First Nations taxpayers.

“Support for First Nations taxpayers is an especially important area for us to look at,” says Ms Owen. “Data suggests that Aboriginal and Torres Strait Islander taxpayers face unique challenges when they engage with the tax system, and these only make it harder and more costly to resolve other difficulties when they arise. I’m confident that more can be done to support First Nations taxpayers and I hope we can work with them, their communities and their representatives to make recommendations that will really make things better.”

The final proposed review is on ATO’s online services for agents, which builds on the Ombudsman’s current review of the registered agent phone line.

“Agents play a vital role in Australia’s tax system, guiding taxpayers through complex processes and laws, and fostering voluntary compliance. I want to ensure that we support the valuable work they do and by building on my office’s current review of the registered agent phone service to look at the online services provided, I hope we will find ways to enhance the tools available to agents to support their work and services to taxpayers.”

The full forward work plan, including details of the reviews planned and information on how to contribute, is available on our website.

IGTO report into the Exercise of the Commissioner’s General Powers of Administration is released publicly

Aiming to improve general tax administration via certainty, accountability and transparency

The report of the Inspector-General of Taxation and Taxation Ombudsman’s (IGTO) investigation into The Exercise of the Commissioner’s General Powers of Administration has been publicly released.

‘The report examines an important area of tax administration,’ said Karen Payne, the IGTO. ‘Although many unremarkable decisions and actions are made or taken every day by Tax Officials in reliance on the Commissioner’s general powers of administration (GPA), a number of significant decisions and actions are also made by the Commissioner (or his delegate, or duly authorised tax official) in reliance on the GPA as part of his administration of the tax system.’

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IGTO report aimed at delivering better access to justice and fairness for small business

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) Karen Payne, has today released her latest report “Improving the operation of the Small Business Litigation Funding Program”.

Her report shares insights from her investigations of ATO decisions under the Small Business Litigation Program. It makes recommendations with the broader aim of delivering better understanding of and access to justice for Australia’s small business taxpayers in litigious disputes with the ATO in the Small Business Tax Division of the Administrative Appeals Tribunal.

IGTO Annual Report FY23 released

20th anniversary (2003 – 2023) – independent investigations to support Integrity in Tax Administration

The Inspector-General of Taxation and Taxation Ombudsman (IGTO), Ms Karen Payne, has released her agency’s Annual Report for the financial year ended 30 June 2023 (FY23). “I am pleased to release the IGTO’s annual report which details our achievements over the past year. This year, in particular, is a significant milestone for my agency, being the 20th anniversary of the creation of the office. The IGTO has been supporting the integrity of the taxation system for 20 years – as Inspector-General of Taxation since 2003 and, additionally, as the Taxation Ombudsman since 2015.”

Reflecting on the past 20 years of her agency, Ms Payne said: “Tax and superannuation systems impact every Australian and all Australians benefit from a tax and superannuation system that is administered with integrity – transparently, fairly and equitably.” 

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IGTO report identifies nine ways to improve administration of the Commissioner’s Remedial Powers (CRP) 

Aiming to improve tax law certainty for taxpayers without delay via CRP

The Inspector-General of Taxation and Taxation Ombudsman (IGTO), Ms Karen Payne, has today publicly released her report and recommendations following her office’s investigation into The Administration of the Commissioner’s Remedial Power (CRP). 

Since March 2017, the Commissioner of Taxation has had a statutory power – the Commissioner’s Remedial Power (CRP) – to modify the operation of certain taxation law provisions that give rise to unintended or unforeseen outcomes. 

The report examines this important power and discretion vested in the Commissioner of Taxation – that is the Commissioner’s ability to temporarily modify tax laws where it produces results which are unintended or unforeseen until a more permanent, legislative resolution can be implemented. In addition to providing improved timeliness and greater certainty for taxpayers, the measure was also intended to reduce the pressures on the law reform agenda.

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Combatting tax fraud –IGTO says it’s vital to ensure bank account integrity to prevent and detect Tax Identity (TaxID) fraud

– Calls for the ATO to improve its administration of taxpayer banking details and refunds to combat TaxID fraud

– IGTO interim (Phase 1) report into TaxID fraud makes 13 recommendations

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) commenced an own-motion investigation into Tax identification (TaxID) fraud on 15 December 2023.  This was in response to an increase in complaints and dispute investigations concerning TaxID fraud received by the IGTO.

The IGTO makes thirteen (13) recommendations for ATO improvement in this interim (Phase 1) report – The importance of bank account integrity.

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Inspector-General of Taxation welcomes new powers as part of the Government’s response to Robodebt

The Inspector-General of Taxation and Tax Ombudsman (IGTO) has welcomed the Government’s decision to grant her new powers in response to the Royal Commission into the Robodebt Scheme. The Bill passed on Wednesday directly addresses two critical failings of oversight by:

  • creating a duty for the Australian Tax Office (ATO) to assist with investigations by the Inspector-General, and
  • allowing her access to Tax Office records, data and information directly when required.

“This decision is a clear signal to taxpayers that we have strong checks and balances within the tax system in Australia,” said Ruth Owen, Inspector-General of Taxation and Tax Ombudsman. “When something goes wrong, my agency can investigate independently and get to the bottom of problems quickly, fairly and without fear or favour.”

 

Don’t bury the lede! ATO letters getting a hard edit from the Inspector-General

Letters from the Australian Taxation Office (ATO) are sometimes an unwelcome delivery, but the information they contain is often important, detailed and time sensitive. In recent years, the ATO has worked hard to make its communications clearer, but the quality and clarity of ATO communications is still a major area of concern in complaints and feedback received by the Inspector-General of Taxation and the Taxation Ombudsman (IGTO). To address this, the IGTO is undertaking a review into the ATO’s drafting processes to see how messages are prepared, how decisions are made, whether feedback is taken on board, and if the ATO can improve its messaging to help more people understand their tax obligations.