Identification and management of financial abuse within the tax system

Terms of reference

Our work will build on broader Parliamentary, academic and community efforts to combat financial abuse and support victim-survivors. Our review will examine concerns raised though our complaint investigation service and by key stakeholders to seek to identify improvements in detecting and managing instances of financial abuse within the tax system. Importantly we will examine best practice approaches to assist the ATO to design products and processes that effectively support victim-survivors of financial abuse and minimise the risk of further victimisation within the tax system.

The questions we will seek to answer as part of our review are:

  1. Whether the ATO has appropriate processes, practice statements, training and guidance in place to assist its officers to identify potential financial abuse within the tax system (for the purposes of supporting and providing relief from tax liability).
  2. How ATO systems may be used to identify potential financial abuse within the tax system (including through information sharing with other agencies or third parties), building off similar experience in the financial services sector (noting that entities in the financial services sector operate in a different regulatory framework and environment to the ATO).
  3. How the ATO provides effective support to victim-survivors and relief for tax liability created through financial abuse, in particular whether the ATO:
    • is appropriately considering victim-survivor circumstances
    • leverages the data / information, services and specialist expertise of other agencies and organisations
    • raises awareness amongst taxpayers and tax professionals about financial abuse in the tax system and how to seek assistance from the ATO.
  4. Whether the ATO is utilising its full suite of powers to grant relief and provide support to victim-survivors of financial abuse within the tax system and hold perpetrators to account (e.g. reallocation or redistribution of liabilities or referral to law enforcement agencies).
  5. The interactions between the ATO and other government agencies as it relates to financial abuse within the tax system, in particular:
    • the information sharing arrangements between the ATO and Services Australia as they relate to financial abuse within the tax system
    • how the tax consequences of financial abuse impact programs administered by other government agencies, in particular welfare and child support
    • the administrative and legislative barriers (e.g. resources, systems, legislative settings etc) that prevent the ATO from being able to work more effectively with Services Australia to minimise the impacts of financial abuse within the tax system on welfare and child support services.

While this review will address some elements of financial hardship and ATO support to taxpayers experiencing vulnerability, it will not involve a deep dive into those topics. Those topics may be investigated as separate stand-alone reviews, subject to further consultation with stakeholders as part of a future refresh of our workplan.

Our review will also not examine law enforcement and prosecutorial efforts to combat coercive control and financial abuse.

While we will take note of policy and administrative programs of work currently being undertaken by other parts of government, this review will focus specifically on tax administration.

Identification and management of financial abuse within the tax system154 KB

‘Own initiative’ investigation into tax identity fraud

Terms of reference

To investigate the ATO’s systems that prevent, detect and respond to identity and related financial fraud, and the impact of those measures on affected taxpayers and their representatives including:

  1. What controls and security measures the ATO has in place, including modifications implemented since Operation Protego, to prevent and detect identity and financial fraud or identity theft from occurring on taxpayers’ ATO accounts
  2. What communication measures and tools are relied upon to prevent, detect and respond to treating identity and related financial fraud
  3. Whether the ATO makes effective use of information that taxpayers and tax practitioners provide which indicate potential weaknesses in the ATO’s approach to addressing identity and related financial fraud, for example:
    1. quickly acting on taxpayers’ enquiries that indicate potential compromise of accounts, and analysing them to detect potential new and emerging fraud methodologies
    2. quickly acting on concerns raised by tax practitioners about potential weaknesses in administration and inter-agency interactions and using them to test and update the ATO’s fraud detection methods
  4. Whether the ATO quickly and effectively treats instances of identity and related financial fraud when notified, for example, by:
    1. immediately stopping any affected refunds that are due to issue
    2. immediately preventing further unauthorised dealings with the taxpayer’s account and protecting it against future financial damage
  5. Whether the ATO has appropriately considered the impact that security settings (especially ongoing security settings) placed on compromised ATO accounts may have on affected taxpayers and their representatives, such as:
    1. where the ATO imposes protection measures on a compromised account, the ease with which affected taxpayers and tax practitioners can access their accounts to fulfil their tax obligations, and the alternative measures that are open to the ATO
    2. the speed at which tax returns and notices issued for affected taxpayers will be assessed
    3. the treatment of debts on affected taxpayer accounts pending the outcome of investigations into the alleged identity and related financial fraud.

Contact us

Email us [email protected]

You can submit your experiences up until 15 February 2024.

The IGTO report with findings and recommendations is planned for release in June 2024.

ID Fraud Terms of Reference358 KB

The Australian Taxation Office’s Administration and Management of Objections – Phase 2

TERMS OF REFERENCE

The IGTO’s investigation will examine the concerns raised above and seek to identify improvements to objection processes for the benefit of taxpayers and tax practitioners. Specifically, the IGTO will examine whether:

  1. the ATO’s systems and processes for receiving, allocating, considering and finalising objections are sufficiently robust to minimise undue delay;
  2. the policies and processes for managing objections provide for an independent and impartial review of the audit decision;
  3. the current processes for managing Objections allows for sufficient engagement, interaction and exchange with taxpayers and their representatives to achieve a common understanding of, and to narrow, the issues in dispute;
  4. the Objections process is effective in minimising and resolving disputes, including through early and effective identification of cases that are suitable for alternative dispute resolution and /or settlement; and
  5. any other relevant or related matters identified by the IGTO throughout the course of the investigation, or as raised by stakeholders in submissions.

The IGTO welcomes feedback from stakeholders – including professional and industry bodies, tax practitioners and taxpayers – on any concerns they have in relation to the objection process and potential improvements that may be implemented to improve the process for the benefit of all.

How to lodge a submission

The closing date for submissions is 4 November 2022. Submissions may be lodged by telephone (02 8239 2111) or be sent by:

Post to:Inspector-General of Taxation and Taxation Ombudsman GPO Box 551 Sydney NSW 2001
Fax:(02) 8088 7815
Email to:[email protected]
Terms of Reference – ATO’s Administration and Management of Objections321 KB

The Exercise of the General Powers of Administration

TERMS OF REFERENCE

The IGTO’s investigation does not propose to examine every type of decision that may be made under the GPA, but will draw from case studies in our complaints investigation service as well as stakeholder submissions to identify and investigate particular areas raised as examples of exercise of the GPA that should be investigated. In particular, the IGTO is interested to understand how broad-based GPA decisions (i.e., those affecting large groups of taxpayers) are identified and determined. As there are limited avenues for taxpayers and tax practitioners to challenge the exercise of the GPA, it is important to ensure that processes and procedures underpinning these decisions are robust and effective.

Through case studies and examples, the IGTO’s investigation will examine:

  1. the processes by which GPA matters are identified and considered, and how the ATO assures itself that its consideration of the issues accord with a purposive interpretation of the law;
  2. the regulatory and compliance impact (including the frequency and circumstances) of the use of the GPA;
  3. whether the ATO’s systems and processes to receive, consider and determine matters for the exercise of GPA are operating effectively, efficiently and with timeliness and transparency taking into account all relevant factors and stakeholder feedback;
  4. how consideration and decisions in relation to the GPA recorded and communicated, both internally and externally;
  5. whether processes in relation to the GPA are well-known and well-understood across the tax practitioner community and within the ATO; and
  6. any other relevant matters that arise during the course of the IGTO investigation or as identified by stakeholders in submissions.

The IGTO welcomes feedback from stakeholders – including professional and industry bodies, tax practitioners and taxpayers – on any concerns they have in relation to the GPA processes and potential improvements that may be implemented.

How to lodge a submission

The closing date for submissions is 28 February 2022. Submissions may be lodged by telephone (02 8239 2111) or be sent by:

Post to:Inspector-General of Taxation and Taxation Ombudsman GPO Box 551 Sydney NSW 2001
Fax:(02) 8088 7815
Email to:[email protected]
Terms of Reference – Exercise of the Commissioner’s General Powers of Administration285 KB

The Exercise of the Commissioner’s Remedial Power

TERMS OF REFERENCE

Through the IGTO’s tax complaint investigation service, it has been observed that there appears to be a lack of clarity about how issues are raised for CRP consideration and whether the processes underlying consideration of these matters are sufficiently robust to take into account consideration of relevant factors and expert stakeholder views. This is important as decisions of the Commissioner in relation to the CRP are not subject to external merits or judicial review.

The IGTO’s investigation will examine:

  1. the processes by which (potential) CRP matters are identified, including the processes by which the ATO assures itself that it has sought to adopt a purposive interpretation of the law;
  2. the processes by which (potential) CRP matters are considered, including the application of the criteria in Division 370 of Schedule 1 to the Taxation Administration Act 1953;
  3. the regulatory and compliance impact (including the frequency and circumstances) of the use of the CRP;
  4. whether the ATO’s systems and processes to receive, consider and determine CRPs are operating effectively, efficiently and with timeliness and transparency taking into account all relevant factors and stakeholder feedback;
  5. how consideration and decisions in relation to the CRP are recorded and communicated, both internally and externally;
  6. whether processes in relation to the CRP are well-known and well-understood across the tax practitioner community and within the ATO;
  7. how the ATO engages with stakeholders as part of its CRP consideration; and
  8. any other relevant matters that arise during the course of the IGTO investigation or as identified by stakeholders in submissions.

The IGTO welcomes feedback from stakeholders – including professional and industry bodies, tax practitioners and taxpayers – on any concerns they have in relation to the CRP processes and potential improvements that may be implemented.

How to lodge a submission

The closing date for submissions is 28 February 2022. Submissions may be lodged by telephone (02 8239 2111) or be sent by:

Post to:Inspector-General of Taxation and Taxation Ombudsman GPO Box 551 Sydney NSW 2001
Fax:(02) 8088 7815
Email to:[email protected]
Terms of Reference – Exercise of the Commissioner’s Remedial Powers265 KB

New investigations announced soon

The IGTO is currently undertaking preliminary research in relation to potential review investigation topics and will announce new investigations here soon.