Review: The effectiveness of ATO communications of taxpayers’ rights to complain, review and appeal

Reviews and reports

This investigation examines the effectiveness of the Australian Taxation Office’s (ATO) communications to taxpayers and their representatives of their taxpayers’ rights to review, complain and appeal decisions made and actions taken by the ATO.

The investigation involved an examination of a case sample of written communications of ATO decisions made – for clear communication of the taxpayers’ rights to review, complain and appeal these decisions. The communication of taxpayers’ rights is an important feature of procedural fairness and is consistent with the Taxpayers’ Charter. These rights and the community’s awareness of them is important for maintaining confidence in the fairness of the tax administration system.

Tax Ombudsman survey

Between August and September 2020, we engaged Orima Research Pty Ltd to conduct a voluntary and independent survey to gauge taxpayers’ and tax professionals’ views on the effectiveness of ATO communications on taxpayers’ right to review, complain and appeal decisions.

The survey comprised 10 questions (of which 3 sought demographic information from respondents). A list of the questions is available for download.

A total of 69 respondents participated. Some respondents chose not to answer certain questions.

Documents and downloads

Tax Ombudsman final report
Tax Ombudsman report summary
ATO letter of response – 12 October 2021
Tax Ombudsman survey results
Tax Ombudsman polling results
Terms of reference

Review: “Death and Taxes” – ATO systems and processes for dealing with deceased estates

Reviews and reports

Australia has operated a self-assessment system of taxation since 1986-1987. Under this system, the taxpayer is personally responsible for lodging a return with detailed information to calculate their taxable
income. Upon lodgement, an assessment is issued by the Commissioner of Taxation to an individual taxpayer which then triggers a limited period of review for the ATO. The self-assessment system has been supported since 1992 by a system of legally and administratively binding advice (private and public rulings and determinations) and non-binding guidance issued by the ATO to provide information to assist taxpayers meet their tax compliance obligations.

This investigation does not seek to address every compliance requirement that arises after a person dies. Rather, it seeks to identify opportunities to reduce the tax compliance burden and associated costs, as well as improve or simplify the tax administration arrangements on behalf of a deceased.

Documents and downloads

Tax Ombudsman report
Tax Ombudsman report summary
ATO letter of response – 3 July 2020
ATO implementation update – 17 August 2022

Review: Australian Taxation Office use of garnishee notices

Reviews and reports

The Inspector-General of Taxation and Taxation Ombudsman commenced this review to maintain community confidence in the administration of the tax system after serious allegations were made about the Australian Taxation Office’s (ATO) inappropriate use of
garnishee notices on small businesses. These allegations
were made by both a current and former ATO officer on the
Australian Broadcasting Corporation’s (ABC) Four Corners
program on 9 April 2018. We investigated allegations that the ATO:

  • gave directions to staff to issue enduring garnishee
    notices in every case as a ‘cash grab’ towards the end of the
    2016–17 financial year; and
  • set targets for staff and assessed their performance
    based on the level of debt collected.

Garnishee notices allow the ATO to recover taxpayer debts from third parties such as banks or trade debtors. If use inappropriately they can severely affect a taxpayer’s cash flow; in particular, the more vulnerable, such as small businesses and individuals.

In our view, the allegations that there was an ATO direction for a ‘cash grab’ on small businesses or that debt staff’s personal performance were set on amounts collected are not sustained on the evidence.

Downloads and documents

Tax Ombudsman report

Review: Goods and Services Tax refunds

Reviews and reports

Our review into Goods and Services Tax (GST) refunds
arose from concerns raised through the our complaints handling service and during consultation to develop the 2017 work program. These concerns included the accuracy of the ATO’s risk assessment tools, its engagement with taxpayers and its efforts to minimise adverse impacts on affected taxpayers.

We reviewed the end-to-end process involved in refund verification including from initial case selection through to the review and audit activities. Overall, we found that the ATO’s administration of GST refunds operated efficiently with the vast majority of refunds released without being stopped for verification.

We made 5 recommendations (comprising 16 parts), all of which were agreed either in full or in part.

Downloads and documents

Tax Ombudsman report
ATO letter of response – 13 March 2018
Government response – June 2018

Review: ATO’s employer obligations compliance activities

Reviews and reports

Our review into the Australian Taxation Office’s (ATO) employer obligations compliance activities was undertaken in response to concerns raised by stakeholders and is based on submissions from a wide range of stakeholders, including employers, workers, superannuation funds and tax practitioners as well as their respective
representatives.

Given the Government’s focus on reducing the compliance burden, particularly for small businesses, a number of other reviews, considering various aspects of employer obligations, had already been undertaken prior to this review. The ATO had also embarked on a program of improvements. Accordingly, this review seeks to build on existing or developing ATO practices to enhance the tax and superannuation systems as a whole whilst delivering improvements to all relevant parties.

Overall, we made 11 recommendations. Two are directed to Government and 9 were directed to the ATO. The ATO has agreed in full or in part with 7 recommendations and disagreed with two.

Downloads and documents

Tax Ombudsman report
ATO letter of response – 24 November 2016
Government response – 22 May 2017

Review: Taxpayers’ Charter and taxpayer protections

Reviews and reports

Our review into the Taxpayers’ Charter (Charter) and taxpayer protections was undertaken to examine concerns raised in relation to the Australian Taxation Office’s (ATO) adherence to the Charter, its currency and effectiveness. Specifically, stakeholders consider that there are limited avenues for enforcement of the Charter principles, diminishing its effectiveness in affording protection to taxpayers.

As part of the review, we compared the Australian approach with those partner jurisdictions, such as the United States of America, the United Kingdom, Canada and New Zealand. Additionally, a significant body of academic and other research was considered, including those of the Organisation for Economic Cooperation and Development, the International Bureau of Fiscal Documentation and professional bodies
(including the Asia-Oceania Tax Consultants’ Association, Society of Trust and Estate Practitioners and Confederation Fiscale Europeene) that collectively represented more than half a million tax practitioners worldwide. Moreover, the IGT also commissioned the University of New South Wales to research and report on existing taxpayer rights in
Australia and, from that research, drew observations regarding the difficulties taxpayers may face in seeking to enforce their rights.

Overall, we made 4 recommendations with which the ATO has either agreed in full, in part or in principle. However, the ATO’s level of agreement and their accompanying commentary create a level of uncertainty as to how and to what extent the recommendations
would be implemented. Accordingly, to the extent that stakeholder concerns persist, we may undertake a follow-up review to assess the effectiveness of resulting ATO actions and, if necessary, make recommendations for government to consider mandatory reporting of the
ATO’s compliance with the Charter and additional enforceable remedies.

Documents and downloads

Tax Ombudsman report