Inspector-General of Taxation and Taxation Ombudsman report
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) released the report into the ATO’s administration and management of Objections on 30 October 2024. The report provided 7 recommendations across 4 topic areas: accessibility, streamlining processes, taxpayer engagement and learning from objections. The ATO has responded to each recommendation and that response was published with the IGTO’s report. The ATO has established an implementation plan for each recommendation and is in the early stages of carrying out those plans. The ATO shared the plans with members at a high level and sought member feedback.
Member feedback showed support for the delivery of a digital objection form and an online channel for taxpayers and tax professionals to lodge objections electronically under recommendation 1(a) which they consider is beneficial and likely to lead to cost savings for taxpayers. In relation to recommendation 2, members indicated a need for the ATO to identify which types of objections will suit a streamlined process and which objections will not. Members also encouraged the ATO to take account of cost savings to taxpayers and professionals in assessing the cost/benefit of potential changes to current practice.
The ATO will continue to share progress on the implementation plan with the Dispute Resolution Working Group (DRWG) and will seek member feedback in 2025.
Corporate tax transparency report
The Corporate tax transparency report 2022–23 was released on 1 November 2024. This year marks the 10th annual report informing the public on the corporate tax system. The report population includes any entity with a total income equal to or exceeding $100 million or entities that have a petroleum resource rent tax payable. It is the first year that data on private companies with a total income between $100 million and $200 million is being published. Highlights include that the total income reported by these entities was $380 billion and the tax payable was $97.9 billion. The report has generated great interest in the media and the community and emphasises the strong tax performance of Australia’s largest tax corporates.
Disputes and settlements findings report
The ATO published the Public and multinational business disputes and settlements findings report for 2023–24 on 11 November 2024. This is the second year the insights on settlements have been published for this market. However, it is the first year the ATO has included information on disputes across all products: audit, objection and litigation. Highlights in the report include the ATO issuing amended income tax assessments to 24 taxpayers that raised around $2.5 billion in liabilities. Separately, total liabilities for GST raised were approximately $363 million. The ATO secured $1.8 billion in tax revenue via settlements in 2023–24, with around 65% of settlements involving global profit shifting issues. Around 78% of settlements occurred at or before an audit, and on average the ATO secured 69% of the disputed amount. All settlements reviewed under the Independent Assurance of Settlements program were found to be a fair and reasonable outcome for the Australian community.
Members commented that the report is well-balanced and the ATO has done well in using data to produce such reports for the public. Members suggested the ATO increase the use of social media to reach and send messaging to individual and small business taxpayers about the amount of tax large market taxpayers are paying.
Update to PS LA 2011/4
The ATO has updated Practice Statement Law Administration PS LA 2011/4 Collection and recovery of disputed debt, which sets out the ATO’s policy on managing the collection of disputes debts, over and above those that apply when a debt is not disputed. The ATO considers each taxpayer's individual circumstances and the need to prevent those who do not pay on time from gaining an unfair financial advantage over those who do. Taxpayers have the right to dispute their tax liability through the objection and litigation processes, however, the ATO can take action even where a taxpayer is disputing their debt. The update to the PS LA 2011/4 states that large businesses and wealthy groups are required to pay in full or enter a 50:50 arrangement for any debt owed. Previously, PS LA 2011/4 stated taxpayers were 'encouraged' to pay in full or enter a 50:50 arrangement. Where such a taxpayer does not enter such an arrangement, the ATO may take action to secure their debt (for example by way of a security bond demand, garnishee or freezing order) before the dispute is finalised.
A member asked how a small business would be able to dispute the debt, when the debt was being pursued. The Chair responded that it would be rare for the ATO to pursue a debt when the taxpayer had lodged an objection or filed an appeal to a court or tribunal. Where the ATO does consider taking such action, it is done carefully with a focus on taxpayer engagement and is subject to increased governance controls that must be met before action is taken.
Other business
Michael Abood from the former Administrative Appeals Tribunal recently resigned as a DRWG member. The DRWG Secretariat will seek a new representative from the newly formed Administrative Review Tribunal in early 2025.
After many years of service to the DRWG, the group farewelled Chris Kinsella representing The Tax Institute, Ashley King representing Chartered Accountants Australia and New Zealand and Hugh Paynter representing The Law Council of Australia, as part of the membership refresh guidelines put in place in late 2023. These professional bodies will be represented by their new and remaining member on the DRWG. The group also farewelled Tania Sourdin of The University of Newcastle who resigned as a member.
All departing members were thanked for their contribution to the DRWG.
Attendees
|
Organisation |
Member or Attendee |
|---|---|
|
ATO |
Andrew Orme, Objections and Review (Chair) |
|
ATO |
Fiona Knight, Public Groups |
|
ATO |
Jonathan Todd, Litigation and Legal Services |
|
Australian Small Business and Family Enterprise Ombudsman |
Dr Craig Latham |
|
Chartered Accountants Australia and New Zealand |
Ashley King |
|
Corporate Tax Association |
Simon Staples |
|
CPA Australia |
Jenny Wong |
|
Law Council of Australia |
Angelina Lagana |
|
Law Council of Australia |
Hugh Paynter |
|
National Tax Clinics |
Annette Morgan |
|
The Tax Institute |
Michael Wells |
|
The University of Newcastle |
Tania Sourdin |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Dan Byrnes, Objections and Review |
|
ATO |
Diana Bedelovski, Objections and Review |
|
ATO |
David Mendoza, Individuals and Intermediaries |
|
ATO |
Jonathan Tang, Public Groups |
|
ATO |
Marielle Delgado, Frontline Compliance |
|
ATO |
Michael Ingersoll, Public Groups |
|
ATO |
Tim Rowe, Objections and Review |
Apologies list
|
Organisation |
Member |
|---|---|
|
ATO |
Andrew Watson, Individuals and Intermediaries |
|
ATO |
Jillian Kitto, Frontline Compliance |
|
Chartered Accountants Australia and New Zealand |
Karen Liew |
|
The Tax Institute |
Chris Kinsella |