Tax and Superannuation Laws Amendment (2014 Measures No. 7) Act 2015 (21 of 2015)

Schedule 2   Transferring tax investigation function to Inspector-General of Taxation

Part 1   Main amendments

Inspector-General of Taxation Act 2003

11   Divisions 2, 3 and 4 of Part 2

Repeal the Divisions, substitute:

Division 2 - Functions of the Inspector-General

7 Functions of the Inspector-General

(1) The functions of the Inspector-General are as follows:

(a) to investigate action affecting a particular entity that:

(i) is taken by a tax official; and

(ii) relates to administrative matters under a taxation law; and

(iii) is the subject of a complaint by that entity to the Inspector-General;

(b) to investigate other action that:

(i) is taken by a tax official; and

(ii) relates to administrative matters under a taxation law;

(c) to investigate systems established by the Australian Taxation Office, or Tax Practitioners Board, to administer taxation laws, including systems for dealing or communicating:

(i) with the public generally; or

(ii) with particular people or organisations;

in relation to administrative matters under those laws;

(d) to investigate systems established by taxation laws, but only to the extent that the systems deal with administrative matters;

(e) to investigate action that is the subject of a part of a complaint:

(i) transferred to the Inspector-General by the Ombudsman under paragraph 6D(4)(b) of the Ombudsman Act 1976; or

(ii) that the Ombudsman advises, under paragraph 10(1)(b) of this Act, does not need to be transferred under subsection 10(1) of this Act;

(f) to report on those investigations.

Note: Paragraphs (a) and (b) can cover action under a taxation law, and action relating to action under a taxation law.

Example: A taxpayer seeks compensation under an administrative scheme because of action by a tax official during the course of an audit that caused the taxpayer detriment. The Inspector-General can investigate the action that caused the detriment, and any action by a tax official under the scheme.

(2) However, these functions do not include investigating:

(a) rules imposing or creating an obligation to pay an amount under a taxation law; and

(b) rules dealing with the quantification of such an amount.

8 Conducting investigations on Inspector-General's own initiative

(1) The Inspector-General may conduct an investigation under paragraph 7(1)(b), (c) or (d) on his or her own initiative.

Note: For example, the Inspector-General may conduct an investigation into a systemic issue that has been drawn to his or her attention by taxpayers, tax practitioners, the Auditor-General or the Ombudsman.

(2) The Inspector-General must conduct an investigation under paragraph 7(1)(c) or (d) if so directed by the Minister.

(3) The Inspector-General may be requested to conduct an investigation under paragraph 7(1)(c) or (d) by:

(a) the Minister; or

(b) the Commissioner or the Tax Practitioners Board; or

(c) a resolution of either House, or of both Houses, of the Parliament; or

(d) a resolution of a Committee of either House, or of both Houses, of the Parliament.

However, the Inspector-General is not required to comply with the request.

9 Discretion not to investigate certain complaints

The Inspector-General may, in his or her discretion:

(a) decide not to conduct an investigation into a complaint; or

(b) if he or she has started such an investigation - decide not to continue investigating the action complained about;

if the Inspector-General is of the opinion that:

(c) the complaint is frivolous or vexatious or was not made in good faith; or

(d) the complainant does not have a sufficient interest in the subject matter of the complaint; or

(e) an investigation, or further investigation, of the action is not warranted having regard to all the circumstances; or

(f) the complainant has not yet raised the complaint with the Commissioner or the Tax Practitioners Board (as applicable); or

(g) the action came to the complainant's knowledge more than 12 months before the complaint was made; or

(h) the complainant has not exercised a right to cause the action to which the complaint relates to be reviewed by a court or by a tribunal constituted by or under a law of the Commonwealth.

10 Transferring complaints to the Ombudsman

(1) The Inspector-General must transfer the following to the Ombudsman:

(a) a complaint made to the Inspector-General that is wholly about action other than tax administration action, unless the Ombudsman advises otherwise;

(b) if part of a complaint made to the Inspector-General is not about tax administration action - that part of the complaint, unless the Ombudsman advises otherwise.

(2) For a complaint made to the Inspector-General that is only partly about tax administration action, the Inspector-General:

(a) must consult the Ombudsman about the complaint or about complaints of that kind; and

(b) may transfer to the Ombudsman the part of the complaint that is about tax administration action if the Inspector-General is satisfied that the whole complaint could be more appropriately or effectively dealt with by the Ombudsman.

(3) The Inspector-General must, for each complaint (or part of a complaint) transferred to the Ombudsman:

(a) notify the complainant in writing of that transfer; and

(b) give the Ombudsman any related information or documents (other than tax file numbers) that are:

(i) in the Inspector-General's possession; or

(ii) under the Inspector-General's control.

(4) For the purposes of the Ombudsman Act 1976 (other than subsection 6D(2), (3) or (4) of that Act), a complaint (or part of a complaint) transferred under this section is taken to be a complaint made to the Ombudsman under that Act.

Note: A similar provision for transferring to the Inspector-General complaints made to the Ombudsman is contained in section 6D of the Ombudsman Act 1976. Subsection 6D(6) of that Act deems transferred complaints to be complaints made to the Inspector-General under this Act.

(5) This section does not apply to a complaint if:

(a) the Inspector-General transfers the complaint under subsections 6(9) and (10), or section 6C, of the Ombudsman Act 1976; or

(b) subsection 6(17) of that Act applies in relation to the complaint.

(Each of the above provisions of the Ombudsman Act 1976 is that provision as it applies because of section 15 of this Act).

Division 3 - Powers and duties of the Inspector-General

15 Certain provisions of the Ombudsman Act 1976 apply

Each of the following provisions of the Ombudsman Act 1976 also applies in relation to the Inspector-General with the modifications set out in the following table:

(a) subsections 3(1), to the extent that it provides for the definitions of Agency Head , authorized person , Commonwealth service provider , disclosable conduct and law enforcement agency ;

(b) subsections 3(2) to (6) and subsection 3(7);

(c) sections 3BA, 3C and 3D;

(d) subsections 5(2), (3) and (3A);

(e) section 5A;

(f) subsections 6(5), (9) to (11) and (16) to (19);

(g) sections 6C, 7 and 7A;

(h) section 8, other than paragraphs (7A)(b) and (10)(ba) to (d) and subsections (8), (9), (10B), (10C) and (12);

(i) sections 9 to 19, other than subsections 16(4) and (5);

(j) sections 35AA to 37.

Note: The above references in provisions of the Ombudsman Act 1976 are described in substance, rather than form. For example, table item 2 will apply to the phrase "an investigation under this Act" wherever it appears in any of those provisions.

16 References to a Department or a prescribed authority

(1) For the purposes of table item 4 in section 15, if the relevant investigation relates to action taken by an ATO official or to the Australian Taxation Office, the reference described in that item applies as if it were a reference to the Commissioner, or the Australian Taxation Office, (as the context requires).

(2) For other investigations under this Act, the reference described in table item 4 in section 15 applies as if it were a reference to the Tax Practitioners Board.

17 Further modifications to how some of those provisions apply

(1) Despite subsection 8(2) of the Ombudsman Act 1976 (as it applies because of section 15 of this Act), an investigation into a systemic issue need not be conducted in private.

(2) Despite paragraph 9(1)(a) of the Ombudsman Act 1976 (as it applies because of section 15 of this Act), a person may furnish information under that paragraph in a way otherwise than by writing signed by the person.

(3) Despite section 15, 16 or 17 of the Ombudsman Act 1976 (as it applies because of section 15 of this Act), the Inspector-General must not recommend changes to taxation laws in a report under that section.

Note: The Inspector-General can include such recommendations in reports under section 18.

(4) Despite subsection 36(1) of the Ombudsman Act 1976 (as it applies because of section 15 of this Act), the penalty set out at the foot of that subsection applies as if it were imprisonment for 6 months in the case of a refusal or failure relating to an investigation into a systemic issue.

18 Reports recommending improvements to taxation laws

(1) After completing an investigation under this Act, the Inspector-General may make a written report to the Minister:

(a) identifying a taxation law under which the action being investigated was taken; and

(b) setting out any recommendations for how that taxation law might be improved; and

(c) setting out the reasons for those recommendations.

The report may set out other matters.

(2) The Minister must cause a copy of the report to be made publicly available before the end of the 25th sitting day of the House of Representatives after the day the Minister receives the report.