Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Assistant Treasurer, Senator the Hon Helen Coonan)1 Inspector-General of Taxation Bill 2003
Outline of Bill
1.1 The Inspector-General of Taxation Bill 2002 will establish a statutory office to review tax administration and to report to the Government with recommendations for improving tax administration for the benefit of all taxpayers.
1.2 The Bill provides for the appointment of an independent Inspector-General of Taxation by the Governor-General for a fixed term of up to five years, with explicit and strictly limited conditions for dismissal from office of the incumbent.
1.3 The Bill provides the Inspector-General with a broad range of powers to obtain comprehensive information on the administration of the tax laws. The Inspector-General will be able to invite submissions from the public or from particular groups of taxpayers or tax professionals, and may receive submissions in confidence. The Inspector-General will also be able to hold meetings with taxpayers, tax professionals or their representatives.
1.4 To promote a cooperative working relationship between the Inspector-General and the Commissioner, the Bill provides that voluntary disclosures of information held by the Commissioner of Taxation and requested by the Inspector-General for the purposes of a review would be authorised disclosures for the purposes of secrecy and privacy laws. The Bill also endows the Inspector-General with investigative powers - including the power to compel disclosure of documents and examine witnesses - so that the Inspector-General is not reliant on voluntary disclosure of information required to complete a review.
1.5 The Bill does not detract from the absolute independence of the Commissioner of Taxation in the administration of the tax laws. The Inspector-General will not be able to direct the Commissioner other than to require the Commissioner to disclose information for a review.
1.6 The Bill does not affect the powers or functions of other taxation review agencies, including the Ombudsman. The Bill requires the Inspector-General of Taxation to consult with the Ombudsman and the Auditor-General.
1.7 The Bill does not impose any obligations on taxpayers and thus has no compliance costs for individuals or businesses. The compulsive investigative powers of the Inspector-General do not extend to taxpayers, since the Inspector-General will be reviewing systemic tax administration issues and not the tax affairs of individuals or groups. In the event that individual taxpayer information were to be incidentally disclosed to the Inspector-General in the course of a systems review, the Bill provides that the Inspector-General cannot include in any report any information that would enable identification of any particular taxpayer.