“A Taxpayer’s right to be informed is fundamental to an equitable tax system,” says Inspector General of Taxation
The Inspector-General of Taxation and Taxation Ombudsman (IGTO), Karen Payne today released her latest report, “An investigation into the effectiveness of the Australian Taxation Office (ATO) communications of taxpayer rights to complain, review and appeal”. The report provides a detailed look at ATO communications in relation to a sample of its decisions and actions and how effective the ATO is in communicating these rights.
“Effective communication of taxpayer rights to complain, review and appeal ATO decisions and actions is vitally important, not the least because it provides assurance to taxpayers that they have been treated fairly,” Ms Payne said. “In this latest investigation, we sought to understand just how effectively the ATO communicates taxpayer rights to complain, appeal and review administrative decisions and actions taken by the ATO. Correspondingly, we wanted to identify any opportunities for improvement. We also support the idea of an express right to be informed.”
Benefits of communicating the rights of taxpayers
In addition to assurance, Ms Payne highlighted the benefits of communicating the rights of taxpayers include:
- Compliance – it aids voluntary complianceThe Organisation for Economic Co-operation and Development (OECD) notes … The promotion of voluntary compliance should be a primary concern of revenue authorities. The ways by which revenue … Continue reading;
- Clarity – it helps to inform next steps and minimises unnecessary disputes;
- Simplicity – it can help to reduce red tape costs of compliance – agreed facts/issues are understood;
- Consistency – it can safeguard against inconsistent outcomes.
The report highlights that while rights to complain and review may not be mandated in legislation they are set out in the Taxpayers’ Charter – and in the Commissioner of Taxation’s own instructions to all ATO staff.
“The ATO has stated publicly on its website that it is committed to following the Taxpayers’ Charter in all its dealings with the taxpayer community,” said Karen Payne. “Indeed, the Taxpayers’ Charter states that the ATO will “outline [the taxpayer’s] options if [they] want a decision or action reviewed including, legal review rights and the formal complaint process”.
She said the IGTO’s investigation identified that, in practice, this requirement is premised on taxpayers being aware of their rights – and how they can exercise these rights to question or challenge the ATO’s actions and decisions. “An express obligation within the Taxpayers Charter for the ATO to communicate taxpayer rights could produce material improvements for the taxpayer experience and fairness in the tax system.”
The investigation also notes that ATO training on taxpayer rights is not mandatory, is not required to be regularly refreshed as part of internal training and the ATO training course on the Taxpayer’s Charter does not include content to support ATO Officials communicating rights to taxpayers. Unsurprisingly, we observed low levels of attendance at ATO training on the Taxpayer’s CharterRefer paragraph D22 of the IGTO Report – An investigation into the effectiveness of ATO communications of taxpayer rights to complain, review and appeal – less than 1% attendance over the last three years.
“The Taxpayer’s Charter does not include an express right for taxpayers to be informed of their right to review, complain and appeal an ATO decision,” Ms Payne said. “An express right would ensure that the ATO proactively communicates this information so that taxpayers can be better informed. This is our first recommendation in the report – and a fundamental or foundation recommendation for all our recommendations.”
“We are delighted that the ATO have agreed to all of our recommendations – see Table 1 below. We note that based on recent pollingThe IGTO has polled tax practitioners during recent (September 2021) webinars, the community also appears to support a right to be informed of their taxpayer rights,” said Ms Payne.
IGTO Webinar Polling
A polling question was posed during recent IGTO webinars as follows:
Would the Taxpayer’s Charter be improved if it included a requirement for the ATO to inform you and your clients about your right to lodge a formal compliant (with the ATO or IGTO) and other rights?
- Of 275 participants polled 93% said Yes – a poll taken during a webinar hosted by Chartered Accountants Australia and New ZealandCAANZ webinar Sharing Knowledge Series: In conversation with Karen Payne on 23 September 2021 – Yes 93%; No 3%; Can’t Say 4% of 275 responses
- Of 266 participants polled 95% said Yes – a poll taken during a webinar hosted by Wolters KluwerWolters Kluwer webinar: “An update from the Inspector-General of Taxation and Taxation Ombudsman” 27 September 2021 – Yes 95%; No 0%; Can’t Say 5% of 266 responses
“It is thus a matter of good tax administration and practice for the ATO to actively provide taxpayers with clear and complete information about their rights to question or challenge the ATO’s actions or decisions. This should be done without the need for taxpayers to request or prompt the ATO for such information. This includes a right to lodge a formal complaint with the ATO or the independent Taxation Ombudsman.”
The report includes six recommendations in total, which are set out below, together with the ATO responses.
Table 1 – IGTO Recommendations and ATO Responses
|#||The IGTO Recommends||ATO Response|
The ATO plays a pro-active role in informing taxpayers of their rights to review, complain and appeal decisions and develop strategies to discharge this role, including by:
a. updating the Taxpayers’ Charter to include an express right to be informed of taxpayer rights to review, complain and appeal decisions and all relevant channels to do so; and
b. requiring (encourage or instruct) its Officers to communicate clear and complete (comprehensive) information to taxpayers of their rights to review, complain and appeal the relevant administrative decisions.
Recommendation 1a – Agree
The ATO is currently undertaking a review of the Taxpayers Charter. As part of this review process, the ATO will take into account the IGTO’s recommendation in relation to inclusion of further detail around the communication of taxpayer rights
Recommendation 1b – Agree
ATO officers that make decisions affecting taxpayers undertake a range of training and review processes that incorporate the importance of providing relevant information on review, complaint and appeal rights. The ATO will continue to review these processes.
|2||Consistent with Recommendation 1 and the premise or principle that the ATO will proactively inform taxpayers of their rights to question and challenge the ATO’s actions and decisions, the IGTO recommends that the ATO:
a. ensures all ATO Officers whose responsibilities include making decisions about taxpayers’ tax affairs are aware of their obligations in this respect when engaging with taxpayers and tax practitioners; and
b. supports its Officers to understand the range of available channels to question or challenge ATO decisions and actions, including by requiring all ATO Officers to undertake relevant training courses on these matters that are refreshed on a regular basis.
|Recommendation 2a – Agree
ATO officers that undertake decision making affecting taxpayers already undertake a range of training that incorporate the importance of providing relevant information on review, complaint, and appeal rights. The ATO will continue to support staff in understanding their responsibilities in this regard. ATO Staff currently receive training in CEI’s and these instructions will continue to be included in training modules.
Recommendation 2b – Agree
The ATO will continue to support staff in understanding their responsibilities and will review current mandatory training content relating to taxpayer rights to review, complain and appeal. The ATO will explore further targeted options for staff that are involved in client engagement roles.
|3||The IGTO recommends that the ATO improve its data capture and reporting to measure its performance against the rights that taxpayers have under the Taxpayers’ Charter. This should include:
a. complete data in relation to compliance with the Taxpayers’ Charter in respect of all complaints;
b. whether the ATO advised the taxpayer of their right to question and right to complain; and
c. developing public reporting on this data to assure itself and the community how it is honouring the Taxpayers’ Charter.
|Recommendation 3a – Agree
The ATO complaints issue template captures data on which Charter Right is relevant to each complaint issue. The ATO is undertaking a complaints template review between October 2021 and March 2022 and will consider the feasibility of capturing this information for complaints resolved at first contact.
Recommendation 3b – Agree
The ATO will consider adding a question to relevant client surveys to determine whether taxpayers who have had a recent interaction with the ATO had been advised of their right to question and right to complain.
Recommendation 3c – Agree
The ATO will add further reporting on performance against the Taxpayer Charter to the annual report from 2021-22.
|4||Consistent with Recommendation 1, where the ATO does not issue written correspondence to taxpayers in relation to its actions or decisions, ATO Officers should:
a. Ensure that taxpayers are verbally informed of their rights to formally challenge or question the ATO’s decisions; and
b. Inform taxpayers that they can request the decision also be communicated in writing.
|Recommendation 4 – Agree
The ATO will review processes within business lines to ensure officers are aware of the importance of communicating review rights and the option of a decision in writing in the limited cases where this is not provided as part of standard process.
|5||The ATO ensures information relating to taxpayer rights to complain, review and appeal can be easily located on the ATO’s website.||Recommendation 5 – Agree
The ATO will explore ways to continue to make it easier to locate information relating to taxpayer rights to complain, review and appeal on the ATO’s website.
The ATO is currently working towards procuring and building a new digital experience platform to enable us to deliver a website that is easier to navigate and find relevant information. In the meantime, the ATO will investigate opportunities to apply improvements to the current site to bring value to our website users sooner. This includes work to improve our search functions to optimise users’ interactions with the website.
|The IGTO recommends that, as part of its communication to taxpayers, the ATO should ensure that taxpayers are informed about:
a. their right to lodge a complaint with the ATO (including a formal complaint with the ATO’s Complaints Unit), and encourage taxpayers to do so should they have any concerns or are dissatisfied with the ATO’s actions or decisions; and
b. the availability of the IGTO’s services and how to engage with the IGTO where they have been unable to address their concerns through a complaint with the ATO.
|Recommendation 6a – Agree in principle
Taxpayers will continue to be informed at a relevant point in their interactions of their right to lodge a complaint with the ATO and the availability of the IGTO’s services. In addition to our correspondence and website, the ATO will consider adding messaging to our inbound call lines.
However, it is essential that through encouraging complaints, the ATO does not even implicitly direct taxpayers away from exercising appropriate statutory review rights. To do so would disadvantage taxpayers given time frames which govern such rights. Whether a complaint is the most effective or efficient mechanism to resolve a taxpayer’s issue depends on the issue.
Recommendation 6b – Agree
The ATO will review procedures around complaints where the client may be unsatisfied with the outcome to ensure that clients are made aware of the IGTO’s services at the appropriate time, along with other relevant review, complaint and appeal channels.
About the Report
A copy of the report can be found here.
A copy of the slide deck summary of the report can be found here.
The IGTO released the survey results on 1st September 2021. They can be found here.
For further information – Contact
Marjorie Johnston – Wordmakers
Mobile: 0407 329 430
About the IGTO
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) is an independent, Commonwealth statutory agency, established in 2003. The Taxation Ombudsman function was transferred to the IGTO in 2015. The IGTO provides an important safety net service in the tax system. Independent investigation of taxpayer complaints enhances community confidence in the fairness of the tax system and provides assurance to taxpayers in the fairness of their outcomes. This helps to enhance voluntary compliance. The IGTO also provides independent advice and assurance to Government on the taxation administration laws and systems. Since 2015, the IGTO has performed dual roles, which complement each other:
- The Taxation Ombudsman provides independent assistance and assurance directly to taxpayers and tax professionals and investigates taxation complaints about the actions and decisions of the Australian Taxation Office (ATO) or the Tax Practitioners Board (TPB). The Taxation Ombudsman, also conducts investigations of actions that have broader community impact or are commonly observed in a number of complaints to identify wider system improvements that address the causal issues.
- The Inspector-General of Taxation undertakes investigations of actions, systems and taxation laws (to the extent they deal with tax administration matters).
|↑1||The Organisation for Economic Co-operation and Development (OECD) notes … The promotion of voluntary compliance should be a primary concern of revenue authorities. The ways by which revenue authorities interact with taxpayers and employees impact on the public perception of the tax system and the degree of voluntary compliance|
|↑2||Refer paragraph D22 of the IGTO Report – An investigation into the effectiveness of ATO communications of taxpayer rights to complain, review and appeal|
|↑3||The IGTO has polled tax practitioners during recent (September 2021) webinars|
|↑4||CAANZ webinar Sharing Knowledge Series: In conversation with Karen Payne on 23 September 2021 – Yes 93%; No 3%; Can’t Say 4% of 275 responses|
|↑5||Wolters Kluwer webinar: “An update from the Inspector-General of Taxation and Taxation Ombudsman” 27 September 2021 – Yes 95%; No 0%; Can’t Say 5% of 266 responses|