This part of the report provides a review of the IGT’s performance during the 2013–14 financial year in relation to the agency’s stated outcome, deliverables and key performance indicators.

The outcome is supported by the adoption of key strategies. The deliverables align with those key strategies and are monitored and measured by way of the performance indicators.

Outcome 1
Improved tax administration

The planned outcome for the IGT is to improve tax administration through community consultation, review and independent advice to Government.

Key strategies to achieve Outcome 1 are:

  • undertake community consultation, research and other processes to identify and prioritise areas of tax administration requiring improvement;
  • call for submissions to review identified areas and stimulate input by, for example, issuing terms of reference and submission guidelines, as well as meeting with selected key stakeholders;
  • review identified areas and provide independent advice and recommendations for improvements to Government and the ATO;
  • maintain a positive public profile by, for example, participating in conferences and seminars as well as through the media;
  • build on approaches that increase the ATO’s involvement and contribution to review processes and outcomes;
  • selectively engage external expertise and undertake overseas comparisons to enhance capabilities and objectivity for appropriate reviews; and
  • foster greater public awareness and improved access particularly for small businesses and individuals by such means as the media, including social media, the IGT website and participating in tax practitioner discussion groups.

Deliverables

The IGT has two specific deliverables, being the work program and independent advice to Government through the reviews.

Deliverable 1
Work program

The IGT’s work program arising from community input and consultation with other relevant agencies is set out in detail in Part 1 of the report.

More information on the work program, including updates, is also available on the IGT website.

An additional on‑going feature of the work program is sustained engagement with stakeholders and maintaining a public profile to ensure emerging tax administration issues of concern continue to be raised with the IGT. This is achieved by various means such as through the media (including social media), the IGT website, engagement with other government agencies and presenting at conferences, seminars and local tax practitioner discussion groups. During the 2013–14 financial year, the IGT and his staff have addressed a number of such forums. Attendance and participation also facilitates improved understanding of issues at a community level as well as providing comparisons with our foreign counterparts which enhance the office’s capabilities and objectivity.

The public speaking engagements undertaken during the 2013–14 financial year are set out in the table below.

Table 1: Key speaking engagements
Date Organisation Type of function Location
28 August 2013 Akolade Australasian Transfer Pricing Roadshow Brisbane
29 August 2013 Akolade Australasian Transfer Pricing Roadshow Sydney
30 August 2013 Akolade Australasian Transfer Pricing Roadshow Melbourne
2 September 2013 Akolade Australasian Transfer Pricing Roadshow Perth
3 September 2013 Institute of Chartered Accountants Australia (ICAA) ICAA Discussion Group Sydney
20 September 2013 Institute of Chartered Accountants of India Conference Sydney
7 October 2013 University of Melbourne Seminar Melbourne
8 October 2013 University of Sydney Master of Laws Presentation Sydney
17 October 2013 The Tax Institute The Tax Institute’s Tasmanian State Convention Tasmania
21 October 2013 ICAA Cumberland Discussion Group Sydney
27 November 2013 C5 C5’s Global Conference Series on Transfer Pricing Australia Melbourne
26 February 2014 Akolade APAC’s 2nd Transfer Pricing & International Corporate Tax Forum Sydney
11 March 2014 King & Wood Mallesons Seminar Sydney
20 March 2014 University of Sydney Master of Laws Presentation Sydney
25 March 2014 CPA Australia (CPA) CPA Hawkesbury Nepean Discussion Group Sydney
14 April 2014 ATAX, University of New South Wales ATAX 11th International Tax Administration Conference Sydney
30 April 2014 The Department of the Prime Minister and Cabinet Regulator Community Practice Forum Canberra
12 May 2014 CPA Inner-west Discussion Group Sydney
3 June 2014 ICAA ICAA Discussion Group Sydney
3 June 2014 Corporate Tax Association (CTA) CTA Conference Sydney
5 June 2014 CPA Sydney Professional Accountants Group Sydney
11 June 2014 CPA Northern Beaches Discussion Group Sydney
24 June 2014 CCH Australia Tax Risk Workshop Sydney

As mentioned in Part 1, the IGT consults with a range of government agencies in the development of the work program and during the conduct of reviews. These agencies include the ATO, Treasury, Commonwealth Ombudsman, Commonwealth Auditor‑General, Attorney‑General’s Department and Australian Securities and Investments Commission. This year, the IGT has also engaged with the Commonwealth Small Business Commissioner and the Australian Financial Security Authority amongst other agencies.

The IGT also maintains strong ties with international revenue authorities, scrutineering bodies and OECD taxation representatives. Engagement with these organisations enhances IGT reporting and recommendations by better understanding international developments and other factors such as whole‑of‑government initiatives.

Deliverable 2
Independent advice to Government and improvements to tax administration

The IGT provides independent advice to Government. The nature of this advice is primarily provided through the reports of completed reviews delivered to the Minister.

The conduct and completion of reviews is determined by the bespoke nature of each review as well as the priorities afforded by various parties and the small nature of the IGT office. Ministerial direction is also a factor with the IGT having previously been directed to undertake several reviews, including the so called ‘U‑turns’ and Change Program reviews.37 The IGT actively seeks to mitigate the tension between the need for flexibility and undue delay through regular project management review.

The review reports detail the IGT’s observations and the recommendations for improvement. Review reports are provided to the Minister after the Commissioner of Taxation has had the opportunity to make a submission — see section 25 of the IGT Act.

Once the Minister receives the IGT report, it must be published either by tabling in both Houses of the Parliament or otherwise, within 25 sitting days of receipt — see section 11 of the IGT Act.

The following table lists the reviews conducted during the 2013–14 financial year and their status as at 30 June 2014. The completion of IGT reviews is applicable from the time a review report is submitted to the Minister.

Table 2: IGT reviews and their status as at 30 June 2014
IGT reviews Status as at 30 June 2014
Review into aspects of the ATO’s use of compliance risk assessment tools Report publicly released
Review into the ATO’s compliance approach to individual taxpayers — income tax refund integrity program Report publicly released
Review into the ATO’s compliance approach to individual taxpayers — use of data matching Report publicly released
Review into the ATO’s compliance approach to individual taxpayers — superannuation excess contributions tax Report publicly released
Review into the ATO’s management of transfer pricing matters Report publicly released
Review into the ATO’s administration of penalties Submitted to the Minister but not publicly released
Follow up review into delayed or changed ATO views on significant issues Final stages of review
Follow up review into the ATO’s implementation of agreed recommendations in five reports released between August 2009 and November 2010 Final stages of review
Review into the ATO’s administration of valuation matters In progress
Review into the ATO’s approach to debt collection In progress
Review into the ATO’s services and support for tax practitioners In progress
Review into the ATO’s management of tax disputes with large businesses and high wealth individuals In progress

The first five reviews in the table above were completed and publicly released during this financial year. The next review listed, the penalties review, was also completed during this financial year but not publicly released by the Minister until the start of the 2014–15 financial year. These six reviews are all described in Part 1 of this report.

The two follow up reviews, shown next in the table, were in the final stages of completion at the end of the financial year. The final four reviews listed were commenced during this financial year. With the exception of the valuations review, these four reviews as well as the two follow up reviews are discussed in Part 1 of this report.

The valuations review was conducted in response to concerns raised by taxpayers, tax practitioners and their representative bodies, relating to:

  • the uncertainty and cost associated with valuations;
  • the ATO’s management of the compliance risk associated with valuations;
  • the independence, capability and ATO’s engagement of valuers; and
  • interactions between the ATO, taxpayers and valuers and how disputes are resolved.

The IGT will make further comment on the reviews that have not been completed and/or not publicly released once they are completed and released by the Minister.

Details on the reviews and access to publicly released reports are available on the IGT website, www.igt.gov.au.

Performance indicators

The IGT has two key performance indicators, being positive community stakeholder feedback and support as well as improvements to tax administration.

Performance indicator 1
Positive community stakeholder feedback and support

The IGT continues to receive positive feedback and support from community stakeholders which may be attributable to the IGT’s responsiveness in reviewing tax administration issues of concern and evidenced by stakeholders’ ongoing engagement with the IGT’s work program.

Positive feedback and support is vital for a small agency such as the IGT comprising of just nine personnel in total. The IGT will continue to engage and communicate with the community to ensure their concerns are correctly identified and understood.

Performance indicator 2
Improvements to tax administration

The way in which the IGT’s advice to Government effectively contributes to the improved administration of tax laws takes several forms.

Firstly, the IGT’s recommendations for Government’s consideration may be policy in nature and lead to legislative change to address identified administrative issues. Examples of Government policy and legislative initiatives adopted in this financial year are set out in Part 1 of this report.

Secondly, and more commonly, the Commissioner may agree to and implement recommendations made by the IGT during a review or following the release of a review report by the Minister.

The Commissioner of Taxation has statutory independence in his administration of tax laws. The IGT does not hold any powers to direct the Commissioner in this regard. However, historically, the Commissioner of Taxation has accepted fully or in part the vast majority of the IGT’s recommendations. This trend continues for reviews publicly released in 2013–14, with the Commissioner accepting fully or in part 67 of the 69 recommendations made to the ATO — refer to Table 3 below.

Table 3: Recommendations in publicly released IGT reports during 2013–14
IGT review Number of recommendations accepted fully, in part or in principle by the ATO Number of recommendations for Government’s consideration Number of recommendations disagreed by the ATO
Review into the ATO’s compliance approach to individual taxpayers — income tax refund integrity program 13 0 0
Review into the ATO’s compliance approach to individual taxpayers — use of data matching 13 0 0
Review into aspects of the ATO’s use of compliance risk assessment tools 16 0 0
Review into the ATO’s compliance approach to individual taxpayers — superannuation excess contributions tax 8 2 1
Review into the ATO’s management of transfer pricing matters 17 0 1
Total 67 2 2

The outcomes of these reviews, demonstrate the achievement of the IGT’s objective to improve the tax administration for the benefit of all taxpayers.

Thirdly, improved administration of tax laws may also be achieved without formal advice to Government by direct day‑to‑day interaction between the IGT and the ATO.

Financial performance

The IGT received an unmodified audit report on the 2013–14 financial statements from the Australian National Audit Office (ANAO). These statements can be found in Part 4 of this report.

The IGT ended 2013–14 with an attributable surplus of $28,925, compared to a surplus of $266,191 in 2012–13.

The agency has sufficient cash and reserves to fund its liabilities as and when they fall due.


37 IGT, Review into delayed or changed Australian Taxation Office views on significant issues (2010); IGT, Review into the Australian Taxation Office’s Change Program (2010).