[i] Source: Commissioner of Taxation Annual Report 2017-18, p 198 and Annual Report 2018 -19 pp 177 - 178. The breakdown of collectable debt lists only the major components. *Rounding causes the totals to differ from the sum of the components.
The Auditor-General Report notes that tax debt owed by small business makes up 63% of overall tax debt, with collectable debt for small business totalling $15 billion in June 2018. The composition and reasons underlying the growth in undisputed debt are not entirely evident. Increasing undisputed debts may be attributable to a range of factors – interest and penalties, increasing tax collections, timing factors, internal changes within the Australian Taxation Office, including system and process changes as well as external environmental factors such the performance of the economy, credit availability, introduction of new laws or policies that affect tax compliance.
The purpose of the review is to understand the trends and landscape of outstanding tax debts in Australia. The results can assist to identify and gain greater insight into which segments of the economy are experiencing increases in undisputed debt collections – that is, areas for further and targeted investigation.
The investigation will also consider international jurisdictions associated with low levels of undisputed tax debts and their related environment. Whilst direct international comparison is rarely possible owing to differences in tax systems, there may be some lessons or insights from overseas experiences that can be identified for further exploration.
Although this is largely an initial scoping study for a subsequent targeted review, the IGTO welcomes submissions, comments and observations from all stakeholders.
Death and taxes: An investigation into ATO systems and processes for dealing with deceased estates
This review responds to feedback we have received directly from stakeholders and through our complaints handling service. Full details are available on our website but in summary we understand the system is not optimal.
Some of the concerns raised (to date) include:
• a lack of acknowledgment from the ATO following notification of the death of a taxpayer;
• difficulties or delays obtaining a deceased estate tax file number;
• inconsistent steps for executors to provide their identity to access information, which is made more challenging in instances where the taxpayer died intestate (without a will);
• inconsistent advice and requirements to obtain probate or letters of administration;
• inability to appoint registered tax practitioners or solicitors as authorised contacts;
• difficulties or delays in accessing taxpayer information for the purposes of finalising taxpayer and deceased estate trust returns; and
• denial of access to the ATO Portals.
The investigation seeks to identify opportunities to improve the administration of deceased estate tax compliance. The IGTO will examine and consider:
• the experiences of the community (family and friends) in managing the tax affairs for the deceased;
• the ATO’s policies, processes and guidelines for receiving information from and dealing with deceased estates;
• the public guidance issued by the ATO to assist executors or administrators;
• the ATO’s systems, including the ATO Portals, for dealing with deceased estates;
• any legislative impediments to the efficient administration of deceased estates; and
• any other relevant issues to the administration of deceased estate tax obligations.
All taxpayers, advisers (tax practitioners, solicitors or barristers, financial planners, trustee and estate service providers) and professional bodies are welcome to provide examples and suggestions for improving the administration of the tax laws and systems for the deceased.