Monitoring and reporting of implementation of recommendations to senior Tax Office management
9.1 Shortly following the announcement of this review, representatives from both the Inspector-General's Office and the Tax Office held a meeting on 7 July 2006 to consider the policies, systems and procedures used to monitor and report on the implementation of the recommendations. Monitoring of the progress of recommendations from all external scrutineers (for example the ANAO, Ombudsman) including those of the Inspector-General is undertaken by the Tax Office's Audit Committee. Reports to this Committee are coordinated by the Tax Office's Internal Audit Branch (IAB) via the following steps:
- On a quarterly basis, all business lines with active recommendations are required to provide the IAB with a written report detailing:
- responsibility for a recommendation;
- status of implementation expressed as a percentage;
- anticipated target completion date; and
- description of the progress during the current quarter.
- The responses are then entered into a database183 and scrutinised. The IAB undertakes a quality review of the information provided by the business lines.184
- Based on the above information, the IAB determines the issues or reasons for the incomplete implementation and prepares a final report for the quarterly Audit Committee meeting.185
9.2 The Audit Committee meeting is held and recommendations requiring attention are then referred to either the Tax Office's Chief Internal Auditor (attached to the IAB) or other senior Tax Office staff for action.
9.3 Representatives from the IAB (including the Director of Governance) meet bi-monthly with senior Tax Office staff from the business lines to discuss the above-mentioned reporting process. The Tax Office has advised the Inspector-General that a project186 is being designed to streamline the reporting process. In particular, this project will be looking at the level of information provided to the IAB and ultimately to the Audit Committee.
9.4 Copies of the above-mentioned quarterly Audit Committee reports provided to the Inspector-General were patchy and contained very limited analysis. The Inspector-General considers that monitoring at the level of the Audit Committee is appropriate, but hopes that the above-mentioned IAB project will increase the level of information included in the reports beyond the current numerical exception data.
Communication to taxpayers of the changes brought about by the implementation of recommendations
9.5 The level of change undertaken to implement the recommendations and findings contained in this follow-up review has necessitated a proactive approach by the Tax Office in terms of communicating with taxpayers. This was particularly the case with the changes announced in 2004 to improve the administration of the GIC.187 This required a significant commitment on behalf of the Tax Office to guide EBA participants in dispute with the Tax Office, which included:
- writing to all EBA participant taxpayers and their representatives about the Inspector-General's 2004 review and the available option to apply for remission of interest previously charged on the additional tax relating to the EBA;
- providing a set of detailed guidelines explaining the circumstances in which EBA participants may be entitled to a remission of interest.
9.6 In the area of Tax Office management of litigation, a number of methods have been used to advise taxpayers of changes. In particular has been the release of a number of law administration practice statements such as PS LA 2007/12 Conduct of Tax Office Litigation in Courts and Tribunals. Although these documents are designed for use by Tax Office staff, they provide a considerable level of information about the Tax Office approach. Another important communication product has been the development of the new decision impact statement which provides a brief outline of the Commissioner's position in relation to recently released court decisions as well as how the law will be administered as a consequence of a decision. This form of communication product has been particularly well received by the tax community at large.
9.7 The Tax Office has also been proactive in making the public aware of changes in the area of audits. For example on 13 October 2005 the then Commissioner of Taxation released the Large business and tax compliance booklet which included an announcement of a significant commitment to reduce audit timeframes with the introduction of a revised approach to complete large business audits within two years. In line with this commitment, the Commissioner also announced that large business audits exceeding that timeframe would be considered a new ground for the remission of the GIC and the SIC.188
9.8 The communication of changes has also been directed at the individual taxpayer. For example, concerns raised by the Inspector-General regarding the timeliness of GST refunds189 saw the rewrite of the ATO Receivables Policy as a practice statement (PS LA 2006/11). In addition, the Tax Office saw the need to publish a plain English guide in the form of a Tax Office fact sheet titled Where is my refund? which contained a complete list of the circumstances in which an activity statement refund and other refunds will be offset and when a taxpayer will need to request the Tax Office to pay credit balances after an offset has been made. This type of informative communication has also occurred in the area of debt management through a series of guides and fact sheets about the importance of managing cash flows as well as budgeting for tax liabilities.
9.9 The Inspector-General recognises the efforts undertaken by the Tax Office in advising taxpayers of changes following on from IGT reviews. The level of information communicated has on the whole been done in a practical and accessible manner via a number of mediums.
183 The IAB's Recommendations Database.
184 Business lines are reminded each quarter that the IAB requires full disclosure of relevant material.
185 Note that the February and August reports only contain detail of any change in the status of implementation that has occurred since the last report (that is, they are on an 'exception reporting' basis).
186 This project is an IAB initiative — conference with the Director of Governance, IAB, 17 October 2007.
187 Tax Office press release — Tax Office improves GIC administration arising in response to the Inspector-General's 2004 Review of the Remission of the General Interest Charge for Groups of Taxpayers in Dispute with the Tax Office.
188 This in turn lead to the release of further guidance to the public via PS LA 2006/8 Remission of shortfall interest charge and general interest charge for shortfall periods.
189 Review of Tax Office Administration of GST Refunds Resulting from the Lodgement of Credit BASs (2005) — Inspector-General of Taxation.