A report to the Assistant Treasurer
Telephone: (02) 8239 2111
Facsimile: (02) 8239 2100
Level 19, 50 Bridge Street
Sydney NSW 2000
GPO Box 551
Sydney NSW 2001
3 May, 2011
The Hon Bill Shorten MP
Assistant Treasurer and Minister for Financial Services & Superannuation
Canberra ACT 2600
I am pleased to present you with my report of the review into the Australian Taxation Office's (ATO's) large business risk review and audit policies, procedures and practices.
The review received many submissions from large business stakeholders. The main concern for stakeholders was the efficiency and effectiveness of the ATO's management of risk review and audit processes. Significant compliance costs and unnecessary disputes arise where this is not achieved. I have sought to foster greater understanding and cooperation between large business and the ATO in the conduct of this review by convening a consultation forum involving ATO management and external stakeholders.
The recommendations in my report are an integrated package that seek to improve the large business risk review and audit processes through greater transparency, accountability and improved stakeholder understanding.
The report has twenty eight recommendations - the ATO has agreed fully to twenty-two, two in principle, one in part and disagreed with three. If implemented appropriately these are expected to significantly improve tax administration in this market segment.
Whilst the ATO has provided reasoning for disagreeing with some of my recommendations, I remain concerned particularly where I have sought to introduce benchmarks and milestones in the audit process to assist the ATO to achieve its goal of completing audits within its set timeframes whilst affording taxpayers due process.
I have also made certain observations about future ATO practice. It may be necessary for the Government to consider legislative action if concerns continue to arise after the agreed recommendations have been implemented and sufficient time has elapsed.
The large market is a very important segment within the tax system providing significant revenue to Government for the benefit of all Australians. The vast majority of tax is collected through voluntary compliance. Large business stakeholders are concerned to ensure that the ATO risk review and audit responses are appropriately measured in delivery and take account of the significant cooperation they provide toward the system, in what is a very complex self-assessment environment.
I offer my thanks for the support and contribution of large business taxpayers, professional bodies, industry associations, taxation advisers and individuals to this review along with the consultative forum. The willingness of many to provide their time in preparing submissions and discussing issues with myself and my staff is greatly appreciated. I also thank the relevant ATO officers for their professional cooperation and assistance in this review.
Inspector-General of Taxation
© Commonwealth of Australia 2011
Ownership of intellectual property rights in this publication
Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia (referred to below as the Commonwealth).
Creative Commons licence
With the exception of the Coat of Arms (see below) and the Treasury logo, this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence.
Creative Commons Attribution 3.0 Australia Licence is a standard form license agreement that allows you to copy, distribute, transmit and adapt this publication provided that you attribute the work. A summary of the licence terms is available from Creative Commons Attribution 3.0 Australia. The full licence terms are available from Creative Commons website.
The Commonwealth's preference is that you attribute this publication (and any material sourced from it) using the following wording:
Source: Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence.
The Commonwealth of Australia does not necessarily endorse the content of this publication.
Use of the Coat of Arms
The terms under which the Coat of Arms can be used are set out on the It's an Honour website.