Australian Government - Australian Taxation Office crest

SECOND COMMISSIONER OF TAXATION

Mr Ali Noroozi
Inspector-General of Taxation
GPO BOX 551
SYDNEY NSW 2001

Dear All,

Review into the ATO's large business audit and risk review policies, procedures and practices.

Thank you for providing us with the opportunity to comment on your final draft report on the Review into the ATO's large business audit and risk review policies, procedures and practices.

Acknowledgements

At the outset I acknowledge and thank you for the collaborative manner in which you have conducted this review. Our involvement with the working group of key practitioners and taxpayer representatives which you established has helped to inform our understanding of taxpayer perceptions and ways to address these perceptions.

General observations

I am pleased to note that stakeholders generally acknowledged a significant improvement in ATO interactions with taxpayers, including greater professionalism and diligence amongst our officers. I also observe that you considered the procedures and practices we have put in place In recent years have had a positive impact on finalising cases in a timely manner.

The Large business and tax compliance (LBTC) booklet establishes a high standard of mutual expectations and behaviour for both the ATO and taxpayers and is the flagship document setting out our approach to large market compliance. I am encouraged by your comments that the underlying principles in the booklet are positive and aimed at making risk reviews and audits more efficient and co-operative.

We agree with your observations on the importance of living out the LBTC booklet expectations in our casework. I am passionate to ensure that this occurs. In this regard, we are continuing to enhance our internal policies and processes to reinforce those expectations. I observe that you also acknowledge the significant efforts we have made to introduce enhanced assurance processes. These are critical for us In understanding how we are performing against our commitments in the booklet and identifying areas for further Improvement.

We do not always agree with the perceptions and views of stakeholders canvassed in your report, but acknowledge that these are the views as expressed in their submissions. We appreciate that you have also included commentary that is intended to reflect our perspective on some of these matters. Many of the stakeholder assertions are not consistent with the generally very positive feedback we receive in our Client Feedback Questionnaires and other stakeholder forums.

This suggests that a number of single case examples in the report are, in our view, not representative of the experience the broader large market population can expect in an audit or risk review.

We acknowledge that there is always room for improvement. We understand that not every taxpayer's experience reflects the high standard and aspirations in the LBTC booklet and sometimes the approach of taxpayers and their advisers does not meet these standards and expectations. I note you have made a number of recommendations that will help us to make improvements, building on the achievements of recent years.

ATO Response to Inspector-General's recommendations

Our responses to your specific recommendations are at Attachment 1.1 understand that you will include these under the relevant recommendation in your final report.

In summary, of your twenty-eight recommendations we agree with twenty-two in full and with two in principle, and one in part. There are three recommendations where we do not agree.

In keeping with the focus of this review, where we have agreed to a recommendation, we do so in respect of the policies, practices and processes for large market income tax compliance.

We also note your observations about the potential for future review of policy arrangements and law for active compliance work, including the statutory processes for use of the ATO's powers of access. These are matters for Government.

Thank you again for the opportunity to comment on your report on this review.

Yours sincerely

SIGNED

Bruce Quigley
Second Commissioner, Compliance

21 April 2011