The letter of response from the ATO is reproduced on the following pages.
To minimise space, the appendix to the ATO's response has not been reproduced in this appendix, but has been inserted into the text of this report underneath each of the recommendations to which that text relates.
SECOND COMMISSIONER OF TAXATION
Mr Ali Noroozi
Inspector-General of Taxation
Level 19, 50 Bridge Street
Sydney NSW 2001
23 September 2011
Dear Mr Noroozi
Thank you for the opportunity to comment on your draft report on the Review into the Australian Taxation Office's administration of class rulings. The Australian Taxation Office's (ATO) responses to your specific recommendations are at Attachment 1. I understand that you will include our responses under the relevant recommendation in the final version of your report.
We welcome your comments about the effective role that class rulings play in our tax system by providing greater administrative certainty to relevant taxpayers through mitigating operational costs and reducing risk. The report provides some important insights into the system as well as noting some of the tensions inherent within the class rulings regime and the administrator's role in balancing the interests and needs of applicants, taxpayers and the community.
I also note your support for the ATO's priority rulings system, with its focus on early engagement, is providing timely and high quality outcomes for applicants and taxpayers by involving the right people in cases at the right times. These are principles that we are considering applying more broadly across all of our higher risk and priority technical work, and so your observations and related recommendation has been timely.
We welcome your finding that there was no evidence of 'no go' topics for class rulings, but acknowledge that we can do more by way of communication to address such mis-perceptions. Similarly, some of the issues you have raised in other recent reviews about our practices around further information requests can also be relevant in the class rulings context; although it did not warrant any specific recommendations in this review.
Consistent with your earlier review of our administration of the private rulings system, this most recent review identified some continuing issues associated with the introduction of the Siebel case management system and the Siebel search functionality and usage. However, we have been able to demonstrate progress on these issues, including fixing the earlier functional defects and rolling out tailored training for staff to better use Siebel search. We have also introduced further functional refinements and improvements to Siebel search as part of the current Siebel upgrade.
Your review has also provided us with other useful insights into areas of our class rulings administration that could benefit from improvement. With the benefits of streamlined processes for more straightforward class rulings being confirmed, we are considering expanding these wider. You have identified opportunities for us to standardise some of our internal case management, record keeping and reporting for class rulings. These opportunities will better assist our case officers and managers to focus on progressing aged cases to resolution and to provide greater transparency. To also support improved transparency, we have acted on your recommendation and will publish our performance against timeliness measures for class rulings in our 2010-11Annual Report and into the future.
In response to your concerns about our communication with applicants and taxpayers, we will improve our up-front support to applicants to help streamline the application process and minimise further information requests. The report gives us an opportunity to remind our staff of the importance of ongoing communication throughout the class rulings process to avoid unexplained delays and the potential mis-perceptions that can arise. Finally, we have agreed to explore how we can better explain and contextualise some class ruling decisions, particularly where a change of ATO view may be involved. However we will remain mindful of the need to maintain appropriate taxpayer and commercial confidentiality.
In summary, we agree either fully or in principle with all eight of your recommendations and have committed to tangible practical action in response.
I am also pleased to note the collaborative and open spirit in which this review has been conducted, with a focus on practicable and sensible improvements. As a result, the implementation of some of the recommendations is already significantly advanced.
Second Commissioner of Taxation