A2.1 On 7 December 2003, the Inspector-General released five issues papers which outlined the 60 systemic tax administration issues of concern which were raised by taxpayers and their representatives during the course of his scoping review. Paragraphs 69 to 70 of Issues Paper 5 outlined the issues of concern about the Tax Office's practices in relation to goods and services tax (GST) refunds:

  • Tax practitioners and industry representatives have expressed an opinion that the Commissioner is 'unfairly' withholding substantial amounts of GST refunds from business. The accepted justification for this delay is the Tax Office's anti avoidance practices, and the belief is that the vast bulk of GST refunds are being held up so the Tax Office can conduct audits in order to 'catch' the few businesses attempting to rort the system.
  • There are claims by industry that the Tax Office deferred payment of about $17 billion of GST refunds for extended periods of time in the last financial year for the purpose of ultimately disallowing a small percentage of claims, some of which may still be contested.

A2.2 During January 2004, the Inspector-General met with representatives from industry, business and tax practitioner organisations. On 30 January 2004, the Inspector-General announced that as a result of those meetings he would review the Tax Office's administration of GST refunds resulting from the lodgment of credit BASs, amongst other issues, as a matter of priority.

A2.3 The Inspector-General advertised the review into the Tax Office's administration of GST refunds on its website, www.igt.gov.au from 31 March 2004. The review was also reported in the press and in specialist accounting and legal publications.

A2.4 Written submissions to the review were taken from members of the public and a number of organisations.

A2.5 Members of the review team also met with members of the accountancy profession, representatives of small business operators, the Commonwealth Ombudsman and Australian National Audit Office to discuss the review.

A2.6 The Commissioner of Taxation was asked to provide information and documents relevant to the review. Visits were made to the Hurstville, Moonee Ponds, Chermside, Penrith and Parramatta branches of the Tax Office and to the Tax Office's national office in Canberra to examine relevant files and interview relevant Tax Office staff.

A2.7 The review also took into account the following other inquiries relevant to this review. The Auditor-General has reviewed the Tax Office's GST fraud control procedures, including the RRE, and recommended ongoing enhancement of the RRE.92 The Joint Committee of Public Accounts and Audit has also published a review of the Auditor-General's report.93 The Auditor-General has also recently reviewed the Tax Office's collection and management of activity statement information.94

92 Australian National Audit Office, Goods and Services Tax Fraud Prevention and Control, Audit Report No. 55 2002-03 Performance Audit.

93 The Parliament of the Commonwealth of Australia—Joint Committee of Public Accounts and Audit, Report 398 — Review of Auditor-General's Reports 2002-2003 Fourth Quarter, March 2004.

94 Australian National Audit Office, The Australian Taxation Office's Collection and Management of Activity Statement Information, Audit Report No. 33 2003-04 Performance Audit.