SECOND COMMISSIONER OF TAXATION
Mr David Vos
Inspector-General of Taxation
GPO Box 551
Sydney NSW 2001
Thank you for your report on your review of the Tax Office’s ability to identify and deal with issues concerning Living Away From Home Allowances.
We would again acknowledge that these difficult technical and compliance issues took too long to resolve.
As you noted in your conclusions, the Tax Office had reason to be concerned about potential revenue impacts where there were indications of potentially excessive purportedly tax free LAFHA payments being made.
The Tax Office agrees with your two key recommendations and we will act expeditiously on key recommendation 1, the consideration of whether we should formally advise the Treasury of our views, in accordance with our Practice Statement PS CM 2003/14, on the administrative impacts of the legislation and the revenue and equity consequences of the laws as interpreted by the Tax Office.
Subject to the outcome of recommendation 1, we will implement Recommendation 2, the potential rewrite or replacement of Miscellaneous Taxation Ruling MT 2030.
We appreciate your acknowledgement that there was ‘timely cooperation’ of the Tax Office in this review.
Finally, as agreed in recent discussions with the Deputy Inspector-General, we will work with your office in the new year concerning any possible broader recommendations that might be incorporated into your foreshadowed fourth report drawing together your findings from the three case studies.
21 December 2006