Terms of Reference

A.1.1 On 31 October 2005 the Inspector-General announced the terms of reference for his review of the Tax Office's ability to identify and deal with major, complex issues within reasonable timeframes. The terms of reference for this review were as follows:

Within each and across all the following three case studies the Inspector-General will identify issues which, when addressed, will improve the Tax Office's handling of major, complex issues into the future:

  • Research and development syndication arrangements;
  • Living Away From Home Allowances (LAFHAs);
  • Service entity arrangements.

Each case study will focus on:

  1. the timeframes to identify and deal with the issue;
  2. the nature and cause of those timeframes, and if they were reasonable in the circumstances;
  3. the extent and cause of uncertainty to affected taxpayers, including any initial Tax Office guidance or representations;
  4. the Tax Office's approaches to the issue, the reasons for them, and if they were reasonable in the circumstances, including:
    1. its compliance, legal and resolution approaches; and
    2. its communications with members of the community; and
  5. the adverse impacts and costs that the Tax Office's approaches and timeframes may have had on businesses and other areas of the community.

Conduct of Review

A.1.2 The Inspector-General advertised the review on his website, www.igt.gov.au from 31 October 2005. The review was also reported in the press and in specialist accounting and legal publications.

A.1.3 Written submissions to the review were taken from members of the public and a number of organisations.

A.1.4 Members of the review team also met with taxpayers, members of the accounting and legal profession, and representatives of various professional bodies representing lawyers, accountants and medical practitioners.

A.1.5 The Commissioner of Taxation was asked to provide information and documents relevant to the review. Visits were made to a number of 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.

A.1.6 The review also took into account a number of other inquiries relevant to this review.

A.1.7 This review was essentially completed by the end of August 2006. However, the Tax Office did not provide substantive responses to any of the recommendations made in the review until some three months later, that is, on 1 December 2006.

A.1.8 Recommendations from the review were first provided to the Tax Office in writing on August 25, 2006 and were then discussed at a meeting held between the Inspector-General and members of his staff and a Second Commissioner and other tax officers in mid-September 2006. One month after this meeting the Tax Office provided a letter containing comments on the report signed by the relevant Second Commissioner. Attached to this letter from the Second Commissioner was a copy of the draft report with further detailed Tax Office comments. However, neither of these documents contained any response to any of the recommendations of the review. The letter from the Second Commissioner stated that, although by that stage some six weeks had elapsed since the provision of the draft report and associated recommendations to the Tax Office, that:

… the Commissioner has not been available to be briefed on the draft report. This reply does not therefore incorporate his views and no comment is made on the draft recommendations.

A.1.9 It was only after the lapse of a further one and a half month period that the Tax Office's substantive comments on recommendations from the review were provided to the Inspector-General.

A.1.10 The Tax Office has provided no explanation to the Inspector-General of the reasons for this three month delay in providing its substantive responses to the recommendations from this review.

A.1.11 The Tax Office's comments on this Appendix are set out in the letter which is reproduced below.

Tax Office comments on this Appendix