1.1 This is the report on the review conducted by the Inspector-General of Taxation (Inspector-General) of aspects of the management of litigation by the Australian Taxation Office (Tax Office). This report is made under section 10 of the Inspector-General of Taxation Act 2003 (IGT Act).
1.2 The review was announced on 10 March 2005. Its terms of reference are reproduced at Appendix 1 to this report. Details of how the review was conducted are given at Appendix 2.
1.3 Part of this review involves an evaluation of the test case litigation program. This aspect of the review was conducted in response to a request made by the Minister for Revenue and Assistant Treasurer and is therefore conducted pursuant to section 8(3) of the IGT Act. The remainder of the review was conducted pursuant to section 8(1) being a review conducted on the initiative of the Inspector-General. The decision to undertake the remainder of the review was prompted by concerns raised with the Inspector-General by industry and tax practitioners.
1.4 A number of key findings were identified by the review. Associated key recommendations are listed in Chapter 2. All key findings and key and subsidiary recommendations are discussed in Chapters 3 to 7 under each of the five specific terms of reference.
1.5 During the course of the Inspector-General’s review, the Tax Office made or proposed a number of changes to its systems involved with the administration of litigation. Some of those changes directly addressed concerns raised with the Inspector-General. All changes made or proposed by the Tax Office are noted in this report wherever relevant.
1.6 The Commissioner of Taxation’s detailed response to the review is in Appendix 3. His detailed comments on key recommendations are set out in Chapter 2. The Commissioner’s comments on subsidiary recommendations are set out in the body of the report.
1.7 The assistance and cooperation provided by the Commissioner of Taxation and his officers to the Inspector-General and his team during the course of the review are gratefully acknowledged.