Terms of reference

A.1.1 On 30 October 2006 the Inspector-General announced the terms of reference for his review of the Tax Office’s administration of GST audits. The terms of reference for this review were as follows:

This review will investigate the ATO’s administration of audits relating to the GST across all sectors. It will include reviewing the processes used by the Tax Office to identify, assess, analyse, prioritise and treat matters that arise during a GST audit and the processes employed by the ATO to evaluate the results of its GST audit activities. The review will focus particularly upon the following matters:

  • the adequacy and effectiveness of ATO policies and procedures relating to how taxpayers and /or issues are identified for GST audit activity, including the extent to which the issues identified involve amounts which involve no net gain to the revenue or which are of a timing nature only;
  • the processes and procedures employed by the Tax Office to conduct GST audits, including:
    • whether GST audits are conducted by officers who are appropriately trained on the nature of the industry in which the relevant audited taxpayer operates and on the GST rules for that industry;
    • the manner in which penalties and interest arising from GST audits are levied;
    • the time frames of GST audits;
    • whether Tax Office processes and procedures for GST audits achieve an appropriate balance between minimising any adverse impacts on businesses and other enterprises and ensuring that they are meeting their GST obligations; and
  • the adequacy and effectiveness of the processes used by the Tax Office to evaluate the results of its GST audit program, including the processes used to compare amounts collected from GST audits with liabilities that are raised.

Conduct of review

A.1.2 The Inspector-General advertised the review on his website, www.igt.gov.au, from 30 October 2006. 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 professions, and representatives of various professional bodies representing lawyers and accountants.

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.