Historical consideration of taxpayer rights and protections in Australia

1.1 Prior to 1986, the Australian tax system operated on the basis of full assessment, whereby taxpayers provided the ATO with all relevant information so that the ATO could apply the law and assess their tax liabilities. Under that system, the taxpayer’s primary responsibility was to make a full disclosure of all relevant information to the ATO.28

2.2 From the 1986-87 financial year, the system moved towards self-assessment in which taxpayers assume responsibility for their tax affairs and determine their own tax liabilities.29 The self-assessment system effectively relieved the ATO from examining the affairs of all taxpayers in the process of issuing an assessment. Under self-assessment, the ATO continues to issue an assessment to taxpayers, however, tax returns are generally taken at face value and may be subject to post-assessment audit and other verification processes.30

2.3 The introduction of self-assessment fundamentally altered the balance of power and responsibilities between taxpayers and the ATO. Under the new system, an incorrect application of the law results in taxpayers being exposed to additional primary tax, penalties and interest charges. At the same time, it also brought about a number of law changes which sought to re-balance these responsibilities, by allowing the ATO to amend not only for errors of calculation or mistakes of facts but also for mistakes of law. A rulings system was also introduced in 1992 which was intended to make it easier for taxpayers to comply with their tax obligations31 and to protect taxpayers against additional primary tax, penalties and interest where they relied upon and acted in accordance with binding advice issued by the ATO.32

The Joint Committee of Public Accounts inquiry

2.4 In 1993, the Joint Committee of Public Accounts (JCPA), as part of its wide-ranging examination of the administration of the tax system, considered the role and responsibilities of taxpayers in the self-assessment system.33 Against the backdrop of the newly implemented self-assessment system, the JCPA identified a need to better re-balance the rights of taxpayers against their relatively new responsibilities:

The Income Tax Assessment Act 1936 (the Act) establishes amongst its numerous provisions obligations and duties in respect of tax. When taken together with the Taxation Administration Act 1953 and the Income Tax Regulations, this body of law imposes an extensive framework of legal responsibilities on taxpayers. The Australian Taxation Office (ATO) administers this body of law and in so doing utilises given provisions to enforce the obligations of the law upon the taxpayer. The question arises, ‘Where is the corresponding statement of taxpayer rights?’

In reality no formal statement of the rights of taxpayers currently exists. Although protection is afforded by the principles of equity and justice established by the common law, the review and objection rights provided by relevant acts and a number of administrative mechanisms for supervising the actions of the ATO, taxpayers have no single written statement of rights. This is despite the fact that the ATO investigatory powers are far more extensive and less well supervised than any criminal law enforcement agency.34

2.5 The above taken together with submissions that had been made to the JCPA and following comparisons with the Citizen’s Charter in the UK and the USA's Taxpayer Advocate Service (TAS) led the JCPA to determine that:

Taxpayers, like every citizen, should be entitled to be fully informed of their rights and obligations according to law. In the Committee's opinion the ATO, as the body established to administer the taxation laws, was obliged to clearly, concisely, accurately and consistently advise taxpayers of their duties and rights. Such publicity should neither be restrained nor restricted to circumstances in which taxpayers were required to confront the ATO. Information concerning a taxpayer's rights and the standards of conduct expected of the ATO readily available for all taxpayers and specifically cast for taxpayers who are required to interact with the ATO. Taxpayer agents and representatives should similarly be entitled to a given level of service.35

2.6 Accordingly, the JCPA recommended the establishment of a Taxpayers’ Charter.36 It should be noted that the JCPA had initially contemplated that such a charter would set out taxpayers’ common law rights as well as standards of service that they could expect from the ATO.37 This charter was to include statements in respect of taxpayers’ rights to legal and commercial advice; due process, timely, accurate and confidential advice, independent review, access to administrative and judicial review, information, privacy, the presumption of innocence and individual consideration and treatment.38

2.7 In addition to the establishment of the Charter, the JCPA also saw a need for the establishment of a dedicated Taxation Ombudsman, for the purpose of providing a remedy to administrative impropriety or inefficiency which impacted upon taxpayers.39 Taxpayers who considered that they had been treated unfairly by the ATO, or whose rights at law had been violated, would be able to approach the Taxation Ombudsman. In 1995, legislation was enacted to give effect to this JCPA recommendation.40 Whilst initially there was a specific Taxation Ombudsman role within the Ombudsman office, gradually this function was subsumed into the broader work of the Ombudsman.

2.8Currently, the IGT is effectively the Taxation Ombudsman with the Ombudsman no longer having a role with respect to tax administration. This transfer of function has happened over time as the role of the IGT has evolved.

Office of the Inspector-General of Taxation

2.9 The IGT was established in 2003 as an independent statutory office to review systemic tax administration issues and to report to government with recommendations for improving tax administration.41

2.10 Since its inception, the IGT has been conducting systemic reviews covering a broad range of tax administration matters. To date it has conducted 44 reviews covering such areas as the self-assessment system,42 the ATO’s compliance risk assessment tools43 and also tax disputes.44

2.11 In the 2014 Federal Budget, a policy decision was made to extend the role of the IGT by transferring the tax complaints handling service from the Ombudsman to the IGT and expanding its scrutineering function to include the Tax Practitioners Board (TPB). This decision, which took effect from 1 May 2015, means that the IGT now operates as a tax specialist ombudsman.45

2.12 In the context of taxpayer rights and protections, the IGT, as an independent agency, assists taxpayers in several ways. First, the IGT facilitates discussion between taxpayers and the ATO or TPB to address or resolve matters in dispute. Secondly, the IGT makes determinations which are persuasive but not binding on the ATO or TPB. It should be noted that the IGT is not empowered to consider the merits of ATO decisions as this is the jurisdiction of the Administrative Appeals Tribunal (AAT) and the courts.

Current status of taxpayer rights and protections in Australia

2.13 In December 2015, the IGT undertook an assessment of the status of taxpayer rights in Australia at the request of the International Bureau of Fiscal Documentation (IBFD). The assessment examined Australia’s performance against a range of criteria published by International Fiscal Association which included both enforceable and unenforceable rights.46 A copy of this document is provided in Appendix 3.

2.14The IGT also engaged Dr Kalmen Datt and Professor Michael Walpole of the UNSW, as part of this review, to independently research and identify all enforceable rights available in Australia. Their report is set out in Appendix 2 with the key enforceable rights being reproduced below:

Table 1: Existing taxpayer rights and protections in Australia
Taxpayer right Source
Challenge (most) assessments, determinations, notices and decisions Part IVC of the Taxation Administration Act 1953 (TAA 1953)
Challenge the issue or failure to issue a private ruling Part IVC of the TAA 1953
Challenge an assessment for an administrative penalty Section 298-30, Sch 1 to the TAA 1953
Apply to remit a penalty; challenge a refusal to remit a penalty Section 298-20, Sch 1 to the TAA 1953
Protection from interest charges if non-binding advice is relied on in good faith Section 9 of the TAA 1953
Appeal an AAT or Federal Court decision Part IVC of the TAA 1953
Request a referral on a question of law to the full bench of the Federal Court Section 44 of the Administrative Appeals Tribunal Act 1975
Request an amendment of their income tax return Section 170 of the Income Tax Assessment Act 1936
Obtain an assessment if no assessment is issued 6 months after a return is submitted Section 155-30, Sch 1 to the TAA 1953
Request an assessment of an indirect tax Section 105-20, Sch 1 to the TAA 1953
Request a variation or revocation of a departure prohibition order (DPO) Section 14T of the TAA 1953
Request a departure authorisation certificate where a DPO has been issued Section 14U of the TAA 1953
Challenge the issue of a DPO Section 14V of the TAA 1953
Challenge a garnishee notice ADJR Act 1977 or Judiciary Act 1903 (Judiciary Act)
Apply for a stay of execution on the grounds of serious hardship in respect to a debt owing under an assessment Sections 14ZZM and 14ZZR of the TAA 1953
Review a demand for a security deposit ADJR Act 1977 or Judiciary Act or the Constitution
Obtain reasons for a decision Administrative Decisions (Judicial Review) Act 1977
Obtain a refund for excess tax withheld Schedule 1 to the TAA 1953
Obtain a tax receipt for an income year Section 70-5, Sch 1 to the TAA 1953
Object to an excess concessional contribution determination Section 97-10, Sch 1 to the TAA 1953
Finality of assessment (Commissioner may not amend an assessment after the period for review has elapsed) Section 155-40 to 155-60, Sch 1 to the TAA 1953
Obtain interest on overpayments and prepayments Taxation (Interest on Overpayments and Early Payments) Act 1983
Access government-held documents Freedom of Information Act 1982
Complain to the Information Commissioner or IGT for a breach of the privacy principles Privacy Act 1988
Lodge a complaint to the IGT (other than on assessments) Inspector-General of Taxation Act 2003
Apply for compensation under the CDDA Scheme Section 61 of the Constitution and the Public Governance, Performance and Accountability Act 2013
Claim legal professional privilege when responding to requests for information and documents under sections
353-10 and 353-15, Sch 1 to the TAA 1953
Common law
Comply with a notice issued under sections 353-10 and
353-15, Sch 1 to the TAA 1953 only to the extent they are able to do so
Common law
Obtain procedurally fair treatment from the ATO Common law
Claim damages for pure economic loss due to wrongful ATO conduct Common law

2.15 The above table shows that the majority of the enforceable rights relate to the ability to seek reasons for ATO decisions and to challenge certain decisions through the objection and appeal processes pursuant to Part IVC of the Taxation Administration Act 1953 (TAA 1953). Other enforceable rights include those relating to the issue of refunds and the right to having interest paid on overpayments. The common law rights include those relating to claims for legal professional privilege, procedural fairness and damages for pure economic loss due to wrongful ATO conduct.

2.16 Interestingly, the research has identified a ‘right’ to seek compensation for defective administration which is based on a provision of the Constitution as well as the Public Governance, Performance and Accountability Act 2013 (PGPA Act) notwithstanding that the decision to pay compensation is purely discretionary and not enforceable externally. This issue is discussed further in Chapter 4.

2.17 Whilst the research from the UNSW has identified a range of enforceable rights available to taxpayers under the current framework, it is important to note that there are various practical impediments for taxpayers seeking to enforce these rights. These are discussed further below.

Legislative rights

2.18 Whilst it is evident that taxpayers have a number of enforceable rights of review and appeal, many taxpayers are restricted or reticent in availing themselves of these rights in practice due to factors such as cost, the formality of enforcing such rights and the chance of success.47 Taxpayers are also cognisant of the impact such actions may have on their ongoing relationship with the ATO.

2.19 Furthermore, when challenging an ATO decision under the current legislative framework, taxpayers are faced with the onus of proving that the ATO’s decision is incorrect or excessive.48 The JCPA had considered this issue in its 1993 report and identified that the burden of proof is an example of the imbalance of powers between the ATO and taxpayers:

No better example of the powers of the ATO and the inferior standing of taxpayers is provided than by the requirement under the Act that taxpayers should satisfy the burden of proving their cases.49

Common law rights

2.20 Fundamental common law rights and avenues for relief that are available to taxpayers include the presumption of innocence, privilege against self-incrimination, the right to claim legal professional privilege and the right to claim damages for pure economic loss as a result of negligence.50 It should be noted that common law rights may be challenged or abrogated through legislation or, in certain circumstances, court decisions.51

2.21 Whilst these rights are available to taxpayers, Australian case law has shown that it is often difficult for taxpayers to successfully enforce their common law rights in practice.52 For example, the comments in Harris v Deputy Commissioner of Taxation, indicates the limited prospects of success in any claim against the Commissioner on the grounds of negligence:

There is no basis upon which to conclude that there is a tort liability in the Australian Taxation Office or its named officers towards a taxpayer arising out of the lawful exercise of functions under the Income Tax Assessment Act.53

2.22 Similarly, in Lucas v O’Reilly, the Court found that the Commissioner’s duties were owed exclusively to the Crown rather than the taxpayer and, as such, any action against the Commissioner for breach of statutory duty would inevitably fail:

If the cause of action relied upon by the plaintiff is based upon a breach of statutory duty, the plaintiff must show not only that the duty which is alleged to have been or to be about to be broken is a duty owed to him but also that the statute creating the duty confers upon him a right of action in respect of any breach.54

2.23 Moreover, whilst the common law right to legal professional privilege may be claimed by taxpayers with respect to certain protected communications, the scope of this right has potentially been diminished by recent court decisions.55 In addition, rights such as the privilege against self-incrimination are also abrogated by the ATO’s exercise of a statutory power, such as its compulsory information gathering powers.56

Pre-assessment rights and protections

2.24 The research undertaken by the UNSW shows that the majority of enforceable rights generally only become available after an ATO decision has been made or an assessment has been issued. In effect, taxpayers have very few enforceable rights in interactions with the ATO prior to the issue of an assessment (pre-assessment).

2.25 Whilst some enforceable rights may exist for taxpayers in pre-assessment interactions with the ATO, such as challenging the scope of an ATO information request,57 most other pre-assessment protections arise pursuant to ATO public and private rulings which are legally binding as well as principles set out in the Charter, practice statements and other guidance products which are not legally enforceable.58

2.26 The IGT had previously examined the role of practice statements in the administration of the tax system59 and the courts have been clear on their legal status.60 The Charter also plays a critical role in the pre-assessment sphere, being the only document which sets out a standard of conduct and expectation for taxpayers and the ATO. Before turning to discuss stakeholders’ concerns regarding the Charter, it is necessary to understand its evolution since its inception in the late 1990s. Moreover, it is instructive to consider the approach adopted by other jurisdictions in this area to identify learning and improvement opportunities.

History and development of the Taxpayers’ Charter

2.27 The Charter was introduced in July 1997 as a document for taxpayers and tax practitioners who deal with the ATO on tax, superannuation, excise and the other laws that it administers. The Charter is designed to assist taxpayers and tax practitioners to understand their ‘rights’ and ‘obligations’.61 It also sets out steps which taxpayers and tax practitioners may take where they are dissatisfied with the conduct of the ATO and its officers.

2.28 Since its introduction, the Charter has undergone a number of reviews. Table 2 below sets out its evolution, the internal and external reviews it has undergone and subsequent revisions made to it.

Table 2: Development and evolution of the Taxpayers’ Charter
1993 The process of introducing a Taxpayers’ Charter in Australia began with JCPA’s report in 1993, which recommended that the Government consider the establishment of a Charter.62
1994 - 1997 The ATO consulted extensively with staff, the general public, business and community groups, tax practitioners and other government agencies during the process of developing the Charter.63
July 1997 The Charter, together with its supporting explanatory booklets, was formally launched in July 1997.64 The Charter at this time comprised a set of 18 publications, including Taxpayers’ charter – in detail (A4 booklet) and Taxpayers’ charter – what you need to know (summary leaflet).65
2001 - 2003

The first major internal review of the Charter was conducted in the 2001-02 financial year and involved both community and staff input.66 The community’s preference at this time was for a concise, simple format.

Following the review of the Charter and taking into account the findings of the research, a revised version of the Charter was released in November 2003.67 The Charter principles remained essentially unchanged. However, the Charter’s design and content was updated based on the community’s preference. A number of changes were made, including:

  • Taxpayers’ charter – what you need to know (A5 version) became the main publication for taxpayers;
  • Taxpayers’ charter – in detail was retained;
  • six of the explanatory booklets were withdrawn and the remainder (12) were updated; and
  • Charter information on the ATO‘s website was made easier to locate and follow.
2004-05

The Australian National Audit Office (ANAO) undertook a performance audit of the Charter in the 2004-05 financial year.68 The ANAO’s report concluded that overall the ATO was managing its responsibilities under the Charter, however, the ATO was yet to effectively monitor and report on its performance against the Charter principles.69

The ANAO made a total of nine recommendations to improve the ATO’s management of its responsibilities under the Charter. The ATO agreed with all of the recommendations, noting that many were consistent with its own internal review and were already being developed or implemented.70

2005-06

The ATO conducted a second internal review of the Charter in the 2005-06 financial year.71 This review involved feedback from the community with respect to how well the ATO was ‘living the Charter’.72 The feedback at this time was that the ATO’s strengths were in treating taxpayers fairly and with respect, as well as the clarity of the ATO’s verbal communication.

However, it was identified that further improvements were required with respect to the ATO’s accountability, handling of complex queries and written communication. In response to the review findings, the ATO undertook a major review of its written correspondence.

January 2007

Following the ATO’s second review of the Charter, a revised set of Charter publications was released in 2007. A number of changes were made, including:

  • Taxpayers’ charter – in detail was renamed to Taxpayers’ charter – expanded version;
  • the ATO removed publication of its service standards in the Charter explanatory booklets and instead published them on the ATO’s website; and
  • the ATO updated the Charter to remove duplicated content and make them easier to follow.
2007-08

The ANAO undertook a follow-up audit of the Charter in the 2007-08 financial year.73 The audit assessed the ATO’s implementation of the nine recommendations from the ANAO’s 2004-05 audit in 2004-05.

The ANAO’s report concluded that the ATO had progressed well in implementing its recommendations and made four recommendations for further improvement, including improving complaints reporting and trend analysis and implementing procedures to align future training programs with the Charter principles.74

2008-09 The Charter was transitioned into a ‘business as usual’ model whereby the ATO aspired to a model of ‘living the Charter’ rather than specifically promoting it as something separate from its ordinary activities.75
2010

Following a third internal review of the content of the Charter which took into account legislative and procedural changes, as well as input from ATO staff, a revised version of the Charter was released in July 2010.76 The revised Charter contained a number of changes, including:

  • the Charter principles remained consistent with the 2007 version, however the document presented was smaller and more concise; and
  • the ATO removed the Taxpayers’ charter – expanded version from the suite of Charter documents, and retired two of the explanatory booklets, Who can help with your tax affairs and If you’re not satisfied, thereby reducing the number of explanatory booklets from nine to seven.77

Note: It is unclear to the IGT as to when and why the ATO further reduced the suite of Charter documents from 12 in the early 2000s to 9 in the current year.

2014 The ATO withdrew the Taxpayers’ charter – respecting your privacy and confidentiality explanatory booklet in March 2014 following the publication of the ATO Privacy Policy. This reduced the number of Charter explanatory booklets from seven to six.78

Source: ATO

2.29 The Charter currently comprises an overarching document, Taxpayers’ charter – what you need to know,79 together with six supporting and explanatory documents. These are:80

  • Taxpayers' charter - treating you fairly and reasonably
  • Taxpayers' charter - treating you as being honest
  • Taxpayers' charter - accessing information under the Freedom of Information Act
  • Taxpayers' charter - fair use of our access and information gathering powers
  • Taxpayers' charter - helping you to get things right
  • Taxpayers' charter - if you're subject to review or audit

2.30 The Charter is the primary vehicle through which the ATO defines the relationship that it seeks to establish and maintain with the community, being one based on mutual trust and respect and to promote and maintain taxpayer voluntary compliance. For example, by being fair, open and accountable in its dealings with taxpayers and ensuring taxpayers are made aware of their ‘rights’ and ‘obligations’.81

2.31 The ATO has publicly acknowledged that the way it treats taxpayers is a major factor in influencing the compliance behaviour of taxpayers. It understands that failure on its part to adhere to the Charter principles may lead to disengagement and future non-compliance.82

International comparisons

2.32 The IGT had previously examined aspects of taxpayer rights in the Management of Tax Disputes review.83 In that review, the IGT considered the dispute management and resolution approaches of a number of other jurisdictions including the USA, the UK, Canada, New Zealand and Ireland.84 In each of those jurisdictions, the IGT observed that taxpayer rights to challenge and dispute the decisions of the revenue authorities were largely consistent, albeit with their own particular nuances. These rights generally involved avenues of internal and external review, as well as avenues to progress matters to tribunals and courts of law.85

2.33 Set out below are discussions of other aspects of enforceable and administrative taxpayer rights in a number of jurisdictions, namely: the USA, the UK, Canada and New Zealand. The IGT also examines aspects of the approaches adopted by Mexico and Chile to highlight their uniqueness.

United States of America

Taxpayer Bill of Rights

2.34 The USA’s Internal Revenue Service (IRS) is subject to a Taxpayer Bill of Rights which is set out in the Internal Revenue Code (IRC).86 These rights developed through a number of iterations and amendments to the IRC.

2.35 The first manifestation of a specific Taxpayer Bill of Rights was legislated in 1988 and has become known as ‘TBOR 1’. These changes included over 20 provisions titled ‘Taxpayer Rights and Protections’, including providing taxpayers with rights of administrative appeal in relation to the collection of revenue and litigation opportunities.87

2.36 The Taxpayer Bill of Rights was updated in 1996 (TBOR 2) with incremental improvements. Notably, this update also established the role of the Taxpayer Advocate.88

2.37 In 1998, further legislative amendments were made to taxpayer rights provisions and became known as ‘TBOR 3’.89 These amendments modified the organisational structure of the IRS by, amongst other things, increasing the independence of the appeals function and creating the position of the NTA to head up the Taxpayer Advocate Service (which effectively replaced the Taxpayer Advocate role that been created in 1996). The amendments also expanded the authority of the TAS, Taxpayer Assistance Orders which may be issued by the NTA and mandated that each state have at least one Local Taxpayer Advocate who reported to the NTA.

2.38 More recently, on the basis of its research into the awareness of taxpayer rights, the NTA concluded that there was greater need to inform and educate taxpayers of the rights and protections available to them.90

2.39 On 10 June 2014, the IRS consolidated the Taxpayer Bill of Rights into a single document to assist taxpayers to better identify and understand their rights. The document sets out each of the ten rights together with a brief explanation and associated fact sheets.91 The NTA website provides further advice on each of the ten ‘rights’ available to taxpayers by explaining what each right means for the taxpayer, how the IRS seeks to meet its obligation under the right and the relevant legislative provisions on which the taxpayer may rely.92

2.40 On 18 December 2015 further amendments were made to the IRC which required that ‘in discharging his duties, the Commissioner shall ensure that employees of the Internal Revenue Service are familiar with and act in accord with taxpayer rights ...’93. These amendments included the insertion of the ten principles of the Taxpayer Bill of Rights into the IRC.

Right to sue for damages

2.41 In addition to the ‘rights’ which are set out in the Taxpayer Bill of Rights, there are a range of statutory causes of action which are available to taxpayers in the USA. Notably, these statutory causes of action provide an option for taxpayers to seek civil damages for:

  • unauthorised inspection or disclosure of taxpayer returns or return information;94
  • failure to release a lien;95
  • certain unauthorised collection action;96 and
  • unauthorised enticement of information disclosure.97

2.42 The IGT understands that whilst these provisions have been available to taxpayers for some years, they have not been widely utilised by taxpayers. Specifically, in her annual reports to Congress over the past three years, the NTA has not listed any of these areas in the ten most litigated issues section.98

Taxpayer Advocate Service (TAS)

2.43 As mentioned above, the TAS, headed by the NTA, was established in 1998 and at least one Local Taxpayer Advocate who reports to the NTA is located in each state.

2.44 The objective of the TAS is to ensure that every taxpayer is treated fairly, and that they know and understand their ‘rights’ as a taxpayer.99 Additionally, taxpayers who meet certain requirements may be assisted by being assigned an advocate who can assist in the matter free of charge until it is resolved.100

2.45 The TAS may provide advocate services to a taxpayer in a number of circumstances including where the taxpayer cannot resolve the issue directly with the IRS and the problem is causing them financial difficulties or if the taxpayer is facing an immediate threat of adverse action and the IRS has not responded to them directly.101

2.46 Under § 7811 of the IRC, a taxpayer may apply to the NTA to issue a Taxpayer Assistance Order (TAO) where the NTA determines the taxpayer is suffering, or is about to suffer, a significant hardship due to the manner in which the internal revenue laws are being administered.102

2.47 The terms of a TAO may require the IRS to:

  • release a levy;103 or
  • cease any action, take any action as permitted by law, or refrain from taking any action, with respect to the taxpayer pursuant to:
    • collection;104
    • bankruptcy and receiverships;105
    • discovery of liability and enforcement of title;106 or
    • any other provision of the internal revenue laws specifically described by the NTA in the TAO.107

2.48 A TAO may be appropriate where the IRS does not agree with the TAS on the proper resolution of specific case issues.108 The IRS will generally comply with these orders unless they are appealed and subsequently modified or rescinded by the NTA, the Commissioner or Deputy Commissioner.109 Where the order is modified or rescinded by the Commissioner or the Deputy Commissioner, a written explanation of the modification or rescission must be provided to the NTA.110 In her annual report, the NTA sets out the use of TAO’s and whether the IRS complied with them.111

2.49 The TAS also examines and reports problems which impact on multiple taxpayers or represent a systemic problem in tax administration.112 Such problems may be identified from patterns in taxpayer issues or raised by taxpayers through the Systemic Advocacy Management System.113 The TAS may also receive intelligence on areas requiring improvement through the Taxpayer Advocacy Panel, a Federal Advisory Committee established in 2002 comprising volunteers from the community.114

2.50 In her annual report, the NTA identifies at least 20 of the most serious problems facing taxpayers and may offer recommendations to resolve the problem. One such problem identified led to the adoption of the Taxpayer Bill of Rights in 2014.

2.51 The NTA has also proposed a ‘report card’ to measure the IRS’s performance relating to taxpayer rights. In the preface to her 2014 and 2015 annual reports, the NTA sets out a Taxpayer Rights Assessment which contains performance measures and data organised against the ten taxpayer ‘rights’. However, this assessment is still a ‘work in progress’ and is expected to grow and evolve over time as more data becomes available.115

Low income tax clinics

2.52 One service made available to certain taxpayers in the USA is the Low Income Taxpayer Clinic Program. This program aims to ensure the fairness and integrity of the tax system for low income taxpayers (and non-English speaking taxpayers) through:

  • pro bono representation on their behalf in tax disputes with the IRS;
  • educating them about their rights and responsibilities as taxpayers; and
  • advocating for issues that impact them.116

2.53 Low income clinics are independent from the IRS but receive some of their funding from the IRS through a matching grant program.117 The TAS oversees and administers the grant program for the IRS. The grant must be matched by the clinic on a dollar-for-dollar basis.118 Academic institutions and other non-profit organisations are among those which may qualify for such funding.119

United Kingdom

Your Charter

2.54 The UK government has a history of adopting charters to provide the community with a comprehensive guide of what to expect in the delivery of public services. The first such charter which specifically concerned taxpayer interactions with revenue authorities was published by the Board of Inland Revenue in 1986. It was superseded by a revised version in 1991 in line with broader government policies at the time.120 Following the merger of the Board of Inland Revenue and Her Majesty’s (HM) Customs & Excise into HM Revenue & Customs (HMRC), a new publication titled Your Charter was adopted in 2009.

2.55 Your Charter sets out what individuals and businesses dealing with HMRC can expect from the department, as well as what it expects from them in return. Recently in January 2016, HMRC ‘refreshed’ Your Charter to be shorter, setting out ‘rights’ and ‘obligations’ in a simple and concise way.121

2.56 HMRC has also sought to strengthen its charter governance by creating a
sub-committee of its Board, namely: the Charter Committee. The Charter Committee is chaired by a HMRC non-executive director whilst the majority of the other members are external to HMRC.122 The HMRC has also appointed nine senior staff members as Charter Champions to assist the Charter Committee in its oversight work.

2.57 The Charter Champions also promote Your Charter within the organisation and ensure its principles are considered in developing HMRC processes and policy design. A number of Charter Advocates have also been recruited by Charter Champions to ensure adherence to Your Charter principles by HMRC staff. It should be noted that these roles are relatively new and are still evolving.

Reporting on the Charter

2.58 Although the ‘rights’ and ‘obligations’ outlined in Your Charter are not legislated into UK law, it is explicitly supported by legislation. Namely, not only is the HMRC required to prepare a charter, which includes standards of behaviours to which HMRC aspires when exercising its powers, but it is also legislatively required to review the charter regularly and report at least once a year on its adherence to the charter.123

2.59 The HMRC’s customer survey measures how it performed against each right listed in Your Charter.124 Each year HMRC present a series of set questions to individuals, small and medium businesses and agents and measures their responses in percentage terms to see how the department is performing.

2.60 The HMRC has made progress to enhance Your Charter through comments and suggestions from taxpayers. The enhanced charter will link the rights and obligations to specific areas of its work to enable taxpayers to more clearly appreciate how it is delivering on its promises and commitments. As noted above, they have also created a new HMRC Board sub-committee to enable them to show stakeholders how they are an accountable and transparent department.

2.61It has been noted that HMRC has increased its focus on Your Charter with 30 references being made to Your Charter in the 2015-16 annual report compared with three such references in the previous year.125

The Adjudicator’s Office and Parliamentary and Health Service Ombudsman

2.62 The Adjudicator’s Office was established in 1993 and currently provides an independent tier of complaint handling for HMRC, the Valuation Office Agency and the Insolvency Service. The Adjudicator is able to look at complaints about mistakes, unreasonable delay, poor and misleading advice, inappropriate staff behaviour and the use of discretion.126

2.63 The Adjudicator cannot look at matters of government or departmental policy, complaints where there is a specific right to determination by any court, tribunal or other body with specific jurisdiction over the matter or complaints about an ongoing investigation or enquiry.127 The Adjudicator also cannot ask a department to suspend any action, such as pursuing a debt or calculating interest.128

2.64 The Adjudicator generally refers complaints to the originating departments to handle internally in the first instance. Where a complaint is considered ready for investigation and accepted, the Adjudicator’s Office appears to seek resolution first by mediation between the parties.129 Where such mediation is inappropriate, the Adjudicator will review the case in detail to set out views and make recommendations. Where the Adjudicator upholds any aspect of a complaint, a detailed letter is prepared for the senior manager responsible along with a request to be notified in writing after the corrective action has been taken.130

2.65 Where a complaint is upheld, the Adjudicator may make recommendations which can include for the HMRC to issue an apology and/or pay costs to the taxpayer.131 Notably, the Adjudicator may also recommend that a monetary sum be paid in recognition of the poor level of service the taxpayer received as well as costs.132

2.66 Where customers remain dissatisfied with the outcome of their complaint after investigations by HMRC and the Adjudicator, they may raise their concerns with their local Member of Parliament to refer to the Parliamentary Ombudsman.133

2.67 The Parliamentary Ombudsman's role is to investigate complaints that individuals have been treated unfairly or have received poor service from government departments. However, the Parliamentary Ombudsman has observed that, as the Adjudicator’s Office already acts as a ‘second tier’ to handle complaints about HMRC, many issues raised in complaints are resolved prior to reaching the Parliamentary Ombudsman.134

European Union law and human rights

2.68 Taxpayer rights in the UK have also been influenced by broader developments of human rights. The main source of human rights law in the UK is the Human Rights Act 1998 (UK), which incorporates the European Convention of Human Rights (Convention) into UK law.135 It enables taxpayers, who contend that their rights under the Convention have been contravened, to seek remedies in UK courts with ultimate rights of appeal being available in the European Court of Human Rights (ECHR)136.

2.69 The particular rights within the Convention that have been held to have an impact on tax matters include:137

  • Article 1 of Protocol 1, the right to peaceful enjoyment of possessions and protection of property;
  • Article 6, the right to a fair and public trial within a reasonable time;138
  • Article 8, the right to respect for private and family life; and
  • Article 14, prohibition of discrimination in the enjoyment of ECHR rights.

2.70 As a European Union (EU) member state, the UK is also required to comply with EU law and the rights contained in the Charter of Fundamental Rights in so far as it is within the scope of EU law.139 Where an EU member state acts in a way that contravenes EU law, the act can be set aside by the Court of Justice of the European Union (CJEU).140 The CJEU can be used by taxpayers if they feel their rights under EU law have been infringed.

2.71 Academic research on the area suggests that whilst the UK Charter may not provide legislative protection, the overlay of European human rights law, and avenues of redress through the ECHR, provides an additional layer of taxpayer protection that is not available in Australia.141

2.72 During the course of this review, a referendum was held in the UK to determine whether it would continue to be a member state of the EU.142 The referendum resulted in a 52 per cent vote for the UK to leave the EU. At present, it is unclear how the anticipated UK’s exit from the EU may impact the jurisdiction of the CJEU and ECHR vis-à-vis UK tax law.

Doctrine of legitimate expectations

2.73 In addition to Your Charter adopted by the HMRC, commentators have pointed to developments in the UK common law that have provided an additional source of taxpayer rights.143 Namely, the administrative law doctrine of substantive legitimate expectations.

2.74 In the UK, the principles of legitimate expectations in tax matters are well established. The principles of legitimate expectation were considered in some detail recently in R (oao Hely-Hutchinson) v HMRC.144 In that case, the taxpayer had relied upon published guidance issued by the HMRC in 2003 to make claims for deductions which had arisen between 1999 and 2002 (inclusive). The HMRC had opened a number of enquiries into such claims, including those of the taxpayer, and these remained opened until at least 2009 when the HRMC revised and reversed the guidance it had previously published on the deductibility of these amounts. As a result of the changed HMRC position, the taxpayer’s claims were denied.145

2.75 The taxpayer lodged an appeal, asserting that he had a legitimate expectation to claim those losses and to be treated in accordance with the 2003 guidance. He also argued that the HMRC’s refusal to recognise his capital loss claim was a breach of the principle that the Commissioners should treat taxpayers fairly and consistently.146

2.76 The HMRC’s central contention was that its duty was to collect the correct amount of tax.147 However, it was held that HMRC’s responsibility for the collection and management of tax ‘embedded the obligation to treat taxpayers fairly’.148 In this case, four particular factors of unfairness were identified. The first factor was comparative unfairness, being that some taxpayers had a legitimate expectation arising out of the 2003 guidance and obtained a benefit, whilst others did not.149 The second factor of unfairness was that the 2009 revised guidance had retrospective effect.150 The third factor was the situation had arisen because of a mistake made by the HMRC in 2003151 and the fourth factor was that HMRC took six years to recognise and resolve its mistake.152

2.77 The court held that legitimate expectation on the part of the taxpayer had been established and that HMRC had failed to consider all aspects of unfairness claimed by the taxpayer.153 The case was remitted to HMRC to make a fresh decision, taking into account all aspects of unfairness. This case is the first tax case where ‘a judicial review application based on legitimate expectations has succeeded in the absence of any finding of detrimental reliance.’154

2.78 In addition to reaffirming the role of substantive legitimate expectations in the UK, the case also demonstrated that:

It is not necessary that the claimant relied on the guidance to his detriment: conspicuous unfairness may also result from the unequal treatment of different taxpayers, and from retrospective withdrawal of guidance in relation to past transactions or claims. HMRC does not have a ‘trump card’ that its guidance was wrong and that it has an obligation to collect the correct amount of tax.155

2.79 The above position appears markedly different to that in Australia as confirmed by the decision of the Full Federal Court in Macquarie Bank156. In that case, the Federal Court effectively confirmed that guidance issued by the ATO cannot bind the Commissioner to act otherwise than in accordance with the tax law.

Canada

Taxpayer Bill of Rights

2.80 In 1985, the then Minister of National Revenue introduced a publication titled the Declaration of Taxpayer Rights (Declaration). This formulation of rights did not have the force of the law itself, although its principles were sourced from the Canadian Charter of Rights and Freedoms,157 statute and common law.158 The Declaration was not enacted into law and has since been superseded by the Taxpayer Bill of Rights.

2.81 On 28 May 2007, Canada adopted a Taxpayer Bill of Rights to increase the accountability of the Canada Revenue Agency (CRA) to taxpayers and enhance the level of awareness among taxpayers about their rights and avenues of redress when dealing with the CRA. It sets out 16 taxpayer ‘rights’ as well as a five-part Commitment to Small Business.159 The Taxpayer Bill of Rights contains both legislated rights and non-legislated service rights. Some of these rights are derived from existing legislation including the Income Tax Act, the Official Languages Act and the Privacy Act.

Office of the Taxpayers’ Ombudsman

2.82 The Office of the Taxpayers’ Ombudsman was established in 2007. The Ombudsman reports directly to the Minister of National Revenue. The mandate of the Ombudsman is to ‘assist, advise and inform the Minister about any matter relating to services provided to a taxpayer by the [CRA]’.160

2.83 The Ombudsman’s duties include reviewing and addressing complaints about the service provided by the CRA and allegations of breaches of the eight service rights contained in the Taxpayer Bill of Rights. This can arise in circumstances such as undue delay, misleading information, complaints of staff behaviour or misunderstandings which potentially result from mistakes by the CRA.161 The Ombudsman does not review complaints relating to tax policy or legislation or matters that are before the courts.162

2.84 The outcome of such reviews may result in the Ombudsman making recommendations to the CRA or the Minister, which may provide remedial relief in the form of giving further information, correcting a misunderstanding or omission, or offering an apology. The Ombudsman may also make recommendations aimed at helping the CRA to improve its policies and procedures to better serve taxpayers. However, the Ombudsman cannot make a binding directive to the CRA to take a particular course of action.163

2.85 The Ombudsman has a role to raise awareness or conduct outreach programs to promote the service rights defined in the Taxpayer Bill of Rights. For example, the Ombudsman has published a Digest of Taxpayer Service Rights to enable taxpayers to better understand their ‘rights’ to service and fairness when dealing with the CRA.164

2.86 The Ombudsman also reviews systemic and emerging issues related to service matters. One such example related to concerns about taxpayers’ reluctance to lodge complaints against the CRA. Consequently, the right to lodge a complaint or seek a review without fear of reprisal was added to the Taxpayer Bill of Rights in June 2013, to reassure taxpayers of the integrity of the complaint process.165 The CRA has also designated a separate form for reprisal complaints.166 These complaints are reviewed by its Internal Affairs and Fraud Control Division,167 which directly reports to the Commissioner. The Ombudsman does not have oversight of reprisal complaints.

2.87 The ability for a taxpayer to seek a review by a taxpayer ombudsman in the Canadian Taxpayer Bill of Rights is consistent with the IBFD best practice in terms of a framework for protecting taxpayer rights.168

Tort of ‘negligent investigation’

2.88 Although the Canadian Taxpayer Bill of Rights does not itself provide specific relief or justiciable redress, developments in Canadian case law have raised the possibility of redress under the tort of negligence.169 Generally, Canadian courts have shown reluctance to impose a duty of care on CRA officials when dealing with taxpayers, despite the Taxpayer Bill of Rights. However, more recent developments have provided indication that the CRA and its officers may be held liable for negligent actions in some circumstances.

2.89 In Leroux v Canada Revenue Agency170, the Supreme Court of British Columbia found that there was sufficient nexus between the CRA auditors and taxpayer being audited such that the taxpayer was owed a duty of care.171 In this case, the taxpayer’s extensive dealings with the CRA through numerous objection processes meant that the CRA officials involved would have reasonably contemplated that carelessness may be likely to cause damage to the taxpayer. Furthermore, the Court found that amongst the allegations, the imposition of penalties indeed breached the standard of care owed by the CRA official to the taxpayer.172 However, due to other factors, the Court determined the breach of standard of care by the CRA and its officers did not cause the injury claimed by the taxpayer.173 The IGT understands that the taxpayer had initially sought to appeal the decision of the Supreme Court of British Columbia, but that appeal had been abandoned.

2.90 Two further cases on the issues have been decided in Canada. In Grenon v Canada Revenue Agency174, the Court of Queen’s Bench of Alberta declined to follow the decision in Leroux on the issue of duty of care.175 The Court in Grenon questioned the approach adopted in Leroux and concluded that, absent exceptional circumstances, there was not a sufficient degree of proximity in the relationship between the taxpayers and the CRA such that the latter would owe a duty of care to the former.176 The decision in Grenon is currently the subject of a pending appeal in the Alberta Court of Appeal.

2.91 In Canada v Scheuer,177 the Federal Court of Appeal determined that:

… there is no category of recognized cases that supports the plaintiffs’ assertion that the Canada Revenue Agency and Canada owed a duty of care to all Canadians when issuing tax shelter numbers or a duty to warn all Canadians that participation in a given tax shelter may lead to the denial of the income tax deductions (the charitable tax credits in this case) allegedly available as a result of such participation. The performance of statutory duties generally does not, in and of themselves, give rise to private law duties of care.178

2.92 However, the Court in Scheuer did leave open the possibility that ‘liability may attach if public officials act in a manner inconsistent with proper and valid exercise of their statutory duties, in bad faith or in some other improper fashion.’179

New Zealand

Inland Revenue’s Charter

2.93 The Inland Revenue’s Charter was first published in March 2001 and outlines the New Zealand Inland Revenue Department’s (IRD) commitments to, and standards of service for, taxpayers.180 It was adopted in response to recommendations made by the Finance and Expenditure Committee in 1999,181 following an inquiry which found that public confidence in tax administration had been eroded.182

2.94 The Inland Revenue’s Charter is noticeably different to other jurisdictions, in that the Charter appears to be targeted at the IRD itself, not the taxpayer unlike those of Australia and the UK which are outward-facing community documents.

2.95 As a result of this difference in approach, the Inland Revenue’s Charter does not set out taxpayer obligations183 and generally does not use ‘rights’ terminology. Instead, it sets out its service commitments. However, the content of the commitments made within the Inland Revenue’s Charter are similar in substance to comparable taxpayer charters or documents in other jurisdictions some of which are discussed above.

2.96 The Inland Revenue’s Charter also clearly sets out the avenue through which taxpayers can make a complaint to the IRD about the service they have received with a commitment to deal with complaints promptly, fairly and fully. It also sets out that complaints can be escalated to the Ombudsman.

2.97 The IRD is currently undertaking a review of its Charter to ensure that it reflects the department’s move towards being a more customer focused and intelligence-led organisation. The IRD expects that this current review will provide an opportunity to engage with its ‘customers’ on the shape, direction and expectations of the Charter as well as identifying new approaches of reporting on the department’s performance against it.

Reporting on the Charter

2.98 When it first implemented its Charter, the IRD reported its performance on the Charter as part of its annual report. The extent of reporting on the Charter included quantitative measures, such as numbers of complaints received and resolved, and qualitative gauges, such as highlighting where new and existing initiatives aligned with commitments under its Charter.184 The IRD does not currently report publicly on its Charter performance and has ceased to include such information in its annual reports.

2.99 Whilst the IRD no longer publishes its performance against the Charter in its annual reports, it reports internally on such performance on a quarterly basis.185 Information contained in complaints is directly measured against IRD customer satisfaction survey results that reference the Charter principles, such as:

  • we will be easy to deal with, prompt, courteous, and professional;
  • we will provide you with reliable and correct advice and information about your entitlements and obligations;
  • we will be well-trained and competent; and
  • we will treat all information about you as private and confidential.186

2.100 This information contained in the above quarterly reports is useful in guiding the IRD’s approach to handling complaints and improving staff performance against the Charter principles.

2.101 In 2015, the IRD engaged an independent consultancy firm to carry out a staff attitudinal survey for the purpose of improving IRD performance in customer service and complaints management.187 The objectives of this survey were to provide insights into staff views on areas including customer service, leadership and commitment to complaints, policies, procedures and processes, complaints handling and complaints as a source of improvement.188 The survey results included candid responses from IRD staff and have helped the IRD understand staff attitudes towards complaints. These results are expected to assist in driving positive attitudes from IRD staff and in moving the IRD towards a customer-centric approach.189

Other jurisdictions

2.102 In addition to the above jurisdictions, the IGT also examined the taxpayer rights and protection frameworks of a number of other countries. Whilst these are not intended to be used as direct comparisons with Australia due to the different socio-political and legal environments within which they operate, they do offer useful insights.

Mexico

2.103 The protection and defence of taxpayer rights in Mexico is the responsibility of the Procuraduría de la Defensa del Contribuyente (PRODECON). The PRODECON is independent of the Mexican revenue authority and provides ‘non-judicial review over the decisions, actions or resolutions of any government agency or public organism which collects taxes or any other kind of duties (social security contributions, customs duties, fees for public services).’190

2.104 In discharging its responsibilities, the PRODECON may provide free advice and counselling to taxpayers as well as advocating on their behalf in legal action against the revenue authority.191 Additionally, the PRODECON may, of its own volition, act as a public defender in ordinary and constitutional courts where it considers that a particular legal provision would violate fundamental taxpayers’ rights.192

2.105 In addition, the PRODECON may also make recommendations for law change to taxes and customs, investigate systemic tax issues and make recommendations for improvement and also act as a mediator in a newly implemented alternative dispute resolution mechanism called Conclusive Agreements between auditors and taxpayers.193 The latter provides a mechanism whereby audit disputes are resolved by way of a binding agreement which cannot be later altered, varied or legally challenged either by the taxpayer or the revenue authority.194

2.106 Finally, the PRODECON also performs an Ombudsman role to receive complaints from taxpayers regarding actions which they consider violate their rights. The PRODECON will make enquiries of the relevant tax office in question which has 72 hours to justify their actions.195 Where the action is verified, the PRODECON may make a non-binding public recommendation for improvement.196 Whilst the revenue authority is not obliged to accept the recommendation, where it is not accepted, the PRODECON has the right to publicly name the relevant official to prevent the relevant conduct from recurring.197

Chile

2.107 The Chilean Tax Code has a legislated list of taxpayers’ rights. The IGT understands that the list essentially consolidates a range of rights which had previously existed through other Chilean legislation as well as its Constitution.198

2.108 By operation of Law No 20.420 which was unanimously approved by the Chilean Senate in December 2009, the Chilean Tax Code sets out the consolidated list of ten taxpayers’ rights and a number of requirements which are directed at the revenue authority.199

2.109 Whilst the rights set out in the Chilean Tax Code are not of themselves unique to those in many other jurisdictions, Chile is the only jurisdiction examined by the IGT in which taxpayers’ rights were legislated. Moreover, the Chilean Tax Code also states that these rights are actionable through the Chilean Tax and Customs Courts where they are violated by acts or omissions of the revenue authority.200

The Model Taxpayer Charter

2.110 Interest in taxpayer rights and responsibilities and the role of charters and similar documents has extended beyond the realm of revenue authorities. The role of taxpayer rights in enhancing the fairness of the tax system was explored recently in a collaborative project by the Asia Oceania Tax Consultants’ Association (AOTCA), Confederation Fiscale Europeenne (CFE) and Society of Trust and Estate Practitioners (STEP). Collectively, the membership of these organisations represents some 500,000 tax advisors in 80 countries.201

2.111 The project identified 86 specific provisions of taxpayer rights which were derived from a survey questionnaire posed to members of AOTCA, CFE and STEP in 41 countries. Australia was one such country with participating organisations being CPA Australia and the Tax Institute of Australia.202

2.112 The aggregate response to the survey questionnaire for each jurisdiction is summarised in the study and indicates that in Australia 64 of the 86 provisions already exist to varying degrees. Notably, the survey reported positively on the clarity of legislation,203 preventing interest or penalties to be imposed if it is not reasonably possible for a taxpayer to comply with legislation204 and making the policy intent clear in legislation.205 The survey results did not find that these aspects were followed in the USA, UK, Canada and New Zealand.

2.113 The survey also identified potential shortcomings in Australia such as allowing tax refunds to be offset against other debt, not reversing the onus of proof on tax avoidance and penalty matters and the enactment of retrospective legislation.

2.114 Based on the result of the survey as well as other research, AOTCA, CFE and STEP published the Model Taxpayer Charter. The Model Taxpayer Charter was designed with a view to be easily adopted by revenue authorities or incorporated into domestic law. An important factor in the Model Taxpayer Charter was its direct balancing of the rights and responsibilities of taxpayers:

… recognising and enshrining taxpayer rights in legislation will contribute substantially to both the perception and reality of fairness and integrity in the tax system. Placing statements of taxpayer responsibilities in an overarching document reinforces the proposition that while holding rights, taxpayers must also shoulder responsibilities and do so in good faith.206

2.115 The Model Taxpayer Charter research noted that the majority of countries which have adopted charters have done so by way of practice statement rather than in a legally binding document.207 Importantly, and notwithstanding the majority approach in this area, the researchers argue that as a matter of best practice ‘the Taxpayer Charter should have legal force to the extent possible, in order for it to be fully effective.’208

2.116 They also advocate in favour of empowering taxpayers to enforce their rights under taxpayers’ charters generally, noting that ‘laws which are not capable of enforcement have no real effect’.209 However, the Model Taxpayer Charter does not propose a framework for enforcement as it considered that enforcement will depend on the legal traditions of the jurisdiction:210

Since these legal traditions vary considerably across the world, it would be wrong to advocate a particular approach as being suitable in all circumstances. We note, that the office of a Taxpayer Ombudsman (or Taxpayer Advocate) could be the appropriate forum for enforcement of Taxpayer Rights in the first instance (i.e. informed resolution rather than court action) if given the authority to do so.211

2.117 The main difference between the Australian Charter and Model Taxpayer Charter as proposed is that the former mainly provides expectations rather than enforceable rights. However, it must be noted that some of the Charter principles are based on legislative requirements and are enforceable. A comparison of the Charter principles against those set out in the Model Taxpayer Charter is set out in Table 3.

Table 3: A comparison of the Australian Charter and the Model Taxpayer Charter
Australia – Taxpayers’ Charter Model Taxpayers Charter
Rights
Treat you fairly and reasonably The Tax system shall be designed and administered fairly, honestly and with integrity, according to the law, without bias or preference.
Treat you as being honest unless you act otherwise The Tax system will be designed and administered to provide as far possible certainty, clarity and finality in one's Tax affairs.
Offer you professional service and assistance The Tax system will be designed and administered fairly and cost effectively taking into account the attainment of its purposes.
Accept you can be represented by a person of your choice and get advice In cases of disputes as to Tax liability an independent, objective, speedy and cost effective appeal process. Disputes as to actions of the Tax Authority will be followed up without fear of reprisal under independent oversight.
Respect your privacy Taxpayers who face difficulties in carrying out their responsibilities as Taxpayers will be given appropriate assistance by the Tax Administration.
Keep the information we hold about you confidential A Taxpayer's affairs and records will be kept confidential and private except in the case of public hearings in litigation or criminal prosecutions.
Give you access to information we hold about you A Taxpayer is required to pay no more than the amount of Tax based on Tax laws.
Help you to get things right A Taxpayer may be represented by a person of the Taxpayer's choosing.
Explain the decisions we make about you Enforcement action including audits, collections, reassessment, penalties and prosecutions will be proportionate to the circumstances.
Respect your right to a review In the absence of any evidence to the contrary to be presumed honest.
Respect your right to make a complaint
Make it easier for you to comply
Be accountable
Obligations/Responsibilities
Be truthful Be truthful in all Tax matters including legally required disclosures.
Keep the required records Provide information on a timely basis as and when reasonably required.
Take reasonable care Be cooperative in dealings with the Tax Administration, filing Tax returns and information reporting, the conduct of an audit, and payment of Taxes.
Lodge by the due date Pay Tax on time without deduction or offset subject to the right to appeal.
Pay by the due date Comply with Tax responsibilities and seek assistance if necessary.
Be cooperative Maintain accurate financial records and supporting information for such period as may be reasonably required.
Exercise an appropriate degree of care and diligence in taxation matters.
Be held accountable for the correctness and completeness of the information supplied to the Tax Administration whether or not another person has been engaged to prepare, assemble and/or submit the information on your behalf.
Treat Tax Officers with courtesy and respect, noting that abuse of Tax Officers in performance of their duties is never acceptable.
Ensure that all legitimate cross border compliance requirements are met.

2.118 An examination of the rights set out in the Model Taxpayers Charter revealed four rights which do not explicitly appear in the Australian Charter. These are the rights to:

  • certainty, clarity and finality;
  • a cost effective and independent, objective and speedy appeals process;
  • pay no more tax than is required by the tax laws; and
  • a proportionality requirement in the conduct of audits, debt collection, reassessment, prosecution and penalties.

2.119 The IGT notes that whilst the above rights do not explicitly appear on the face of the Australian Charter, some may be found in varying degrees in other publications or legislation. For example, ‘access to an independent appeal process’ arguably exist through the Part IVC reviews and appeals.212


28 The Treasury (Cth), Report on Aspects of Income Tax Self Assessment (2014) p 2.

29 Ibid.

30 Ibid.

31 Above n 28, pp 2-3.

32 Taxation Administration Act 1953, Sch 1, Sub-Div 357-B.

33 Joint Committee of Public Accounts, Parliament of Australia, Report No. 326 An Assessment of Tax, A Report on an Inquiry into the Australian Taxation Office (1993).

34 Ibid, p 307.

35 Ibid, p 311.

36 Ibid, p 314.

37 Ibid, p 312.

38 Ibid, pp 311-312.

39 Ibid, p 314.

40 Ombudsman Act 1976, sub-s 4(3) [now repealed].

41 Inspector-General of Taxation Act 2003, sub-s 7(1) [now superseded]; IGT, Submission to the House of Representatives Standing Committee on Tax and Revenue, Inquiry into the External Scrutiny of the Australian Taxation Office (2016) p 21 <www.igt.gov.au>.

42 IGT, Review into improving the self assessment system (2013).

43 IGT, Review into aspects of the Australian Taxation Office’s use of compliance risk assessment tools (2014).

44 IGT, The Management of Tax Disputes (2015).

45 Inspector-General of Taxation Act 2003, s 7.

46 International Fiscal Association 2015 Basel Congress, Cahiers de droit fiscal international Vol 100b – The practical protection of taxpayers fundamental rights (2015) pp 74-82.

47 Binh Tran-Nam and Michael Walpole, ‘Access to justice: How costs influence dispute resolution choices’ (2012) 22(3) Journal of Judicial Administration, p 27.

48 Taxation Administration Act 1953, ss 14ZZK and 14ZZO; University of New South Wales (UNSW), Report to the Inspector-General of Taxation on Taxpayer Rights (April 2016) p 27.

49 Above n 33, p 307.

50 UNSW, Report to the Inspector-General of Taxation on Taxpayer Rights (April 2016).

51 Commissioner of Taxation v Donoghue [2015] FCAFC 183.

52 John Bevacqua, ‘Redressing the imbalance – challenging the effectiveness of the Australian Taxpayers’ Charter’ (2013) 28 Australian Tax Forum 377, p 392.

53 Harris v Deputy Commissioner of Taxation (2001) 47 ATR 408.

54 Lucas v O’Reilly (1979) 36 FLR 102.

55 Commissioner of Taxation v Donoghue [2015] FCAFC 183.

56 Stergis & Ors v Federal Commissioner of Taxation & Anor 89 ATC 4442.

57 See for example: Australia and New Zealand Banking Group v Konza [2012] FCAFC 127.

58 Macquarie Bank Limited v Commissioner of Taxation [2013] FCAFC 119.

59 IGT, Follow up review into delayed or changed ATO views on significant issues (2014).

60 Macquarie Bank Limited v Commissioner of Taxation [2013] FCAFC 119.

61 Above n 26.

62 Above n 33, p 314.

63 Commissioner of Taxation, Annual Report 2002-03 (2003) p 102.

64 ATO communication to the IGT, 15 January 2016.

65 Ibid.

66 Ibid.

67 Commissioner of Taxation, Annual Report 2003-04 (2004) pp 100–101.

68 Australian National Audit Office (ANAO), Taxpayers’ Charter: Australian Taxation Office (2004-05).

69 Ibid, p 21.

70 Commissioner of Taxation, Annual Report 2004-05 (2005) p 105.

71 Commissioner of Taxation, Annual Report 2005-06 (2006) p 42.

72 Ibid, p 44.

73 ANAO, Taxpayers’ Charter: Follow-up Audit (2007-08).

74 Ibid, p 14.

75 Above n 64.

76 ATO, ‘Taxpayers’ Charter 2010’ (internal ATO document, 12 March 2014).

77 Ibid.

78 Ibid.

79 ATO, Taxpayers’ charter (22 January 2013) <www.ato.gov.au>.

80 Ibid.

81 ATO, ‘Guiding principles and models’ in ‘Developing Effective Compliance Strategies’ (13 January 2015) <www.ato.gov.au>.

82 Ibid.

83 Above n 44.

84 Ibid, pp 26-38.

85 Ibid.

86 Internal Revenue Code (USA), §7803 (a) (3).

87 Dianne Mehany, Scott Michel, and Christopher Rizek, ‘United States’ in International Fiscal Association 2015 Basel Congress, Cahiers de droit fiscal international Vol 100b – The practical protection of taxpayers fundamental rights (2015) 873, p 875.

88 Taxpayer Advocate Service (TAS), ‘Our history’, <www.taxpayeradvocate.irs.gov&gt;.

89 Internal Revenue Service Restructuring and Reform Act of 1998 (USA).

90 NTA, ‘Volume 1: Most Serious Problems #1’ in 2013 Annual Report to Congress (2013).

91 Internal Revenue Service (IRS), Taxpayer Bill of Rights (13 June 2016) <www.irs.gov>.

92 NTA, ‘Taxpayer rights’ (undated) <www.taxpayeradvocate.irs.gov>.

93 Internal Revenue Code (USA), §7803 (a)(3); Consolidated Appropriations Act 2016, s 401.

94 Internal Revenue Code (USA), §7431.

95 Internal Revenue Code (USA), §7432.

96 Internal Revenue Code (USA), §7433-7433A.

97 Internal Revenue Code (USA), §7435.

98 NTA, 2015 Annual Report to Congress – Volume 1 (2015) pp 426-527; NTA, 2014 Annual Report to Congress – Volume 1 (2014) pp 423-520; NTA, 2013 Annual Report to Congress – Volume 1 (2013) pp 322-408.

99 TAS, Who we are (undated) <www.taxpayeradvocate.irs.gov>.

100 Ibid.

101 TAS, Contact us (undated) <taxpayeradvocate.irs.gov>. See also, IRS, Internal Revenue Manual, Part 13, Chapter 1, Section 7. – Taxpayer Advocate Service Case Criteria <www.irs.gov>; TAS, Learn more about eligibility (undated) <www.taxpayeradvocate.irs.gov>.

102 Internal Revenue Code (USA), Title 26, § 7811.

103 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b).

104 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b). See also Chapter 64 of the Internal Revenue Code (USA).

105 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b). See also
Sub-chapter B of Chapter 70 of the Internal Revenue Code (USA).

106 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b). See also Chapter 78 Internal Revenue Code (USA).

107 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b).

108 IRS, ‘Taxpayer Assistance Order (TAO) Process’ in IRS Manual, Part 13.1.20.2 <www.irs.gov>.

109 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b).

110 Code of Federal Regulations (USA), Title 26, Chapter I, Subchapter F, Part 31, §301.7811-1 (b).

111 NTA, 2015 Annual Report to Congress (2015) pp 555-556.

112 TAS, Who we are (undated) <www.taxpayeradvocate.irs.gov&gt;.

113 IRS, System Advocacy Management System (SAMS) (20 May 2016) <www.irs.gov>

114 Taxpayer Advocacy Panel, What we do (undated) <www.improveirs.org>.

115 TAS, 2014 Annual Report to Congress (2014), p xv; TAS, 2015 Annual Report to Congress (2015), p xvii.

116 TAS, Low income taxpayer clinic program report (December 2015) p 4.

117 Internal Revenue Code section 7526(a).

118 Internal Revenue Code section 7526(c)(5).

119 TAS, Low Income Tax Clinics (2015) pp 58-59.

120 International Fiscal Association 2015 Basel Congress, Cahiers de droit fiscal international Vol 100b – The practical protection of taxpayers fundamental rights (2015), p 868.

121 HM Revenue & Customs (HMRC), Your Charter Annual Report: April 2015 to March 2016 (14 July 2016) p 7.

122 HMRC, Our Governance <www.gov.uk>.

123 Commissioners of Revenue and Customs Act 2005 (UK), s 16A, as inserted by Finance Act 2009 (UK), s 92.

124 HMRC, Your Charter Annual Report: April 2014 to March 2015 (2015).

125 Ian Young, ‘Charter Annual Report 2015-16’ <www.ion.icaew.com/TaxFaculty/post/Charter-Annual-Report-2015-16>.

126 The Adjudicator’s Office, How we work <www.adjudicatorsoffice.gov.uk>.

127 Ibid.

128 The Adjudicator’s Office, Annual Report 2015, p 6.

129 Ibid, pp 8-9.

130 Ibid, p 6.

131 Ibid, p 6.

132 Ibid, p 12.

133 Parliamentary Commissioner Act 1967 (UK).

134 Parliamentary and Health Service Ombudsman, Complaints about UK government departments and agencies, and some UK public organisations 2014-15 (2015) p 26.

135 HMRC, AH 1051 – European Law and Human Rights: European Union Law <www.hmrc.gov.uk>.

136 Human Rights Act 1988 (UK) s 7; See also Ministry of Justice, Making Sense of Human Rights (2006) p 12.

137 HMRC, REC1006 – Customer contact – HMRC work areas affected by the HRA <www.hmrc.gov.uk>.

138 Article 6 does not apply to public law disputes and the ECHR has held that tax is public law.

139 HM Government, Rights and obligations of European Union membership (April 2016).

140 Ibid.

141 Above n 52, p 395.

142 European Union Referendum Act 2015.

143 Above n 141, p 394.

144 R (oao Hely-Hutchison) v HMRC [2015] EWHC 3261.

145 Ibid, at [23].

146 Ibid, at [28].

147 Ibid, at [30] and [43].

148 Ibid, at [43].

149 Ibid, at [50]-[53] and [71].

150 Ibid, at [54]-[56] and [72].

151 Ibid, at [57]-[62] and [73].

152 Ibid, at [63] and [74].

153 Ibid, at [77].

154 Mark Whitehouse and Peter Halford, ‘Hely-Hutchison, legitimate expectation and judicial review,’ Tax Journal (2 December 2015) <www.taxjournal.com>.

155 Ibid.

156 Macquarie Bank v Commissioner of Taxation [2013] FCAFC 119.

157 Part I of the Constitution Act 1982, being schedule B to the Canada Act 1982 (UK) 1982, c 11.

158 Jinyan Li, ‘Taxpayers’ Rights in Canada’ (1997) 7(1) Revenue Law Journal 83, p 85.

159 Canada Revenue Authority, Taxpayer Bill of Rights (December 2013) <www.cra-arc.gc.ca>.

160 Order in Council P.C. 2007-828, Schedule 1, s 4.(1).

161 Office of the Taxpayers Ombudsman website, ‘Complaints we review’, <www.oto-boc.gc.ca>.

162 Ibid.

163 Ibid.

164 Ibid.

165 Salvatore Mirandola and Sergio Privato, ‘Canada’ in International Fiscal Association 2015 Basel Congress, Cahiers de droit fiscal international Vol 100b – The practical protection of taxpayers fundamental rights (2015) 215, p 236.

166 Form RC459, Reprisal Complaint.

167 CRA, Reprisal Complaints <www.cra-arc.gc.ca>.

168 International Fiscal Association 2015 Basel Congress, Cahiers de droit fiscal international Vol 100b – The practical protection of taxpayers fundamental rights (2015), pp 74-82.

169 John Bevacqua, ‘Suing Canadian Tax Officials for Negligence: An Assessment of Recent Developments’ (2013) 61(4) Canadian Tax Journal 893.

170 Leroux v Canada Revenue Agency 2014 BCSC 720.

171 Ibid, at [271]–[309].

172 Ibid, at [339]–[355].

173 Ibid, at [372]–[399].

174 Grenon v Canada Revenue Agency 2016 ABQB 260.

175 Ibid, at [82].

176 Ibid.

177 Canada v Scheuer 2016 FCA 7.

178 Ibid, at [30].

179 Ibid, at [46].

180 Inland Revenue Department (IRD), Inland Revenue’s Charter <www.ird.govt.nz>.

181 Finance and Expenditure Committee, Report of the inquiry into the powers and operations of the Inland Revenue Department (1999).

182 Controller and Auditor-General (NZ), Inland Revenue Department: Performance of Taxpayer Audit (July 2003), pp 9-10.

183 It should be noted that taxpayers’ primary obligations are set out in legislation under section 15B of the Tax Administration Act 1994 (NZ).

184 For example: Inland Revenue Department (NZ), Annual Report 2001-2002, pp 59-63.

185 IRD, Inland Revenue Charter and Customer Satisfaction (1 January to 31 March 2011).

186 Ibid.

187 IRD, Complaints Management Assessment: Stage 1 (November 2015).

188 Ibid.

189 IGT meeting with the IRD, 19 May 2016.

190 Diana Bernal, ‘The role of PRODECON in the protection of taxpayers’ rights’, p 2 <www.taxpayerrightsconference.com>.

191 Ibid, p 3.

192 Ibid, p 4.

193 Ibid, p 3.

194 Ibid, p 13.

195 Ibid, p 6.

196 Ibid, pp 6-7.

197 Ibid, p 7.

198 Enrique Rojas, ‘CIAT News – Chile’, Inter-American Centre for Tax Administrations <www.ciat.org>.

199 Ministerio de Hacienda, Modifica El Código Tributario Para Explicitar Derechos De Los Contribuyentes (19 February 2010) <www.leychile.cl>.

200 Ibid.

201 Asia Oceania Tax Consultants’ Association (AOTCA), Confederation Fiscale Europeenne (CFE) and Society of Trust and Estate Practitioners (STEP), Towards Greater Fairness in Taxation: A Model Taxpayer Charter (March 2016) <www.taxpayercharter.com>.

202 Model Taxpayer Charter, Origin of Our Study, <www.taxpayercharter.com>.

203 Model Taxpayer Charter, Art 17(1).

204 Ibid, Art 17(2).

205 Ibid, Art 17(6).

206 Above n 201.

207 Ibid.

208 Ibid.

209 Ibid.

210 Ibid.

211 Ibid.

212 Taxation Administration Act 1953, Pt IVC.