The Inspector-General of Taxation (IGT), Mr Ali Noroozi, today announced terms of reference for his review into the Australian Taxation Office's (ATO) administration of penalties and called for stakeholder submissions.

"Concerns with the ATO's administration of penalties have persisted over a number of years. Given the level of concerns raised with me by individual and business taxpayers, I have decided to undertake a review to establish the underlying causes for these concerns," said Mr Noroozi.

Concerns raised with the IGT can be summarised as follows:

  • insufficient stratification within the penalty regime coupled with its purpose not being reflected in the way it is administered – for example, perceptions that penalties can be imposed at unreasonably high levels to leverage settlement negotiations;
  • initial penalty decisions being reduced on review, indicating potential capability gaps or a lack of due process with decision making;
  • a lack of transparency in ATO penalty decisions; and
  • delay in penalty decision making and the need for better ATO engagement and communication.

"Penalties play an important role in Australia's tax system. They deter infringement of the law by setting the standards of behaviour expected and encouraging taxpayers to voluntarily comply. However, we should ensure that they are used fairly and equitably, appropriately taking into account taxpayers' circumstances," said Mr Noroozi.

"I want to better understand your concerns so we can improve the tax system. I have set out guidelines to help you prepare submissions. My aim is for balanced thinking on the issues and better outcomes for both taxpayers and the ATO," said Mr Noroozi.

Terms of reference and submission guidelines for the review are available on the IGT website: Submissions will be treated as confidential and due by 21 December 2012.

22 November 2012
Media contact: Ali Noroozi – (02) 8239 2107

Published date