1.1
The House of Representatives Standing Order 215(c) authorises the Standing Committee on Tax and Revenue (the Committee) to inquire into and report on the annual reports of agencies allocated to it by the Speaker.
1.2
The Speaker’s Schedule of 1 August 2019 allocated to the Committee the annual reports of the Australia Taxation Office (ATO).
1.3
The Committee may also expand its focus to consider matters of broader significance to tax administration under its power to inquire into annual reports. The Committee may also receive a ministerial referral to investigate areas of tax and revenue policy.
1.4
Inquiry into the ATO Annual Reports was a responsibility previously held by the Joint Committee of Public Accounts and Audit (JCPAA), who then reported biannually. The responsibility was transferred to the Committee in the 44th Parliament, who continued reporting biannually initially.
1.5
The inquiry into the Commissioner of Taxation Annual Report 2015-16 saw a departure from the Committee’s previous practice of biannual annual report scrutiny in order to ‘enable examination of ‘bigger picture’ contemporary tax administration matters.’ For the first time, the inquiry report made ‘formal recommendations on tax administration; rather than merely flagging topics to be examined in the next period’s annual report review.’
1.6
The following year, the inquiry into the Commissioner of Taxation Annual Report 2016-17 continued to expand its focus to consider broader matters of the ATO’s operations, including issues with digital service delivery and allegations of a misuse of power against small business. This extended focus prolonged the inquiry past the submission of the Commissioner of Taxation Annual Report 2017-18. As a result, the 2017-18 Annual Report was not subject to an individual inquiry.
1.7
These two previous inquiries into the Commissioner of Taxation’s annual reports had at their centre an ‘assessment of the trajectory of the ATO’s Reinvention Program.’ The Reinvention Program, started in 2015, had a central goal:
To achieve our vision of being a contemporary, service oriented organisation, we are transforming how our clients and staff experience the tax and super systems…We are not starting from scratch, but building on the many things we already do well. This represents the next phase in the evolution of how we administer the tax and super systems. It will be an ongoing and iterative process, encompassing our clients’ and staff’s entire experience. This means taking a whole-of-system and, where appropriate, a whole-of-government approach, working with government, business partners and other agencies.
1.8
The release of the ATO 2018-19 corporate plan, Working towards 2024, marked the end of the Reinvention Program and a shift to new goals for the future:
Building on the gains of our reinvention program, we have developed two aspirations for our journey to 2024 – to build trust and confidence in the tax and superannuation systems and to create a streamlined, integrated and data-driven future. Our Corporate plan 2018–19 is the first step in that journey. We will regularly review the steps we are taking to get to 2024 and continually adapt to the broader environment.
1.9
The Commissioner states in the Commissioner of Taxation annual report 2018-19 (the 2018-19 annual report), that in this period, there has been:
…major progress of our Towards 2024 Plan to build trust and confidence in the administration of the ATO and develop a more streamlined, integrated and data-driven organisation. At the core of Towards 2024 is the ongoing focus on improving the client and staff experience and fostering a culture of service.
1.10
This report intends to reflect the Committee continuation of its ‘bigger picture’ approach to the examination of the ATO’s performance in the light of matters raised in the 2018-19 annual report, and other issues raised in evidence put before it. The Committee has also undertaken some further consideration of certain areas that had been canvassed in previous report recommendations or that have been the subject of recent external scrutiny, for example, in relation to disputed debt.
Conduct of the inquiry
1.11
On 5 March 2020, the Committee resolved to inquire into and report on the 2018-19 Annual Report.
1.12
The Committee called for public submissions to assist its evaluation of ATO performance over 2018-19. In total, 14 submissions were received. Nine of these are primary submissions and five are supplementary. All submissions are listed at Appendix A.
1.13
The Committee held four public hearings in Canberra, one of which was via videoconference due to COVID-19 restrictions. Details of public hearings are listed at Appendix B.
1.14
The Committee heard from government agencies, tax and legal experts and representatives of small and medium enterprises through written submissions and hearings.
1.15
Submissions and transcripts for all public hearings can be found on the Committee’s website.
Report outline
1.16
This report covers matters arising over the 2018-19 financial year, as outlined in the annual report, with additional insights on the broader taxation system as discussed at hearings and in submissions.
1.17
This report consists of three chapters:
Chapter two discusses the ATO’s tax administration and examines both its achievements and limitations, which give rise to concerns.
Chapter three examines the ATO’s engagement with some specific taxpayer cohorts and tax professionals, and considers some international perspectives to draw on options to modernise the Australian tax system.
1.18
The impact of COVID-19 on taxpayers in relation the ATO’s management of the JobKeeper and cash flow boost programs, or the ATO’s administration of early release of superannuation following the COVID-19 crisis was discussed at length by the witnesses.
1.19
While the Committee acknowledges the seriousness of the COVID-19 impact on the community, businesses and the ATO, the evidence gathered on these issues will not be examined as part of this report given the scope of this inquiry is limited to the 2018-19 reporting period.