Review of the ANAO audit report No.37 1998-99 on the management of the Tax File Numbers
Media Releases

Media release: 2 July 1999

PARLIAMENTARY COMMITTEE TO REVIEW MANAGEMENT OF TAX FILE NUMBERS

Glaring inefficiencies in revenue collection by the Australian Taxation Office, with some $500 million of revenue not being collected, have been uncovered by a recent performance audit by the Auditor General. This is despite the tax file number (TFN) system having improved tax collection.

The Auditor General's report revealed that the basis of the problem is the operation of the TFN system which is the building block of the tax revenue system. The audit also suggested that the ATO could have been more proactive in advising government about problems with the TFN system and options to address those problems.

'For these reasons, a new inquiry to examine the management of the TFN was launched this week by the House Economics Committee' said the Committee Chairman, David Hawker MP.

Mr Hawker stated that 'The audit showed there was less than optimal performance of the TFN due to:

• shortcomings in the quality of the ATO's data bases eg data matching studies by the Audit Office revealed 3.2 million more individual TFN registrations than people in Australia counted at the last census;
• weaknesses in the management of the risks associated with verification of the identity of the TFN applicant;
• deficiencies in the systems supporting the administration of the TFN withholding tax eg ATO cannot reconcile the accounts of almost all investment bodies and there are gaps in the coverage of the TFN system particularly for real estate transactions and transactions reported to AUSTRAC; and

• less than full compliance by the ATO's clients with the TFN quotation arrangements.

'These are serious matter which need to be addressed' said Mr Hawker.

'While the Committee acknowledges that the Tax Office has agreed to the Auditor-General's recommendations, there have been some qualifications in ATO's response, and legislative amendments are needed to implement some of the recommendations. Accordingly, a parliamentary committee is well placed to look at these issues' said Mr Hawker.

'We are mindful of the sensitivities surrounding the privacy aspects of the TFN and the big job that the Tax Office has in implementing tax reform, but these factors do not preclude the TFN matters being corrected as well' said Mr Hawker.

'The ATO has always been cooperative in assisting parliamentary committee's in improving the tax system to the benefit of the community, and the Economics Committee looks forward to a continuation of that help from the ATO on this occasion. The Committee expects to commence work on this inquiry in August/ September' concluded Mr Hawker.

Ends
2 July 1999
Further information:
David Hawker MP (Chairman) 03 - 5572 1100 (electorate)
Beverley Forbes (Secretary) 02 - 6277 4587
Email: EFPA.Reps@aph.gov.au

Committee Membership 39th Parliament

Chairman: Mr David Hawker MP
Deputy Chairman: Mr Gregory Wilton MP
Members:
Mr Anthony Albanese MP
Ms Anna Burke MP
Ms Teresa Gambaro MP
Mrs Kay Hull MP
Mr Mark Latham MP
Mr Christopher Pyne MP
Hon Alex Somlyay MP
Dr Andrew Southcott MP

For a copy of the Audit Report No 37 - Management of tax file numbers:

Contact the Australian National Audit Office (02 6203 7685) or their website http:/www.anao.gov.au

Or

Government Info Shops or their website http://www.ausinfo.gov.au

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