Appendix 3 - Recommendations made by the Board of Taxation and the Government's response[1]
SPECIFIC RECOMMENDATIONS AND OUTCOMES
Recommendation 1
The legislation establishing the Inspector-General should
include an object clause stating that the object of the legislation is to
improve the way in which the Australian Taxation Office administers the
Australian taxation system from the perspective of taxpayers.
Response: Agreed in principle.
Recommendation 2
In achieving this objective, the functions of the Inspector-General
of Taxation should be broadly defined to include providing advice to the
Government, reviewing the systems used by the Australian Taxation Office to
administer the tax system, and making recommendations to the Government about
how these systems could be improved.
Response: Agreed in principle.
Recommendation 3
The Inspector-General of Taxation should be established
outside the Ombudsman's office, with the Ombudsman retaining its existing
functions.
Response: Agreed.
Recommendation 4
The efficiency and effectiveness of the new office should be
reviewed within five years of the appointment of the first Inspector-General of
Taxation.
Response: Agreed.
Recommendation 5
The Inspector-General of Taxation should have a right of
access to individual taxpayer information held by the Australian Taxation
Office, but only to the extent necessary to carry out its functions, and should
be under an obligation comparable to that of the Ombudsman to maintain the
confidentiality of any such information.
Response: Agreed.
Recommendation 6
The Inspector-General of Taxation should be appointed by the
Governor-General.
Response: Agreed.
Recommendation 7
The Governor-General should be able to remove the
Inspector-General of Taxation from office only for misbehaviour or physical or
mental incapacity.
Response: Agreed.
Recommendation 8
The Inspector-General of Taxation should be able to
undertake work on both an "own motion" basis and in response to a
direction given by a Minister. The legislation should not prescribe how the
Inspector-General of Taxation's work priorities would be established.
Response: Agreed in principle. The Inspector-General will
be able to undertake reviews on an `own motion' basis and will have a high
degree of discretion in prioritising work.
However, the Inspector-General will be obliged to respond
to directions from Treasury Ministers, to reinforce the Inspector-General's
role in providing a new source of advice to the Government on matters of tax
administration, independent of the Australian Taxation Office and the Treasury.
Recommendation 9
The Inspector-General of Taxation should be required to
report annually to the Parliament. The legislation should require that the
annual report outline the matters on which advice has been provided to the
Minister, and list the formal reports given to the Minister, in the reporting
period.
Response: Agreed in principle. The Inspector-General's
enabling legislation will impose a special annual reporting requirement on the
Inspector-General to ensure transparency.
Recommendation 10
The Inspector-General should be able to publish reports of
reviews of the systems used by the Australian Taxation Office to administer the
tax system, and recommendations to the Government about where these systems
could be improved (but not advice to the Government), but only after giving the
Minister a reasonable opportunity to comment. A person whose interests would be
adversely affected by the publication should be given a reasonable opportunity
to comment, and to have their comments included in the publication. The
Inspector-General should not be liable to be sued for an act done in good faith
in exercise of any power conferred by the legislation, including the power to
publish.
Response: Agreed in part and in principle.
The Government agrees that it will be important for the
Inspector-General's reports to be made public. It will be important for the
Inspector-General to be accountable to taxpayers, their advisers and
representatives, for the way in which taxpayers' concerns are addressed. It
follows that the operations of the office of Inspector-General must be
transparent and that the Inspector-General must maintain the respect and
cooperation of taxpayers.
However, the Inspector-General of Taxation is not
intended to duplicate the roles of the Auditor-General nor the Ombudsman, both
of whom have a continuing public reporting role on tax administration.
A key function of the Inspector-General of Taxation will
be to advocate the concerns of taxpayers to the Treasury Ministers to enable
fast resolution of any systemic problems in the tax system. For this reason,
the Inspector-General will report to the Treasury Ministers.
The Inspector-General's inquiries and reports may include
recommendations for legislative amendments or changes in administrative
processes. It is desirable for recommendations involving changes to the tax
system to be released simultaneously with the Government's decision on such
changes to avoid speculation and uncertainty about the taxation system.
Accordingly, it is proposed that the Treasury Ministers would have the
responsibility for releasing reports by the Inspector-General.
The Government agrees that, if there is criticism of the
Commissioner or any other tax official arising from a review by the Inspector-General,
then the Commissioner should have an opportunity to address such criticisms
prior to completion of the report.
The Inspector-General of Taxation will be given
appropriate immunity from being sued.
Recommendation 11
The Ombudsman's role in reviewing administrative action
taken by the Australian Taxation Office, both in response to a complaint and on
an "own motion" basis, should not be affected by the establishment of
the Inspector-General of Taxation.
Response: Agreed.
Recommendation 12
The Inspector-General of Taxation should be obliged to
consult with the Ombudsman and the Auditor-General in establishing a work
program and priorities.
Response: Agreed. However, it is not intended that such a
consultation arrangement would impinge on the independence of any of the
statutory office-holders involved.
Recommendation 13
The Government should appoint as the inaugural
Inspector-General of Taxation someone who:
- has a strong capacity to understand commercial and
public sector issues in tax administration;
- is committed to community consultation and building
constructive relationships with stakeholders; and
- has earned the trust of both government and external
stakeholders.
Response: Agreed.
Recommendation 14
The establishment of the Inspector-General of Taxation
should not affect the functions of the Board of Taxation.
Response: Agreed.
Recommendation 15
The Inspector-General of Taxation should not be an
ex-officio member of the Board of Taxation.
Response: Agreed.
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