- If elected, Labor will appoint a Second Commissioner at the ATO to review tax disputes.
- ATO Commissioners know that to have a truly independent review, skills and resources are needed.
- Engagement with the ATO provides an important taxpayer education opportunity.
The ALP’s Shadow Treasurer, Chris Bowen, has announced that, if elected, Labor will appoint a Second Commissioner at the ATO to review tax disputes.
The news has been met with applause in some quarters, but reportedly received a cautious response from ATO Commissioner Chris Jordan.
The ATO’s daunting challenge is to exercise its powers consistently and treat all taxpayers fairly. When it comes to disputes, some CAs tell me their clients sometimes simply “fold” rather than take on the ATO. In such cases the rights and wrongs of some disputes become invisible both to the ATO and to the broader community.
Few would disagree that individual and small business taxpayers naturally feel vulnerable when challenged by the mighty ATO. They need to know they’ve received a “fair go”.
However, Mr Bowen’s announcement isn’t just about small business. His media release envisages a model “for all taxpayers, through pre-assessment reviews, objections, litigation including identifying test cases and providing oversight on settlements”.
The reference to settlements will be of particular interest to business taxpayers and the civil society groups that monitor the tax they pay.The ALP policy has no doubt already been work-shopped by the ATO Executive.
The ALP’s idea could be turned into a positive
ATO Commissioners know that to actually have a truly independent review, it is essential that reviewers have the internal authority, skills and resources. The process needs to be quick and efficient.
Despite these, and other difficulties, the ATO could come to see the ALP announcement in a positive light.
Face to face ATO engagement during the review process provides an important taxpayer education opportunity. Reviewers will need highly developed soft skills – an essential ingredient when dealing with individuals and small business taxpayers. An empathetic approach rather than “Computer says No” outcomes could actually enhance the ATO’s standing.
Importantly, an independent review may lead to increased awareness within the ATO that in some cases, the regulator’s initial response should have been more proportionate to the taxpayer’s circumstances. Clobbering those who’ve tried to be good taxpayers isn’t conducive to a sound long-term relationship with the regulator.
Finally, don’t think this is just an ATO issue.
Chartered Accountants experienced in dispute resolution know that constructive negotiations often occur with ATO auditors, and they will be keen to ensure that any new process doesn’t muck-up current opportunities for pragmatic engagement at the audit stage. The determination of the ATO reviewer could in some cases also cast doubt on the quality of the professional advice initially provided to the taxpayer.
As with any tax policy announcement, nothing is simple.
Opinion Article: Labor to appoint Second Commissioner to review disputes
Michael Croker's full LinkedIn pulse article.