Inspector-General of Taxation review into ATO’s management of tax disputes

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Inspector-General of Taxation review into ATO’s management of tax disputes with large business and High Wealth Individuals

27 February 2015: The Government has today released the report by the Inspector-General of Taxation to the Assistant Treasurer on his review into the management of tax disputes containing his recommendations.

Deloitte Lawyers made a submission to the Inspector-General in respect of the Inspector-General’s review. Commenting, Aldrin De Zilva, Partner, National Leader, Deloitte Lawyers says: “Deloitte Lawyers’ submission made several recommendations based on feedback from, and our experiences with, large business and high wealth individual clients in tax disputes.

“In particular, our submission highlighted taxpayer concerns about the lack of perceived independence and separation between the ATO’s original decision makers and those officers who review and litigate those decisions. It also recommended the creation of a separate agency to manage disputes and conduct litigation. The Inspector-General’s report recommends the creation of a separate and dedicated Appeals Group led by a new Second Commissioner.

“Deloitte Lawyers welcomes and supports the Inspector-General’s recommendation as providing a constructive framework for independent and objective review and decision making.”

De Zilva continues: “Although Deloitte Lawyers’ considers a complete separation of the functions, in line with the US model would be preferable, we view the Inspector-General’s recommendation to establish the Appeals Group as being a step in the right direction. The recommendation would ensure matters are dealt with by officers having the relevant commercial and legal expertise and remedy any taxpayer concerns about the independence and objectivity of the review process.”

Deloitte Lawyers has acted for many large business clients in Administrative Appeals Tribunal (AAT) and Federal Court proceedings against the Commissioner.

De Zilva adds: “Our experience is consistent with the positive litigation outcomes for taxpayers highlighted in the Inspector-General’s report over the last seven years. The report notes that 83.5% of AAT cases and 77.1% of Federal Court cases have resulted in a variance to the ATO’s original decision in favour of the taxpayer. These results support the need for the creation of a separate and independent agency that could serve to circumvent the need for costly litigation.”

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