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''I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center.''
Australians disputing debt determinations by the Tax Office should not have to begin to pay until the amounts have been upheld by an external authority or court, under a plan to reverse the onus of proof.
Federal Parliament’s standing committee on tax and revenue on Tuesday recommended broad changes to ATO practices, including the creation of a taxpayer bill of rights, designed to hand new protections to workers and businesses against a powerful government agency.
Committee chairman and Liberal MP Jason Falinski said elements of the United States’ system should be incorporated into Australia’s rules, including upgrading the position of the independent Inspector-General of Taxation and Tax Ombudsman to become a taxpayer advocate.
“The Australian Taxation Office has undertaken considerable reform and restructuring recently and is staffed by experienced and dedicated people who are to be congratulated for having got us through the economic chasm of COVID,” the MacKellar MP said.
“However, some of its functions have been neglected, and moreover, there is considerable expertise in this country, human and technological, waiting to be deployed in many areas of taxation. We encourage urgent action in this area to get ahead of the global curve.”
In its review of the ATO’s annual report, the committee said changes should be made to legislation to extend debt rights to taxpayers, meaning repayment cannot be required until the debt has been proved.
“The onus of proof should lie not with the taxpayer, but with the ATO,” Mr Falinski said.
The committee recommended the ATO increase transparency and communication about its compliance activities to “better foster community trust and confidence in tax administration”.
The statutory timeframe for cases involving fraud or evasion should be reduced to 10 years after the issue of an assessment by the ATO.
“The committee also recommends that the period of review of evidence requested by the Australian Taxation Office should be harmonised with the record keeping requirements. The amendment should contain provisions to extend the period on a case-by-case basis.”
The ATO’s latest annual report put the ratio of collectable debt to net tax collections at 8.3 per cent, up from 6.7 per cent in June 2020.
Research by Inspector-General of Taxation Karen Payne this year found collectable debt levels reported by the ATO have grown from $19.2 billion in financial year 2016, to more than $34.1 billion in financial year 2020.
In the same period, tax liabilities increased by just 16.42 per cent.
About 60 per cent of collectable debt rests with small and medium-sized businesses, but 5.09 per cent of taxpayers were responsible for more than 63 per cent of cash owed to the ATO.
Just 1.22 per cent of accounts represent 43.44 per cent of individual collectable debt amounts, with the average per account $172,070.
The Morrison government will respond to the report in coming months.
Mr Falinski praised the ATO’s work during the COVID-19 pandemic.
“There are many who complain about the ATO, and let us face it tax collectors have never been popular from Jesus’s time onwards, however, I believe I speak on behalf of the entire committee in thanking the ATO, its leaders, teams and staff for their considerable efforts on behalf of our nation to ensure that when we were faced with the chasm of COVID, all of us were able to get to the other side.”