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Tax inspector to deal with small business issues

SENATOR Helen Coonan says she is looking for a “tough, independent watchdog” to take on the role of Inspector General of Taxation.

The role of inspector general was announced by Prime Minister Howard as a pre-election commitment in October last year. As Minister for Revenue and Assistant Treasurer, Senator Coonan is currently considering the powers and scope of this new role.

Senator Coonan says there are complaints that the ATO is largely unaccountable for the day-to-day administration and its dealings with taxpayers.

The Senator wants an inspector general who can identify the systemic problems in tax administration. She also is looking for this new office to address complaints and concerns of the business community, particularly those between small business and the Australian Tax Office.

Senator Coonan sees a role for the inspector general in examining and reporting on difficulties in the self-assessment system. This was an issue highlighted in the recent Mass Marketed Schemes Inquiry.

Other issues identified when Senator Coonan met with professional bodies, business groups and accounting firms recently included:

p cultural/morale issues with the ATO;

p lack of commerciality in tax law changes;

p IT system problems;

p constant delays and inconsistencies in dealing with the ATO;

p structure of the ATO; and

p ATO possibly performing too many roles.

Senator Coonan is currently developing a model for the Office of Inspector General. The model will go to the Board of Taxation for consideration and then public consultation.

According to Senator Coonan, the legislation should be introduced into Parliament in the spring sitting, and the new inspector general should be in place by the end of 2002.

The Prime Minister has set aside an annual budget of $2 million for the Office of Inspector General.

The Tax Institute of Australia believes the inspector general should report directly to the minister and provide independent and objective advice, particularly when presented with conflicting views from the ATO and industry.

The accounting bodies have called for the person taking on this new role to be a tax professional with commercial experience.

The proposed powers of the inspector general include the right to access taxpayer information in appropriate circumstances and inquisitorial powers to call for documents and to require the giving of information by the ATO.

It will be interesting to follow the interaction between the inspector general and other tax overseers including the ombudsman, Australian National Audit Office, and the Board of Taxation.

The 18-month-old Board of Taxation was given a wide brief, including improving the general integrity and functioning of the taxation system. However, to date its focus has been much narrower. The board has spent much of its first 18 months focusing on the development of the tax value method for determining taxable income.

Some commentators have suggested the ombudsman should deal with individuals, while the inspector general should focus on systemic issues. If an inspector general had been in place during the past 12 months, they could have examined issues such as the BAS problems, the issues surrounding alienation, and the recent PAYG error.

According to Peter Haggstrom, a former special tax adviser to the Commonwealth ombudsman, the tax ombudsman also has the powers Senator Coonan has highlighted for the inspector general, but what the ombudsman does not have is adequate funding.

Senator Coonan says there are fine, but important, distinctions to be drawn in the roles and functions of the minister for revenue, the inspector general and the commissioner of taxation.

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