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The document that outlines the rights and obligations of taxpayers will benefit from an update — and more widespread awareness.
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Timely review of Taxpayers’ Charter a chance to modernise
14 October 2022
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14 minute read
What is the Taxpayers’ Charter?
The Taxpayers’ Charter outlines the rights and expected obligations of taxpayers in their dealings with the ATO. The ATO is committed to following these guidelines in all dealings with taxpayers and its representatives, from interactions in the call centre through to the audit and review process.
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At a high level, the charter states that taxpayers should expect from the ATO the right to:
- Be treated fairly and reasonably, taking the taxpayer’s personal circumstances into account
- Be treated as being honest, with opportunities to explain discrepancies
- A high standard of service and assistance that is shaped by the taxpayer’s needs
- Question and seek a review of the ATO’s decisions, with issues being resolved fairly and quickly
- Seek representation and assistance with matters
- Confidentiality, ensuring that the taxpayer’s data is kept secure
- Seek access to, and update where needed, their personal records
- Be informed of the progress of decisions being made by the ATO
- Be able to easily comply with taxation and superannuation obligations through the ATO’s systems and processes
- Accountability so the taxpayer is informed of their rights and obligations and updates regarding the resolution of issues
The charter also outlines the ATO’s expectations that taxpayers will be truthful, keep records, take reasonable care to meet their obligations, lodge and pay on time, and co-operate with the ATO in a courteous manner.
It is important to understand that the charter is not legislated. The charter is not a bill of rights that lists in statute the rights of Australian taxpayers, nor does it provide taxpayers with rights. It explains the rights of taxpayers that are already enshrined in the tax law, as well as in (primarily) the Taxation Administration Act 1953 and the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act).
In its November 2021 report, A brief history of the Taxpayers’ Charter (2021 Report), the Inspector-General of Taxation and Taxation Ombudsman (IGTO) noted that comparable jurisdictions such as the US, UK, Canada and New Zealand each had a taxpayer bill of rights or charter with the content of these documents exhibiting commonalities with Australia’s Taxpayers’ Charter. [1] A draft Taxpayers’ Bill of Rights was prepared by the (then) Taxation Institute of Australia (now the Tax Institute) in the IGTO’s report, and we continue to support the IGTO’s call for an Australian Bill of Rights.
Why do we need a Taxpayers’ Charter?
Most taxpayers have limited interactions with the ATO. For many, this occurs once a year during tax time, unless they operate a business or have more complex affairs. However, if a taxpayer needs to interact with the ATO to correct an error or as part of a review process, it can be a daunting and uncomfortable situation. In the worst case scenario, taxpayers may be subject to stress and significant cost and time burdens, in addition to a liability for a large tax bill and/or interest and penalties.
During these times, it’s important for taxpayers and their representatives to have ready access to information that can be used to ensure that the engagement process is impartial, equitable and affords the taxpayer reasonable opportunities to present their argument or circumstances. This is particularly important as, without the charter, there is no single source in Australia’s taxation and superannuation framework that informs taxpayers of their rights or sets out expectations to a fair process.
As noted in the IGTO’s December 2016 Taxpayers’ Charter and taxpayer protections (2016 Report), there is no universally accepted definition of ‘taxpayer rights’. [2] The enforceable safeguards that make up a part of "taxpayer rights" are spread across the tax law and a number of other statues (such as the Administrative Decisions (Judicial Review) Act 1997 and the Freedom of Information Act 1982), as well as common law principles such as legal professional privilege [3]. On the other hand, taxpayers may have certain expectations from the ATO that are reflected only in administrative practices and, if violated, often only resolved through a complaint to the ATO or the IGTO. [4]
An effective charter that is consistently applied to all interactions between the ATO and taxpayers is important for building public trust in our administrator. As noted in the 2016 Report, research has shown a link between public trust in the administrator and voluntary compliance. [5] Taxpayers need to know that, even if the eventual decision is adverse, their treatment and experiences through the process were fair. Before the House of Representatives Standing Committee on Tax and Revenue in March 2015, then ATO Second Commissioner Neil Olesen acknowledged the importance of perceptions of fairness in promoting taxpayer compliance:
We are deeply interested in fairness because we understand that, in the tax system, if people have a misperception of how the system operates, if they think it operates unfairly, that is a no-no in tax administration. That gets people thinking, ‘Well, if it's unfair, I don’t want to participate in it’. [6]
Until Australia adopts a single set of legislated rights that codifies the notion of "taxpayer rights" and the remedies for any breaches, the charter remains an integral part of our taxation and superannuation systems.
Review of the Taxpayers’ Charter
The ATO is currently undertaking a review of the charter. The objectives of the review are to ensure that the charter:
- Meets community expectation about how the ATO engages with taxpayers when administering the taxation, superannuation and registry systems
- Accurately reflects what the community can expect from the ATO
- Guides ATO staff when interacting with taxpayers
- Fulfils its purpose of informing taxpayers of their rights and obligations in their dealings with the ATO
The review contains six key consultation questions that are intended to guide the ATO towards better understanding how effective the charter is at meeting its objectives. Feedback and submissions from the public are due by Monday 24 October 2022. The Tax Institute is working with members of its national technical committees and broader membership to better understand how effective the charter is at guiding and informing taxpayer about their rights, and whether experiences indicate that the ATO undertakes interactions as envisaged by the charter.
After feedback has been received, the ATO proposes to create a Consultation Reference Group to evaluate the feedback and make recommendations for updates to the charter and related ATO polices. To ensure the review effectively guides and advises the ATO, it is necessary for the Consultation Reference Group to also contain representatives from industry, such as the professional bodies. This way, any updates to the charter or ATO processes can be designed with key input regarding the likely impact on taxpayers and tax practitioners.
What can be expected from the review?
The charter was introduced in 1997 and has seen iterative changes over the decades, with the most recent change made in 2014. [7] Since then, Australia’s taxation and superannuation systems have seen the adoption of many new technologies, legislative developments and changes to the ways in which the ATO engages with taxpayers. Further, Australian individuals and businesses have been tested by an unprecedented series of natural disasters and a global pandemic that brought the world to a social and an economic standstill. These recent events and developments have meant that more taxpayers are likely interacting with the ATO through a broader range of avenues and in respect of a more varied set of circumstances.
Although it is unlikely that the review will result in major changes to, or a significant rewrite of, the charter, the charter has been tested in ways that may not have been envisaged in its initial design or in subsequent reviews. There is a need to ensure that the charter reflects on these experiences and undergoes updates that allow it to be fit for purpose in today’s world as well as the world of tomorrow. ATO officers and taxpayers need a modernised framework that facilitates fair and timely interactions and engagement activities.
While feedback received by the Tax Institute to date has reported many positive experiences by our members in their dealings with the ATO, some concerns have been raised. In part, these concerns relate to the importance of the charter forming part of regular conversations held by the ATO with taxpayers when resolving their issues. Benefits would stem from the ATO promoting greater awareness of the charter during their engagement with taxpayers.
Acknowledging that many taxpayers are apathetic to their tax affairs, taxpayers should be aware of their rights under the charter. Although tax practitioners may be aware of the charter, most members of the general community lack this insight and knowledge. After all, tax is a consideration that occurs only a few times a year; for most, only once a year. For these people, especially those who do not seek advice from a tax professional, it is imperative that the ATO takes extra steps to ensure that taxpayers are informed of their rights in a clear and concise manner. This may require changes to the website, social media engagement or procedures for taxpayer engagements. [8]
Final comment
It is pleasing that the ATO is undertaking a review of the charter. It brings to the forefront an often overlooked aspect of the administration of our taxation and superannuation systems that is crucial in practice. We look forward to the ATO working with the professional bodes and the community to update the charter, ensuring it provides the most suitable framework for taxpayer interactions.
Robyn Jacobson is the senior advocate at the Tax Institute.
[1] 2021 Report, page 4.
[2] 2016 Report, paragraph 1.17.
[3] 2016 Report, paragraphs 1.18–1.19.
[4] 2016 Report, paragraphs 1.22–1.24.
[5] 2016 Report, paragraphs 1.8–1.15.
[6] House of Representatives Standing Committee on Tax and Revenue, ‘Tax Disputes’, March 2015, paragraph 2.11.
[7] 2016 Report, paragraph 2.28, Table 2: Development and evolution of the Taxpayers’ charter.
[8] See also 2016 Report, paragraphs 3.24–3.34 for further suggestions.
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