The communication of taxpayers’ rights is an important but often overlooked feature of the tax system. Essentially, it is the right of taxpayers to be informed of their rights and obligations when the ATO makes decisions about them and their right to question those decisions. It ensures procedural fairness and is consistent with the Taxpayers’ Charter which states that the ATO will outline the taxpayer’s options if they want a decision or action reviewed including legal review rights and the formal complaints process.
Where a taxpayer is affected by a decision or action taken by the ATO, the principles of procedural fairness generally require that they should be given an opportunity to dispute the decision made and have the matter reviewed independently. This can be done through various avenues including formal review rights (eg AAT or Federal Court), review rights within the ATO (eg objections and internal reviews), and external complaints investigation services such as the Inspector General of Taxation and Taxation Ombudsman (IGTO).
In examining the taxation complaints service, the IGTO has observed that information on rights of appeal and opportunities to raise complains varies across different types of ATO-issued correspondence. In particular, the IGTO found in a number of investigations that ATO correspondence may not clearly and/or completely advise taxpayers and their representatives of their rights to review, complain and appeal.
For example, the IGTO uncovered correspondence in some instances which includes information regarding formal review rights with no reference to taxpayers’ rights to an internal ATO review or the ability to lodge a complaint with the ATO or the IGTO. This may result in taxpayers not being fully aware of their review options and lead to significant Court and/or professional fees.
As such, the IGTO has launched a new investigation into effective communication of taxpayers’ rights to review, complain and appeal decisions made and actions taken by the ATO. The investigation will seek to understand and confirm how effectively, clearly, and completely the ATO communicates appropriate information to taxpayers and their representatives on these taxpayers’ rights. It will also involve an investigation of a selection of written communications of ATO decisions made, to look for clear communication of taxpayers’ rights to review or otherwise.
This substantial review will take place in stages, focusing initially on ATO communications which concern debt decisions in relation to individuals and small business taxpayers. IGTO has decided to initially focus on this narrow group as it has noted that these taxpayers are most likely not to have significant financial resources to appeal taxation decisions in the Courts. After the initial stage, the review will also seek to confirm ATO communications around access to the AAT Small Business Taxation Division (SBT Division).