Enhancement to the Commissioner's general powers of administration
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) recently released a report into the exercise of the Commissioner’s General Powers of Administration (GPA) which examined how the power was exercised and areas for improvement. The report looked at five case studies which illustrated the complexities of the GPA and highlighted a number of conceptual and practical challenges.
What are the Commissioner's general powers of administration?
In short, the GPA consists of a collection of legislative provisions that specifically provide the Commissioner with a discretion in relation to the administration of provisions set out in relevant Acts. According to the IGTO report, it is arguable that any administrative decision made by the Commissioner or a delegate that is not a decision under a specific legislative power is an exercise of GPA, which makes it very wide in scope. Some of the decisions that include exercises of GPA consist of:
- determining that a debt is uneconomical to pursue;
- suspend active debt recovery action for taxpayers within areas affected by natural disaster; compromise of tax debts;
- settling of tax disputes;
- communication/development of broad compliance approaches to particular issues or areas as set out in Practice Compliance Guidelines;
- administering tax laws following significant judicial decisions;
- implementing aspects of the government’s COVID-19 measures; and
- accepting a simplified calculation of work-related expense deductions for those working from home during the COVID-19 pandemic.
Issues with the general powers of administration
Through examining case studies, the IGOT’s report identified the following issues with GPA decisions:
- the Commissioner’s exercise of the GPA is generally not able to be challenged in the Administrative Appeals Tribunal or the Federal Court of Australia, and so taxpayers have little recourse where the exercise of the GPA adversely impacts them;
- unlike other jurisdictions and other statutory regimes in Australia, there is no statutory framework to guide the exercise of the GPA;
- it is often difficult to delineate what aspects of the ATO’s actions or decisions are made under the GPA and what aspects are pursuant to express statutory provisions or discretions;
- the exercise of the GPA may include the introduction of parameters or thresholds as part of decision making which necessarily exclude those that do not come within the set parameters; and
- exercises of the GPA may result in taxpayers in materially similar circumstances being treated differently or inconsistently.
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IGOT recommendations to enhance the general powers of administration
While the IGTO noted that it supports the flexibility that GPA affords the Commissioner to achieve sensible and practical outcomes for taxpayers, it considers that the experience could be enhanced by the implementation of a principled framework to guide decision making. The IGOT made three recommendations to the ATO in its report:
- The ATO consider establishing an advisory or oversight panel to assist and guide broad-reaching exercises of the Commissioner’s GPA (i.e. where such exercises are likely to impact large sections of the taxpayer population).
- The ATO consider ways in which it could raise awareness and understanding of the Commissioner’s GPA, including by considering whether PS LA 2009/4 (When a proposal requires an exercise of the Commissioner’s powers of general administration) remains fit for purpose and any additional guidance that may be development to support greater, both public and tax official, understanding of the GPA.
- The ATO consider ways in which it could enhance accountability and transparency for broad reaching exercises of the Commissioner’s GPA and enable taxpayers to more easily identify and track exercises of the GPA that may affect them.
The ATO has agreed to all three recommendations.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.