Independence and clarity the aim as ATO overhauls appeals process

Experts have welcomed a new announcement from the Australian Taxation Office that it will open a new division to deal with taxpayer cases which have gone to appeal, along with other sweeping changes aimed to give businesses more clarity about the tax process.

ATO Commissioner Chris Jordan is set to give the tax administrative system a shake-up, with the appeals division to provide clarity to businesses much faster on certain laws, or disputes.

Experts, who have long-criticised the ATO for its slow appeals process, say the new system should address a key concern – independence.

“This is a change we’ve wanted for some time,” says Tax Institute senior tax counsel Robert Jeremenko.

“The ATO should not be in the position where it is judge, jury and executioner when it comes to dealing with taxpayers and appeals.”

Jordan told The Australian Financial Review not only will the ATO open a new appeals division, but it will also work on developing a closer relationship with Treasury.

“I want there to be a much clearer process around getting clarity generally,” he said.

The ATO was contacted by SmartCompany this morning, but couldn’t give any further information. Jordan is set to detail the changes in a speech later this week.

The current view among tax experts is the appeals process is flawed. Until 1994, the ATO had a separate appeals division but it was broken up into separate segments.

And in 2002, legislative drafting was taken away from the Tax Office and given to Treasury. The change has caused criticism among industry players, who say the ATO has taken too long to explain certain decisions.

Having a separate appeals process, experts say, should allow more independence in tax rulings.

“Some of this is about perception as much as reality, but for the integrity of the system, separation is plausible, and has worked before,” says Paul Drum, head of policy at CPA.

“It does seem inappropriate the same people who make the original decision are working on the same team as those reviewing the appeal.”

Jeremenko says the “clear delineation of an appeals area” will be welcome for business.

“The point is that it’s much clearer in laying things out, and will hopefully avoid the appearance of bias in the appeals process.”

“It’s really a move that will go a long way to addressing those perceptions, whether they’re right or wrong.”