“Following representations from taxpayers and tax practitioners about how the Australian Taxation Office applies the General Interest Charge (GIC) for tax disputes involving groups of taxpayers, I have asked the Inspector-General of Taxation to investigate the administration of GIC remission in such cases,” Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said today.
“Specifically, I have asked for an examination of the consistency and appropriateness of the Tax Office’s remission decisions for disputes by groups of taxpayers with similar tax arrangements where the Commissioner has remitted no part of the GIC.”
“The Inspector-General has also been asked to consider GIC remission in relation to participants in Employee Benefit Arrangements.”
The term Employee Benefit Arrangements covers four different types of arrangements: employee benefit trust arrangements; employee share or incentive plans; controlling interest superannuation arrangements; and offshore superannuation schemes.
The Commissioner announced earlier this year that for controlling interest superannuation arrangements he would partially remit the GIC where a contribution was made to a superannuation fund before 19 May 1999.
For participants in other employee benefit arrangements the Commissioner has generally applied the full rate of GIC with no remission.
“The administration of GIC remission in such cases, should achieve an appropriate balance between considering the individual merits of taxpayers and consistency between taxpayers in similar arrangements,” Senator Coonan said.
The requested review is also intended to extend to the remission of late payment penalties arising under the penalty system that preceded the introduction of the GIC in 1999.
The reference does not extend to the circumstances in which the GIC is imposed by the law or to the statutory grounds for remission of the charge, nor does it extend to considering alternatives to the GIC.
“The GIC generally applies when taxpayers pay their tax liability after the due date however I have received many representations stating the administration of GIC remission is acting as a significant disincentive to taxpayers finalising the settlement of their tax liabilities,” Senator Coonan said.
“ I look forward to receiving the report of the Inspector-General, including any recommendations he may have for the improvement of the Tax Office’s operations in this area.”