18 November 2004

Report by Inspector-General of Taxation

The Government today released the report by the Inspector-General of Taxation into Remission of the General Interest Charge (GIC) for Groups of Taxpayers in Dispute with the Tax Office (ATO).

Minister for Revenue and Assistant Treasurer, Mal Brough, said the Inspector-General reviewed the ATO's systems for remitting GIC where there are disputes involving groups of taxpayers, with particular regard to participants in Employee Benefit Arrangements (EBAs).

The Report makes a number of recommendations, including that participants of EBAs be offered a tax office review process when they apply for remission of interest.

"In response to those recommendations, the ATO proposes to introduce special arrangements for EBA participants which would ensure an individual's circumstances are fully considered where they are applying for remission of interest," Mr Brough said.

"While the courts have consistently found EBAs to be ineffective for tax purposes, it is nevertheless important that those people who have been drawn into these situations are treated fairly."

"The ATO has also indicated that it will review and publish more practical and accessible guidelines to the community, particularly on the remission of interest charges that arise on shortfalls prior to assessments being amended.

Mr Brough said that this positive outcome of the first review since the Inspector-General was appointed, in August last year, demonstrated that the system implemented by the Government was working.

"This positive outcome finds the balance between the Commissioner's responsibility on behalf of taxpayers to ensure that everybody pays their fair share of tax and the concerns raised by the Inspector General to ensure that everybody gets treated fairly," Mr Brough said.

"I commend both the Inspector-General and the Commissioner for their efforts to make positive contributions to the resolve this difficult issue."

The report is available at www.igt.gov.au.

The full details of the ATO's response can be found at www.ato.gov.au.