The Government has today released its response to the review of the treatment of small business tax cases under the scheme for Compensation for Detriment Caused by Defective Administration (CDDA).
Completed by Mr Robert Cornall AO, the review made 12 recommendations to improve outcomes for small businesses who make complaints about defective administration in the tax system.
The Government has accepted all 12 recommendations either in full, in part or in principle.
These decisions will make applying for compensation easier, ensure fair and independent decision making, and improve oversight.
Key actions the Government is implementing include:
- The Government will ensure fair handling of CDDA claims by ensuring claims are investigated and decided by officers who are not from a part of the Australian Taxation Office (ATO) that were involved in the tax matters which may have led to the claim. The most sensitive or complex matters can now be referred to independent reviewers outside the ATO.
- For more serious cases, the investigation of a claim will be separated from the decision-making. These cases will also be escalated to senior levels for decision, with the Tax Commissioner himself deciding the outcomes where an independent reviewer is involved.
- For the most serious matters, there will be an opportunity for a complainant to comment on an investigator’s preliminary views before a final decision is made and an opportunity to request a review of a decision.
- Plausibility will be adopted as the standard of proof in CDDA tax matters, to establish whether defective administration has occurred (instead of balance of probabilities).
- ATO procedures will require its staff to take into account a small business’ financial and personal capacity to respond to a review, audit or other compliance process.
- The Australian Small Business and Family Enterprise Ombudsman will establish a new assistance function to help small businesses understand how they can pursue CDDA claims. The ATO will also work to increase awareness of the scheme.
- The ATO will review and update its guidance material to ensure that making a claim is as simple as possible and decisions are explained in succinct everyday language.
- The Government is strengthening oversight of CDDA matters and accountability, by ensuring the Assistant Treasurer is well briefed on the operation of the scheme. Delegations to the ATO will reflect how the Assistant Treasurer wants the ATO to administer the scheme on the Minister’s behalf.
The ATO will be required to provide a report to the Assistant Treasurer on the implementation of the Review’s recommendations in 12 months from today, so that if needed further reforms can made.
The Government would like to thank Mr Robert Cornall AO for his work on this important review.
The Government’s response to the CDDA review can be viewed on the Finance website.