The Government today released the Inspector-General of Taxation’s report of his Review of the Tax Office’s management of complex issues – Case study on living away from home allowances.
The report looked at the Australian Taxation Office’s (ATO) ability to identify and deal with major, complex issues within reasonable timeframes in respect to arrangements involving the payment of living-away-from-home allowances (LAFHA) to foreign nationals, including working-holiday visitors or ‘backpackers’. This report is pursuant to section 10 of the Inspector-General of Taxation Act 2003.
The review was announced as one of three case studies which the Inspector-General would use to examine the ATO’s ability to identify and deal with major, complex issues within reasonable timeframes.
The Inspector-General found that the ATO took far too long to resolve the technical and compliance issues arising from this project. The ATO in its response to the report acknowledged that the difficult technical and compliance issues took to long to resolve.
Further, the Inspector-General in seeking to ensure that the ATO provides greater certainty to taxpayers on the key technical issues relating to its administration of the LAFHA provisions, has recommended that:
- The Commissioner of Taxation should conclude a corporate view on whether the ATO should formally advise the Treasury, in accordance with agreed protocols, that legislative change is required or not; and
- In the absence of the ATO providing such formal advice to Treasury on any legislative change, then the ATO should issue a new public ruling that would provide community-wide guidance and certainty on the Tax Office’s interpretation, administration and practical application of the LAFHA provisions. It would replace the existing ATO ruling.
The ATO has accepted both recommendations and has advised the Inspector-General that it will be acting upon them shortly.
The Inspector-General also foreshadows his intention that broader recommendations will, together with others arising from the Research and Development Syndication and Service Entity case studies, be issued as part of the fourth report on the ATO’s ability to deal with complex issues within reasonable timeframes.
That report will be finalised once the two other case studies which form part of this overall review are completed. The ATO has agreed to further dialogue on this and other recommendations. This dialogue will be undertaken as part of the process leading up to the finalisation of the fourth report.
The report, which also contains the ATO’s response, is available at www.igt.gov.au.