Australian National Audit Office (ANAO)

This audit would examine the effectiveness of the Australian Taxation Office’s (ATO’s) administration of penalties and interest charges, including the correctness of decisions regarding the imposition and remission of penalties and interest.

A range of penalties and interest charges can be applied by the ATO, with these penalties and charges intended to encourage taxpayers to take reasonable care in complying with their tax obligations. Interest charges are intended to ensure that taxpayers who underpay their tax for a period do not receive an advantage over those who have paid their tax on time, and to compensate the community for the impact of late payments. The tax law provides the ATO with the discretionary power to remit (partially or in full) interest charges and penalties in certain circumstances. While the prospect of remission is not to be used as an inducement to finalise a dispute, remission may form a component of a settlement.

In 2015–16, the ATO reported that, in relation to penalties and interest, it imposed $2.8 billion, remitted $1.2 billion, and collected $2.3 billion. Interest charges accounted for a larger proportion of total impositions, remissions and collections than penalties.

This audit would examine whether the Australian Taxation Office’s (ATO’s) Tax Avoidance Taskforce is meeting the revenue estimates and staffing requirements that were stated in the 2016–17 Budget.

The ATO will receive $679 million over four years through the 2016–17 Budget to establish a Tax Avoidance Taskforce. The aim of this funding is to enhance the ATO’s current compliance activities targeting large multinationals, private groups and high-wealth individuals, and to extend these activities to 30 June 2020. The taskforce is expected to recover $3.7 billion in tax liabilities over four years, and also to deter taxpayers from attempting to avoid and evade their tax obligations. The taskforce was established against the backdrop of the ‘Panama Papers’, which relate to the leaking of client records from a Panamanian law firm.

This audit would examine whether the Tourist Refund Scheme (TRS) is being effectively administered.

The TRS enables a traveller to claim a refund, subject to certain conditions, of the goods and services tax and wine equalisation tax that has been paid on goods purchased in Australia. The TRS operates at Australian international airports and international cruise terminals.

The scheme is operated by the Department of Immigration and Border Protection under a memorandum of understanding with the Australian Taxation Office. There is also a contractual arrangement in place between the department and an external provider (responsible for dispersing individual payments to claimants each day, for later reimbursement by the department). In 2015–16, more than 96 per cent of the 765 503 applications received were approved, to a value of $194.4 million.

This audit would examine the implementation of the Farm Management Deposits Scheme by the Department of Agriculture and Water Resources, the Treasury and the Australian Taxation Office. The audit would include an assessment of the extent to which objectives of the scheme are being achieved.

The scheme, which was established in 1999, aims to assist primary producers to deal more effectively with fluctuations in cash flows by allowing eligible primary producers to set aside pre-tax income in years of high income, which can be drawn upon in future years. Deposits are tax deductible in the year they are made, and included as taxable income in the year they are withdrawn. Deposits must remain in the account for at least 12 months, unless the withdrawal is made in exceptional circumstances. On 1 July 2016, the following changes were made to the operation of the scheme: the cap on deposits was doubled from $400 000 to $800 000; an early trigger during times of drought was re-established; and deposits can be used to offset the interest costs on primary production business debt. The total holdings in the scheme were $4.35 billion at 31 May 2017.