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The Australian Taxation Office (ATO) is the Australian Government’s principal revenue collection agency. Its role is to administer Australia’s tax system and significant aspects of Australia’s superannuation system. The ATO has a single outcome delivered through 18 programs. In addition, the ATO provides support to the Tax Practitioners Board, the Australian Business Register and the Australian Charities and Not-for-profits Commission.
Read an overview of the Australian Taxation Office including details of key activities, expenses and staffing levels. The audit focus section outlines the influences on the ANAO’s allocation of financial audit resources and the selection of performance audit topics and other activities. Also included is a list of material entities within the portfolio with their corresponding risk profile and key risks. Any risks that are considered key audit matters (KAMs) by the ANAO are separately identified.
This audit would examine the Australian Taxation Office’s compliance with model litigant obligations (MLOs), and the assistance provided to Commonwealth entities by the Attorney-General’s Department in maintaining compliance with the MLOs.
Pursuant to a Legal Services Direction issued by the Attorney-General under the Judiciary Act 1903, Commonwealth entities have an obligation to act honestly and fairly in handling claims and litigation. This includes responsibilities to reduce costs and delays in the handling of litigation, and requires that entities do not commence legal proceedings unless satisfied that litigation is the most suitable method of dispute resolution.
The Office of Legal Services Coordination within the Attorney-General’s Department is responsible for assisting Commonwealth entities in complying with the MLOs.
The Australian Taxation Office is one of the largest litigants in the civil justice system. It has litigation advantage over the vast majority of companies and individuals given its access to resources, expertise and experience as a repeat litigant.
This audit would examine the effectiveness of the Australian Taxation Office’s (ATO’s) arrangements to deter, detect and deal with aggressive tax planning.
Tax planning or tax-effective investing involves taxpayers operating within the taxation law to arrange their financial affairs to keep their tax to a minimum. However, some taxpayers plan their tax affairs outside of the taxation law. This behaviour is referred to as aggressive tax planning and the ATO aims to deter, detect and deal with these taxpayers. One element of the ATO’s activities to address aggressive tax planning is the Domestic Promoter Initiative, which targets Australia-based promoters of tax schemes.
The audit would examine whether the Australian Taxation Office and the Department of Agriculture and Water Resources have effectively administered the Farm Management Deposits Scheme.
The Farm Management Deposits Scheme commenced in 1999. The Scheme provides an income tax concession to eligible primary producers to help them manage fluctuations in their income so that they can be more financially self-reliant. At 30 April 2018, a total of $5.17 billion was held by primary producers in Farm Management Deposits accounts. Treasury has estimated that the revenue forgone through the Scheme will increase from $245 million in 2016–17 to $560 million in 2017–18. In 2016, the Scheme was amended to double the amount that producers could deposit; re-establish early-access provisions; and remove the restriction on the use of deposits as loan offsets.
The audit could focus on the risk identification and compliance strategies and activities that support the integrity of the Scheme. It could also examine the: latest changes to the Scheme to determine whether they were established on a sound basis; the Department of the Treasury’s and the Australian Taxation Office‘s estimation of the potential tax revenue forgone through the Scheme; and the extent to which the objectives of the Scheme are being achieved.
This audit would examine the effectiveness of the Australian Charities and Not-for-profits Commission’s (ACNC’s) processes for the regulation of charities, including its compliance and enforcement activities.
The ACNC was established in December 2012 as the independent national regulator of charities. There were over 55,000 registered charities in Australia by the end of 2017, and in 2016 registered charities had a combined total revenue of $142.8 billion and total assets of $197.6 billion. Eligible charities can access tax concessions, including income tax exemptions and gain deductible gift recipient status via endorsement by the Australian Taxation Office.
In 2016–17, charities that were subject to ACNC compliance actions controlled nearly $5.1 billion of charitable assets. The number of charities that had their registration revoked by the ACNC following investigations rose by 30 per cent in the same year. The ACNC stated that it will focus on charity compliance in 2018 to help identify and stamp out misconduct in charities. Sound oversight arrangements and strong corporate governance and accountability is fundamental to effective regulation of this growing sector of the economy.
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.
This audit would examine whether the Tourist Refund Scheme is being effectively administered, including through appropriate management of risks.
The Tourist Refund Scheme enables a traveler 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. In 2015–16, more than 96 per cent of the 765,503 applications received were approved, to a value of $194.4 million.
The Tourist Refund Scheme operates at Australian international airports and international cruise terminals. The scheme is operated by the Department of Home Affairs 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.