• Tax Time update – 12 September 2017

    Table 1: Tax returns received – Year to date (overall), current year 2017

    Lodgment – Type and channel

    Overall - year to date returns received as at 11 September 2017

    Current year returns received as at 11 September 2017

    Comparison – Current year returns received as at 11 September 2016

    Individual

    Electronic

    6,706,415

    6,079,994

    5,812,399

    Paper

    107,096

    83,008

    104,559

    Non-individual

    Electronic

    373,409

    210,128

    205,773

    Paper

    22,883

    16,181

    18,068

    Self-preparer

    myTax

    2,414,595

    2,251,920

    2,052,737

    Tax practitioner

    Practitioner Lodgment Service (PLS)

    1,354,080

    1,189,095

    183,820

    Electronic Lodgment Service (ELS)

    3,240,310

    2,778,940

    3,753,358

     

    Summary

    Overall year to date returns received as at 11 September 2017

    Current year returns received as at 11 September 2017

    Comparison – current year returns received as at 11 September 2016

    Electronic returns received

    Individual

    6,706,415

    6,079,994

    5,812,399

    Non-Individual

    373,409

    210,128

    205,773

    Total electronic

    7,079,824

    6,290,122

    6,018,172

    Paper returns received

    Individual

    107,096

    83,008

    104,559

    Non-Individual

    22,883

    16,181

    18,068

    Total paper

    129,979

    99,189

    122,627

    Tax refunds – Current year as at 11 September 2017

    Refunds issued     5,481,899

    Refunds issued ($m)   15,263

    Average refund ($)       2,784

    Telephony service standard performance as at close of business 11 September 2017

    From 1 July 2017 we have received approximately 1,757,296 inbound calls to general queues and 322,695 to tax practitioner queues and achieved service commitments of:

    • General taxpayer calls – 84% (YTD) of calls are answered within 5 minutes
    • Tax practitioner calls – 92% (YTD) of calls are answered within 2 minutes

    Latest contact centre reports show an average wait time of 33 seconds and an average handle time of 748 seconds in the tax practitioner queues.

    Compensation for detriment caused by defective administration

    The ATO (General Counsel Branch) considers compensation claims under the whole of Commonwealth ‘Scheme for Compensation for Detriment caused by Defective Administration’ (CDDA). 

    There is a dedicated CDDA hotline number 1800 005 172 answered by ATO General Counsel in business hours (with a 24 hour voicemail facility), and a General Counsel monitored email address.

    Guidance about making compensation claims under the CDDA scheme and the CDDA claim form are available on the ATO’s website at Applying for compensation. Material is also available on the Department of Finance website.

    CDDA is a discretionary scheme that allows Commonwealth entities to pay compensation where detriment is suffered as a result of defective administration by the entity, where there is no legal requirement to make a payment. Claims are considered in accordance with resource management guide 409 (PDF, 863KB)External Link issued by the Department of Finance.  Claims need to establish that direct financial loss has been suffered; that this loss was caused by defective administration by the ATO, and that reasonable steps have been taken by the claimant to mitigate that damage.

    The CDDA scheme is a remedy of ‘last resort’.  Where disadvantage can be addressed through other means, such as extending time to lodge or deciding not to apply penalties or interest, these will be explored prior to an offer of compensation under the scheme.

    Defective administration is defined in resource management guide 409 as:

    • a specific unreasonable lapse in complying with existing administrative procedures;
    • an unreasonable failure to institute appropriate administrative procedures;
    • an unreasonable failure to give proper advice within an officers power or knowledge
      to give; or
    • giving advice that was in all the circumstances incorrect or ambiguous.

    Detriment is a quantifiable financial loss suffered by the applicant, including personal or mental injury, economic loss, or damage to property. Where the compensation claimed concerns non-financial detriment (such as inconvenience) regard must be had to relevant legal principles in quantifying the payment.

    Applications for compensation under the CDDA scheme need to set out the facts and address the criteria set out in the guidance material. They would also need to address things such as legal terms concerning the use of systems.

    The ATO provided four examples of situations where compensation has been paid under the CDDA

    1. A payment plan by direct debit was accepted for an income tax account debt in a conversation between a taxpayer and an ATO officer, to commence on 1 June. The ATO sent two letters to the taxpayer, confirming the direct debit request, and confirming the details of the payment plan. The second letter incorrectly recorded that payments were to be debited on the 2nd of each month, starting on 2 May.
    1. Amendments to superannuation laws were made that had complex interactions with certain taxations laws. Changes to ATO systems to implement the new laws did not fully reflect the complexities of the interactions, and reprogramming took time. Taxpayers received incorrect refunds, and incurred additional costs dealing with their tax agents, and the ATO to make inquiries and get amendments. The ATO paid a set amount of compensation reflecting the detriment of incurring additional professional fees.
    2. Taxpayer A left a partnership. Seven years later the partnership was audited by the ATO. The Partnership advised the ATO that Taxpayer A was no longer a partner, orally and in writing. The ATO contacted Taxpayer A’s agent, and was again advised orally and in writing that Taxpayer A was no longer a partner. A few months later the ATO again contacted Taxpayer A’s agent, and received the same advice again. The ATO did not amend the entity’s partnership status in its records. The outcome of the audit was a debt for the partnership that was not paid. The ATO directed its debt collection processes to Taxpayer A, who incurred costs in defending the debt collection processes. The failure to record that Taxpayer A was not a partner at the time the audit related to was an unreasonable lapse and contrary to the expected standards of diligence. Compensation was paid to Taxpayer A to cover the cost of defending the collection process.
    3. In about 2009 the ATO paid tax agents a lump sum per client for tax bonus payments wrongly sent to them that they had to send on to their clients.

    Most issues arising from systems outages have been dealt with by exercising statutory discretions in favour of taxpayers, such as additional time to lodge or remission of interest.

    CDDA claim figures for the last five financial years are included in the ATO annual report.

    Year

    Finalised

    Number Paid

    Amount

    Median

    Average

    % Paid

    2011-12

    334

    162

    $773,857

    $571

    $4,776

    48.5%

    2012-13

    339

    147

    $363,617

    $267

    $2,473

    43.3%

    2013-14

    219

    79

    $841,754

    $300

    $10,655

    36.1%

    2014-15

    201

    77

    $738,402

    $484

    $9,589

    38.3%

    2015-16

    160

    59

    $317,502

    $424

    $5,381

    36.9%

    Looking specifically at claims made by tax agents on their own behalf, between November 2013 (when current reporting systems came into existence) and 30 June 2017. There have been

    • 44 claims recorded by General Counsel
    • 16 Claims paid either in full or in part for a total of $84549.13
    • Nine for ATO officer error or delay, three for ATO system error or delay, three for incorrect advice and one unspecified.

    The totals for the categories are:

    • Nine for ATO officer error or delay:  $8,860.50
    • Three for ATO system error or delay:  $4,007.63
    • Three for incorrect advice: $70,806
    • One unspecified:  $875

    Total $84,549.13

    All Commonwealth expenditure is governed by generally applicable rules and laws, including the terms of departmental appropriations and laws such as the Public Governance, Performance and Accountability Act. Compensation payments by Commonwealth Departments (whether legal liability or discretionary) can only be made under general schemes and principles applicable across the Commonwealth. Discretionary compensation payments in any form are governed by the Department of Finance Resource Management Guidelines on CDDA, Act of Grace, Ex Gratia payments and waiver of debts. Legal liability compensation payments are governed by the Attorney-General’s Legal Services Directions. The ATO administers CDDA, and makes decisions in relation to legal liabilities under the Legal Services Directions. The Department of Finance or the relevant Minister administer and decide payments under the other schemes.

    Appropriations to the ATO, and the Public Governance, Performance and Accountability Act, prevent the ATO from unilaterally and arbitrarily making discretionary payments to third parties, however characterised, including compensation payments. Such payments can only be made in accordance with powers or discretions arising under other laws or rules such as the CDDA scheme or the Legal Services Directions.

    The CDDA scheme resulted from a 1995 Cabinet decision to appropriate moneys to a separate discretionary compensation scheme with different features to traditional act of grace payments. Although it is permissive and discretionary, the ATO has to apply the CDDA scheme according to its terms as set out in the resource management guide, in good faith, and in accordance with general principles and legal requirements for the expenditure of public money, including the Public Governance, Performance and Accountability Act.

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    Last modified: 13 Sep 2017QC 53272