Recommendation 3.3

The IGT recommends that the ATO:

  1. Consider ‘willing participation’ or ‘transparency’ in terms of information confidence and cost and use them alongside, but separate from, the RDF in determining the ATO compliance approach to taxpayers;
  2. The tool for assessing information confidence and cost should consist of objective and specific criteria such as:
    1. Does the taxpayer voluntarily disclose information to the ATO?
    2. Does the taxpayer respond to informal ATO information requests?
    3. If no, what were the reasons for this?
    4. Have you used formal information gathering powers with respect to this taxpayer?
    5. If so, what were the reasons for this? Did the taxpayer outline a specific concern that gave rise to a need for you to exercise such powers?
    6. How did the taxpayer respond to our formal information gathering requests?
    7. Did the taxpayer exercise their right to legal professional privilege correctly?
    8. If not, what was the issue of concern? How was it resolved?
    9. Did the taxpayer avail themselves of the accountants’ or board papers concessions correctly?
    10. If not, what was the issue of concern? How was it resolved?
  3. Update its internal guidance to ATO officers to reflect its stated position in the LBTC booklet in relation to taxpayer requests for exercise of the Commissioner’s formal information gathering powers; and
  4. State, in an appropriate publicly available document such as the LBTC booklet, its position with respect to the exercise of such taxpayer legal rights as LPP and FOI as well as use of Accountants’ Concession when determining the taxpayer’s risk categorisation.

ATO response

We agreed with this recommendation and implementation was completed on 26 November 2014.

Internal procedures have been updated to provide staff with guidance on ‘willing participation’ or ‘transparency’ relating to information confidence and cost. These procedures have also been updated to provide detail on the separation of information cost and confidence.

The Large business and tax compliance publication outlines factors we use to determine a taxpayer’s risk differentiation framework (RDF) categorisation. We provide a checklist of the level of evidence we consider, which includes the ‘fullness of disclosure and cooperation demonstrated in relation to any enquiries’ and ‘the level of disclosure and engagement around significant transactions you undertake’. The Large business active compliance manual – income tax also has detailed procedures covering legal professional privilege and freedom of information at a case level.

The information gathering procedures document for staff outlines the ATO’s position in relation to our formal information gathering powers and has been updated to reflect the information in the Large business and tax compliance publication.

    Last modified: 02 Apr 2015QC 44737