ATO Vulnerability Capability
In late 2024, the ATO Vulnerability Capability was established to strengthen and co-ordinate the way the ATO supports people experiencing vulnerability. This work arose from various scrutineer activities and the ATO’s acknowledgment of the growing number of taxpayers presenting with vulnerability factors. In understanding these factors, the ATO will be able to provide targeted and effective support options, in addition to existing support options, that will contribute towards fostering willing participation in the tax system. A whole of government approach is required towards this policy issue. A key deliverable in this work is the development of the ATO Vulnerability Framework (framework), with guiding principles drawn from the Taxpayer Charter, to provide a structured approach to supporting taxpayers experiencing vulnerability. The ATO provided an update on the framework and the next steps for consultation, as well as specific actions being considered to better support people experiencing vulnerability.
Member feedback showed support for the development of the framework and acknowledged the difficulty in addressing vulnerability factors such as financial abuse, coercion and control and emphasised the importance of consulting with services directly supporting such taxpayers and tax agents.
ATO strategic litigation
The ATO will be making changes to the Test Case Litigation Program. The update clarifies that funding can be made for superannuation issues and for matters before the newly established Administrative Review Tribunal Guidance and Appeals Panel. Further, the Test Case Litigation Funding criteria will be updated to say that the ATO will generally not provide funding for tax avoidance issues, and a taxpayer’s capacity to pay for their own costs of the legal proceedings will be considered when determining if funding should be provided. The ATO confirmed that the changes to the funding criteria are not due to budgetary constraints, but to ensure closer alignment to the Public Governance, Performance and Accountability Act 2013 (Cth) when expending public monies, and public perception. Members were invited to provide feedback on the draft of the updated content prior to publication on the ATO website.
Changes to the deductibility of ATO interest charges
The ATO advised of the recent law change regarding the non-deductibility of general interest charge (GIC) and shortfall interest charge (SIC) from 1 July 2025. This is the result of a change in government policy, where taxpayers pay a tax liability late, they will no longer have the benefit of a tax deduction for any GIC or SIC charged. The change is designed to ensure that taxpayers who do the right thing and pay their tax in full and on time are not disadvantaged relative to those who do delay payment.
There has been no change to the laws about remission of GIC and taxpayers will still be able to request the ATO to remit interest charges. Taxpayers should be aware that remission requests are carefully assessed to ensure a level playing field for those taxpayers who pay on time. Law Administration Practice Statement PS LA 2011/14 General debt collection powers and principles will be updated to reflect the law change. In relation to 50/50 arrangements whereby taxpayers receive 50% remission of future GIC if 50% of the tax liability is paid, our policy has not changed, however taxpayers will no longer receive a deduction for GIC or SIC incurred from 1 July 2025.
Member comments
Questions regarding whether interest on alternative borrowings were still deductable and when the updated PS LA 2011/14 would be published were raised. ATO members confirmed there would be no change to the general interest deductibility rules around borrowing and the ATO will advise members when PS LA 2011/14 would be updated. A member observed that different taxpayers (such as individuals or small business) may not have the option of obtaining alternative borrowings due to their financial circumstances.
A further member provided comment regarding large market taxpayer disputes and raised the point of when interest is incurred, as disputes will now have a pre and post 30 June 2025 treatment. Comments were made that the ATO should not use the law change to delay how disputes are progressed so that the GIC/SIC is incurred post 1 July 2025 and that it would be beneficial to send communications to such taxpayers regarding the change and impact. The ATO confirmed and assured members that the resolution of matters is not driven by GIC/SIC revenue outcomes. We aim to progress disputes and engage with taxpayers as efficiently and effectively as possible to ensure the right amount of tax is paid. If there are specific instances which members would like to raise where they are concerned about delays, we ask you to escalate these through the usual processes with the relevant area of the ATO. We will consider some targeted communications to large market taxpayers. In relation to small business taxpayers, a member indicated that the deductibility of interest was an incentive to pay their tax liability and by removing the ability to deduct the charges, the ATO debt book may be negatively impacted.
Other business
Member feedback was given regarding their recent experiences of the Administrative Review Tribunal (ART) timetabling of matters and use of technology for mediations. We acknowledged that the ART is still newly formed, and we have found it to be receptive to feedback on their administrative practices.
An enquiry was raised in relation to the ATO’s view of the President’s referral to the responsible Ministers outlined in ART’s Notice of Systemic Issue No 1 of 2024 regarding whether an agency should apply the ART’s interpretation of a statute to subsequent cases (on same provision), rather than continuing to apply its own view of the statute, unless and until the ART’s decision in the primary case is set aside or varied. We are aware of the Notice and are considering the current Decision Impact Statement practice. We are transparent we seek clarity and challenge a view by way of the appeals process, and we strategically manage all subsequent cases on the same issue pending the outcome of the appeal.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Amy James-Velagic (Chair), Objections and Review |
|
ATO |
Andrew Watson, Individuals and Intermediaries |
|
ATO |
Jillian Kitto, Frontline Operations |
|
ATO |
Jonathan Todd, Litigation and Legal Services |
|
Australian Small Business and Family Enterprise Ombudsman |
Craig Latham |
|
Chartered Accountants Australia and New Zealand |
Karen Liew |
|
Corporate Tax Association |
Simon Staples |
|
CPA Australia |
Jenny Wong |
|
Law Council of Australia |
Justin Byrne |
|
National Universities Tax Clinics |
Annette Morgan |
|
The Tax Institute |
Michael Wells |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Diana Bedelovski, Objections and Review |
|
ATO |
Jonathan Tang, Public Groups |
|
ATO |
Robert Thomson, Individuals and Intermediaries |
|
ATO |
Sara Darmenia, Individuals and Intermediaries |
|
ATO |
Tim McIntyre, Individuals and Intermediaries |
Apologies list
|
Organisation |
Member |
|---|---|
|
ATO |
Fiona Knight, Public Groups |
|
Law Council of Australia |
Angelina Lagana |