ATO on watch for 'U-turns'

Inspector General Ali Noroozi, formerly tax counsel for the Institute of Chartered Accountants, has announced a seven-point program after sifting through more than 50 submissions from taxpayers concerned about Tax Office behaviour.

Heading the list will be an inquiry into "the implications of delayed or changed ATO advice on significant issues".

Announcing the program, Mr Noroozi said that although the ATO acted as an adviser to taxpayers, it often failed to provide advice for a long period of time in areas of known uncertainty "leaving taxpayers to determine their own view in order to meet obligations".

When it did convey a view it often did so "by stating that it is not changing any pre-existing opinion, but that its view is merely an expansion on what the law has always said"."

This may effectively mean that its view is to be applied retrospectively," Mr Noroozi said."

Taxpayers may have insufficient time to avoid adverse consequences by changing arrangements they have had in place for some time and of which they believe the ATO was well aware."

"The ATO's position on whether it has changed its view or not can determine what protection taxpayers have from additional tax, interest and shortfall penalties," he said.

The Inspector General will also examine the administration of the superannuation guarantee charge in the light of complaints that the ATO "doesn't chase up short payments of superannuation charge"."

There's so little follow-up on the ground, it's all done by press release to leverage compliance," said a submission to the Inspector General.

Also on Mr Noroozi's agenda is the ATO's commitment to finalise large company audits within two years."

A number of concerns were raised in relation to initial delays resulting in truncated processes towards the end of the two years in order to achieve the time frame," he said.

Other inquires will examine Australia's private ruling system in which non-binding rulings are published with something approaching the force of law, the fairness of the ATO's focus on "the top end of the small and medium enterprise sector", and the effectiveness of the ATO's administration of the rules relating to self-managed super funds.

Mr Noroozi said he would set out terms of reference for each review after detailed work to refine its scope and focus. He expected to call for public submissions on each.

Other issues raised in submissions that may later become reviews include the way in which the ATO outsources the collection of tax debts, its administration of personal tax refunds and its use of information gathering powers.

Mr Noroozi succeeds the first Inspector General, David Voss, and has been appointed for five years. In opposition, the ALP had said it would abolish the post of Inspector General, but decided to keep it on taking office.