ATO, Tax

ATO needs governance shake-up

The ATO is a monopoly service provider by necessity, but there are governance issues including too much power focused on one individual, according to taxation watchdog the Inspector-General of Taxation.

Addressing the Institute of Public Accountants 2018 National Congress in Sydney last week, inspector-general of taxation Ali Noroozi said while he was not suggesting multiple tax offices, the only way to make monopolies work efficiently is by ensuring appropriate governance and scrutineering arrangements.

Noroozi said he has canvassed two suggestions to address governance issues within the ATO since he took office 10 years ago.

“One is that I believe the tax office should have a board. I do believe there is too much power focused on one individual. Others countries such as the UK, US all have a board,” he said.

“The way I see the board is that it should have an independent chair, the commissioner, and the second commissioners should also be on the board, but there should be also other board members from the private sector.”

The board should monitor the overall strategy of the ATO rather than focusing on the day-to-day operations, and it would not be privy to taxpayer information.

It should contain members from the private sector who specialise in various fields, including finance, information technology and human resources.

“I have also suggested that it is inappropriate because you all know about internal audits – you can’t have your scrutineers sit on the board,” Noroozi said.

“So what I’ve also suggested is that whilst the inspector-general will not be on the board, they should meet periodically with the board to bring to [its] attention … things that they may otherwise not be privy to.”

Noroozi’s other recommendation is to establish a separate appeals area within the ATO to be headed by a new second commissioner.

While the ATO currently has three second commissioners, he suggested a fourth second commissioner to steer the appeals function.

This could ensure independent impartial consideration of objections that have been lodged, he said.

Noroozi has stepped down from his role as inspector-general, announcing in July he would not be seeking reappointment for a third term.

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