Following the conclusion of its inquiry into taxpayer engagement with the tax system, the House Committee on Tax and Revenue (Committee) presented its report Taxpayer Engagement with the Tax System (Report) to the House of Representatives. In presenting the Report, Committee Chair Mr Jason Falinski MP said that the Committee’s 13 recommendations are aimed at making tax obligations in Australia easier to administer and comply with.
The inquiry involved a comprehensive assessment of tax administration in Australia and in comparable nations overseas. The Committee found that while the ATO’s goal of creating a modern tax administration service is well underway, Australia’s complex tax system is presenting some hurdles to full automation.
The Report makes the following recommendations:
- A review of Australia’s tax system should be undertaken before 2022, with the purpose of making recommendations on how to simplify the present tax system.
- The ATO should continue to deploy behavioural insights approaches to increase taxpayer engagement.
- The ATO should make greater use of behavioural insights techniques, such as randomised controlled trials, before full implementation of new initiatives to determine if such changes are better than current practices.
- The ATO should consider adopting a Regulatory Philosophy to codify the principles on which it will administer tax laws and engage with taxpayers.
- The ATO should continue to expand availability of technical initiatives such as pre-filing, simplified electronic lodgement systems for business and individuals, and online assessment tools to facilitate Australia’s transition to a ‘push return’ tax system.
- The Treasury should consider an ABN withholding tax system at source for all industries with the potential for the rates to be industry specific.
- The ATO should review the functionality of the contractor assessment tool for accuracy and utility to taxpayers.
- Work-related deductions scheme should be reformed by introducing the standard reduction concept as proposed by the Australia’s Future Tax System Review.
- The ATO should adopt a roadmap for the abolition of paper-based returns.
- The ATO should work to develop a framework which clearly outlines the rights and obligations of both parties in the tax engagement process.
- The ATO should include a service level agreement with end users, particularly tax agents, that includes consideration of payments to end users for poor delivery outcomes.
- The ATO should engage with all services providers, allowing taxpayers the ultimate choice of which channel of access or service to use.