Inspector General of Taxation and Taxation Ombudsman issues guidelines re notification of debts owing to government
In response to criticism of the ATO’s recent actions on re-activating or off-setting old debts, the Commonwealth Ombudsman/ACT Ombudsman, and the Inspector-General of Taxation and Taxation Ombudsman (IGTO) have jointly issued new guidelines aimed at improving how Australians are notified about debts owing to government agencies such as the ATO.
The publication outlines principles designed to ensure that the process of debt notification is handled with transparency, clarity and sensitivity towards impacted individuals.
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IGTO issues guidelines
Mr Iain Anderson, serving as both Commonwealth Ombudsman and ACT Ombudsman, together with Ms Karen Payne, Inspector-General of Taxation and Taxation Ombudsman, emphasised the importance of government agencies adopting a compassionate and principled approach when dealing with debt notification.
“While the law may require agencies to take certain actions, it is crucial that these actions are taken in a manner that minimises distress,” they said.
The guidelines propose five key principles for the ATO and other government departments to consider when conducting programs:
- Transparency and Accountability – agencies should communicate clearly why the debt has arisen, fostering trust and confidence in the process.
- Clarity on the Debt’s Origin – individuals should understand the source and nature of the debt, tailored to the recipient’s circumstances.
- Clear Pathways for Review – information on how to request a review of the debt, apply for waivers, and arrange repayments should be readily accessible, ensuring individuals understand their rights and options.
- Accessible Support – contacts for further assistance must be provided, acknowledging that people may have additional questions or need personalised support.
- Commitment to Improvement – the process of debt recovery should be viewed as an opportunity to learn and enhance future practices based on oversight recommendations and past experiences.
Also noted was the significance of reflecting on past interactions and the recommendations from oversight bodies to continually improve how agencies engage with the community regarding sensitive matters such as debt recovery.
Taxpayers who have an unresolved complaint or dispute with the ATO are able to lodge a dispute with the IGTO to receive independent assurance.
IGTO will conduct an independent investigation of the actions and decisions that are the subject of the dispute and can help taxpayers better understand the actions taken by the ATO and independently verify whether shortcomings exist in the ATO’s action or decision which should be rectified, as well as identifying other options taxpayers may have to resolve their concerns.
Examples of IGTO intervention
For example, in one case study, the IGTO assisted a taxpayer to verify whether the full amount of general interest charge had been remitted on their tax debts.
In another case, after a taxpayer’s original request for the Commissioner to exercise his discretion to pay their refund instead of offsetting it against their tax debt due to an imminent risk of homelessness was denied, the taxpayer lodged a dispute with the IGTO.
Following urgent discussions between the IGTO and senior ATO officers, the ATO reversed their decision, and the taxpayer received their refund.
The IGTO can also intervene in cases where the ATO has used family assistance payments to offset tax debts.
According to another one of IGTO’s case studies, the ATO used a Centrelink Family Assistance payment to offset a tax debt that a taxpayer had.
At the time, the taxpayer was unemployed and supported two minors along with an ageing parent and relied on the payment.
After IGTO intervention, the ATO agreed to refund the offset recognising it was not appropriate to pursue debt collection given the circumstances.
Lodging a dispute with the IGTO
Taxpayers interested in lodging a dispute with the IGTO should note that they must have first attempted to resolve the complaint directly with the ATO unless special circumstances exist.
Those that remain unsatisfied with the ATO response should then lodge a formal complaint with the ATO for review.
If taxpayers are still unsatisfied with the outcome of the ATO review, they can then lodge a dispute with the IGTO for an independent investigation either online, via post or telephone.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.