Federal inquiry asks if there is too much scrutiny of the ATO

A federal inquiry will examine whether the Australian Taxation Office suffers from too much scrutiny.

The Parliamentary Tax and Revenue Committee announced on Tuesday it would look into the ATO's oversight regime in the wake of public complaints from Tax Commissioner Chris Jordan.

Tax Commissioner Chris Jordan thinks too much time and money is wasted answering questions about his agency's performance.Credit: Dominic Lorrimer

The ATO, which has faced massive jobs, gets feedback on its performance from several agencies including the Inspector-General of Taxation and Auditor-General.

It also has to answer questions at various federal parliamentary committees, including at Senate estimates, those held by the House of Representatives Tax and Revenue Committee, and during inquiries such as the recent one into corporate tax avoidance.

The Tax and Revenue Committee in a 2013 report itself noted that "much of this scrutiny [on the ATO] is similar to other agencies" and the "fact that these agencies often focus more on the ATO reflects the importance of the ATO's role".

The committee's chairman, MP Bert van Manen, on Tuesday announced the terms of reference for the inquiry, with submissions due by March 11. The committee was asked by Treasurer Scott Morrison to hold the inquiry.

"The committee will inquire into the scrutiny arrangements that apply to the Australian Taxation Office, with particular regard to removing inefficiency and duplication, reducing cost to government," he said.

While Mr Jordan thinks the ATO faces too much scrutiny, Australian Public Service Commissioner Stephen Sedgwick in his May 2013 Capability Review said that this would "prevent serious, large-scale lapses in its performance".

Mr Sedgwick also noted in that report that "some scrutineers and members of consultative forums advised that the ATO can be dismissive of feedback, particularly where it conflicts with a strongly entrenched view that the ATO holds about its own performance or client expectations".

Clayton Utz tax partner Niv Tadmore said streamlined and focused ATO scrutiny was welcome, and the "recent allocation of more functions to the Inspector-General of Taxation's office" had ensured this.

Gary Kurzer, who had a dispute with the ATO, said the agency's leadership thinks "that they are above scrutiny, and thus need less diligence, as they are not answerable to any higher authority, and can act as they choose with impunity".

The inquiry follows numerous complaints by small business and individual taxpayers about the ATO's harsh treatment of them. The agency claims it is addressing such issues by offering a 'fresh set of eyes" during disputes.