Tax Commissioner Chris Jordan says there should be fewer reviews of the ATO

Tax Commissioner Chris Jordan says keeping up with constant reviews into the tax office may not be the best use of the agency's time and resources, and maybe it's time that external scrutineers focused on being more "forward looking".

A federal inquiry is examining whether the Australian Taxation Office suffers from too much scrutiny.

Tax Commissioner Chris Jordan says there's too much scrutiny of the ATO.Credit: Daniel Kalisz

Parliament's tax and revenue committee last month announced it would look into the ATO's oversight regime.

The committee, chaired by Liberal MP Bert van Manen, was asked by Treasurer Scott Morrison to hold the inquiry. Submissions to the inquiry are due on Friday.

The Inspector-General of Taxation, Ali Noroozi, has announced his terms of reference for the review into the ATO following the $144 million tax fraud case.Credit: Nic Walker

Mr Jordan said he did not initiate the inquiry. But he has longed complained that the ATO, which has faced massive job cuts, has to answer to too many agencies, including the Inspector-General of Taxation and Auditor-General.

It also answers to various federal parliamentary committees, including those held by the tax and revenue committee, and at Senate estimates.

Return on investment needed

In an interview with Fairfax Media, Mr Jordan said while it was ultimately up to the federal government to decide, one option could be that reviews coming out of the office of the Inspector-General of Taxation, Ali Noroozi, could be "more forward looking".

Mr Jordan said that there had been 51 audits, reviews and investigations with more than 6300 pages of reports and 347 recommendations over the past five years.

"If I look at the totality of it, it's quite immense," he said. "What's the return we get as an organisation, or [what return] does the economy or the country get out of this investment?"

He said the complaints function of the IGT could continue; the office last year took over handling complaints from the Commonwealth Ombudsman, after Mr Noroozi suggested at the 2011 tax forum this may be a good idea.

But Inspector-General Noroozi also does wider reviews of the tax office's performance, and many of his recommendations suggest changes to the ATO's systems and structures and legislative changes that later may get adopted by government.

Asked whether these reviews should be toned down, Mr Jordan said: "It's up to the committee", but given the ATO was undergoing cultural change and trying to be more "forward looking", he said that one should ask the question whether so many reviews by the IGT were needed.

"So whether the IGT continues to do reviews, but probably fewer of, and more forward looking, is the way that I would see it," he said.

Mr Noroozi said: "Due to restrictions in my legislation, I am unable to comment further at this time."

But last month Mr Noroozi told the tax and revenue committee that scrutiny was necessary because as a previous tax commissioner had noted, although the agency gets things right 90 per cent of the time, there is a 10 per cent chance things go wrong.

Small business calls for more scrutiny

Some submissions to the inquiry are calling for more scrutiny, not less. Co-founder and director of Independent Contractors Australia, Ken Phillips, said there should be "increased powers and resources for the Inspector-General of Taxation to oversee the processes of the ATO".

"Our submission draws heavily on case studies of individual self-employed people who have been subject to, what we believe is oppressive, unfair, unjust and potentially and arguably illegal treatment by the ATO," he said.

Independent Contractors also wanted the creation of a small business tax tribunal to provide "oversight of ATO interpretation of the legal facts and application of tax law to self-employed small business people".

"Further, increased scrutiny as proposed will force the ATO to address its ingrained systemic inefficiencies thus providing a better service for taxpayers and create government cost savings," Mr Phillips said.

The ATO has been attempting to improve its dispute resolution process with small business over the past year under its "cultural reinvention" program. Mr Jordan has said there's a "fresh set of eyes" now for disputes.

But Mr Phillips said: "The cultural change the ATO talk of, in relation to small business, is just that, talk. There is no action on the ground. It's more PR rather than outcomes."

He said small business people were "in a highly vulnerable position" when the ATO makes accusations against them.

"The ATO has huge resources to prosecute their case, whereas the small business person lacks the resources – financial, knowledge and legal – to defend themselves."

The tax and revenue committee, which is holding the inquiry, noted in a 2013 report 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".

Australian Public Service Commissioner Stephen Sedgwick in his May 2013 capability review said scrutiny was needed to "prevent serious, large-scale lapses in [the ATO's] performance".