Review of Income Tax Self Assessment

Review chair
The Treasury

During 2004, Treasury conducted a Review of Aspects of Income Tax Self Assessment as commissioned by the Government. The Review focused on identifying whether the income tax laws achieved a fair balance between protecting the rights of individual taxpayers and protecting the revenue for the benefit of the whole Australian community.

The Government released a discussion paper on 29 March 2004, identifying key issues, setting out reform options and inviting taxpayers and their representatives to make submissions in response. Over 30 comprehensive and detailed submissions from individuals, professional associations, companies and representatives of taxpayers were received.

On 16 December 2004 the Government released the Report on Aspects of Income Tax Self Assessment, and issued a media release announcing its response to the report. The Review identified a number of refinements to the system aimed at reducing uncertainty and compliance costs for taxpayers while preserving the Tax Office’s capacity to collect legitimate income tax liabilities.

Legislation giving effect to the recommendations on penalties and interest charges received Royal Assent in June 2005. Legislation giving effect to the recommendations on advice and amendment periods received Royal Assent in December 2005. Further recommendations are being addressed through additional reviews by Treasury, the Board of Taxation and the Inspector-General of Taxation.

The Board of Taxation, pursuant to Recommendation 7.1 and in conjunction with Treasury, is currently reviewing international consultation processes to identify potential improvements to the tax consultation process. The Board of Taxation is also conducting a consultation to determine the extent to which common self assessment principles can be applied to all federally administered taxes.

The Inspector-General of Taxation has evaluated whether the pattern of private binding rulings indicates a pro revenue bias (as alleged by some contributors to the RoSA consultation).  On 7 August 2006 the Inspector-General released a report on Tax Office Management of Part IVC litigation (part of which was in response to Recommendation 6.2 in the Report on Aspects of Income Self Assessment).

Treasury is reviewing discretions that go to the determination of a taxpayer’s liability, the design of elections in the law, and provisions with unlimited amendment periods. The scope of each of these reviews will be outlined in subsequent publications.