Tax & ATO News Australia

Inspector-General of Taxation releases report into ATO's use of benchmarking to target the cash economy

On 4 October 2012, the Assistant Treasurer, David Bradbury, released the Inspector-General of Taxation's report on its review into the ATO’s use of benchmarking to target the cash economy.

This report was made following consultation with stakeholders. Whilst the stakeholders were generally supportive of the ATO using benchmarks to exclude large numbers of likely compliant taxpayers from compliance activities, they were concerned that that the ATO’s benchmark-based compliance activities captured many compliant taxpayers resulting in unnecessary stress, extra compliance costs and time away from their businesses. The report found that the ATO had made adjustments in only 24% of the 7670 benchmark audit cases, meaning that 5830 taxpayers had been wrongly accused.

Overall the report made 11 recommendations to improve the use of benchmarks by the ATO. Although the ATO agreed with nine recommendations, I am concerned that the ATO only partially agreed with two. One of these recommendations was that the ATO agree to publish more information about how it develops and uses its benchmarks. However, the ATO has refused to publish geographical comparisons of benchmarks. The other recommendation was better record-keeping and the accurate reporting of income so that the overall costs for small business are minimised.
 

Posted in: Tax & ATO News Australia at 26 October 12