ATO and administration
Inspector-General of Taxation
The Inspector-General of Taxation is an independent statutory office that reviews how Australia's tax system is administered and recommends improvements, and which also handles complaints about the tax authorities as Taxation Ombudsman.
Australia's tax system is administered mainly by the Australian Taxation Office, and like any large administrator it can make mistakes or adopt processes that work poorly for the people they affect. The Inspector-General of Taxation is an independent office created to look at that administration from the outside. It is separate from the ATO and reports on how well the system works in practice, rather than setting tax rates or deciding the law.
The office carries out reviews of systemic issues in tax administration. These might look at how a certain kind of audit is conducted, how a particular process affects small businesses, or whether information given to taxpayers is clear. After a review, the Inspector-General can publish findings and make recommendations to the Government and to the ATO. Recommendations are not binding in the way a court order would be, but they are public and carry real weight in shaping reform.
The same office also carries the title of Taxation Ombudsman. In that role it can investigate individual complaints from taxpayers and tax practitioners about the actions of the tax authorities, and it can assess whether those actions were reasonable, fair and lawful. It is intended to be a step used after you have first tried to resolve the problem directly with the ATO through its normal complaints process.
For a small business owner, this matters in situations such as a delayed GST refund, a dispute about a penalty, or a poorly handled debt recovery step. The Inspector-General does not act as an appeals body for the amount of tax you owe. Disputes about the correct amount of GST or income tax are dealt with through the objection and review process, and ultimately through the tribunal or courts. The complaints function is about conduct and process rather than re-deciding your tax position.
A common misunderstanding is that complaining to the Inspector-General pauses your obligations. It does not. Lodgment dates and payment dates continue to apply, and interest such as the general interest charge can keep accruing on amounts that remain unpaid while a matter is being considered. If you need more time to pay, a payment plan through the ATO is the practical route, and it can be arranged alongside a complaint.
Before approaching the office, keep clear records of what happened, including dates, names of staff you spoke with, reference numbers and copies of correspondence. A concise written summary of what went wrong and what outcome you want will help. The office publishes information on how to lodge a complaint and what it can and cannot look at. This is general information only, so confirm what applies to you with the ATO or a registered tax professional.
Worked example
A bakery owner lodges a quarterly BAS claiming a $6,200 GST refund. Eight weeks later nothing has happened and three calls to the ATO produce conflicting answers. She writes down each call date and reference number, uses the ATO's formal complaints process first, and when she remains unsatisfied she lodges a complaint with the Inspector-General's office, attaching her timeline. The refund amount itself is not in dispute, only the delay.
Practical tips
- Try to resolve the issue with the ATO through its complaints process before going to the Inspector-General, since the office generally expects that step first.
- Complaining does not stop interest or penalties running, so lodge and pay what you can on time and ask about a payment plan if needed.
- Do not confuse complaints about conduct with disputes about the tax amount. For the amount, use the formal objection process.