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The Tax Office will need to consider automatic administrative relief for tax practitioners, says CA ANZ, as inaction over the current compensation scheme for ATO system failures continues.
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Alternative practitioner compensation scheme proposed
15 April 2019
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In a submission to the review of Compensation for Defective and Detrimental Administration (CDDA) scheme, CA ANZ lamented that tax practitioners who had experienced the major ATO system outages in 2016 and 2017 had their claims ultimately turned away.
“Our understanding is that claims made by tax agents were rejected by the ATO on the basis that there was no defective administration and that there was no demonstrable loss,” the submission said.
“There appears to be a difference between what tax agents and the ATO consider to be defective administration and what can be claimed in compensation.
“This debate has not progressed since the 2011 Inspector-General of Taxation’s report into his ‘Review of the ATO’s Change programme’ as the ATO did not agree with the IGT’s recommendation that the ATO work with the tax practitioner community to robustly and openly reconsider its position on these issues.”
Noting that while there were no current system issues plaguing the ATO, it was likely that some disruptions might surface given the speed of which the digital world changes.
“Apart from CDAA, one issue which we feel the ATO should seriously consider is a tax technology service standard for taxpayers and tax practitioners which, amongst other matters, provides automatic administrative relief,” CA ANZ said.
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The IGT’s stand
The IGT has examined the CDDA scheme on numerous occasions, with its most recent examination in its Future of the Tax Profession report recommending that the “ATO should align its service standards with those of commercial providers, including a dedicated scheme for compensation where outages or system failures result in loss for the users”.
Instead, the tax office has disagreed with the recommendation, noting that it has approved target service standards, while referring back to the CDDA scheme for compensation.
“It must be made clear that service standards are aspirational targets and are not a formal agreement between the ATO and the community or tax profession,” the ATO said.
“Where the ATO does not meet its service standards, the ATO has relief provisions to support the community. Examples of these include waivers to penalties or extensions of lodgment dates for returns.”
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