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The Tax Office’s popular online discussion forum is facing criticism for spreading incorrect advice on issues as basic as the capital gains discount.
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Taxpayers using ATO Community at risk of ‘plainly wrong’ advice
03 December 2024
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Taxpayers and their agents are being warned against relying on ATO Community for answers to their tax questions, with one expert calling the platform's lack of moderation “dangerous” and a source of misleading or “plainly wrong” information.
ATO Community is described as a peer-to-peer discussion forum allowing taxpayers to “join the conversation and find answers to your tax and super questions”.
But tax lawyer Matthew McKee told Accountants Daily he was concerned unsuspecting taxpayers were at risk of being subject to incorrect advice from anonymous users and even the ATO’s own staff.
“Tax is very complex and very difficult, and often it involves nuance and degree that doesn’t convey or come across well online,” McKee said.
McKee, a veteran tax and super lawyer based in Sydney, discovered the “danger” of relying on ATO Community after one of his tax agent clients showed him an official ATO response to a thread about capital gains tax.
The thread, from November 2022, features a question from an Australian resident about CGT liability on the sale of an investment property they purchased as a non-resident.
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Section 115-105 of the Income Tax Assessment Act 1997 states that a CGT discount is only available for periods in which a taxpayer is a resident.
But the top response from a verified ATO account suggested that simply becoming a resident automatically enabled access to the discount.
“The fact you’re selling the property when you’re an Australian resident, as opposed to a foreign resident, means you can use the Australian resident rules,” the answer said.
“If you’ve owned the property for 12mnths+, you can apply the CGT discount. You don’t have to use the CGT discount for foreign resident if you’re now an Australian resident for tax purposes.”
McKee said the answer was “plainly wrong” despite addressing a “basic” tax concept.
“It’s just fundamentally wrong,” he said. “It’s quite concerning.”
“If I'm a lay taxpayer, I'm probably going to think that that person and what they say is authoritative. It seems very clear, and I have no reason to question that could be wrong.”
Reliance on such advice, McKee warned, could expose taxpayers to significant penalties, as statements made outside the ATO’s private ruling system were non-binding.
The issue was compounded by the forum’s visibility to the public: “I searched ‘CGT discount, ATO foreign resident,’ and that post was the sixth entry on Google,” McKee said.
“I don't mind a person getting it wrong. I have a problem with the process by which a person getting it wrong can be published on the website. It feels like there should be a system in place to prevent that occurring.”
ATO Community was launched in 2017 to encourage taxpayers to self-serve and resolve queries online.
Last year, chief service delivery officer David Allen referred taxpayers to the online forum as “with more than 117,000 members involved and over 225,000 posts, it’s likely your query has already been answered”.
The ATO also claims it has staff who moderate and “place a stamp of approval on correct information so you can trust the advice you receive”.
But McKee was unconvinced and said he could not think of an instance where he would recommend his clients to use the forum.
“I don’t know when you would want to rely on it,” he said.
“It feels like the ATO is taking a utilitarian approach where the benefits outweigh the negatives.”
“More information awareness is good, but it must be good information. Once you create a system that allows for bad information awareness, I think that's a detriment.”
The ATO was contacted for comment.
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