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Accountants hoping for easier access to compensation for major ATO system outages have had their hopes all but dashed, with a review failing to listen to advice from the professional associations and the Inspector-General of Taxation.
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Inquiry mute on dedicated compensation for ATO outages
05 November 2019
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The Independent Review of the Compensation for Detriment Caused by Defective Administration (CDDA Scheme) has now been completed, with the report’s 12 recommendations failing to address issues surrounding the ATO’s IT outages and system failures.
The review, conducted by former secretary of the Attorney-General’s Department, Robert Cornall, slapped down submissions made by all three major professional accounting bodies that had called for the CDDA Scheme to be revisited so that practitioners would be able to claim compensation for ATO digital system failures.
The Inspector-General of Taxation’s recommendation for a dedicated scheme for compensation for practitioners was also noted in the review but failed to be considered as a recommendation.
Instead, the review noted that “large computer systems are subject to outages from time to time and major system upgrades can cause disruption in the normal course of business”.
“They are not automatically evidence of defective administration,” the review said.
“Second, the ATO operates a complex computing platform managed by a combination of ATO staff with IT expertise and contracted service providers. The actions of contracted providers are not covered by the CDDA Scheme.”
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Going one further, the review said practitioners did not have to pay to use the ATO’s digital systems, highlighting how the ATO had to bear the costs in the upkeep of the systems.
“The commissioner refers to the relationship between the ATO and tax professionals as a partnership, but the ATO bears the cost of increasing digital efficiency in the tax system,” said the review.
“It is not a commercial arrangement where tax professionals pay for a service.”
Without pushing for any recommendations, the review instead noted that any consideration of changes to the CDDA Scheme or an establishment of a dedicated compensation scheme for tax administration would be a matter for government.
‘Disappointing’
The three major accounting bodies — Chartered Accountants Australia and New Zealand, CPA Australia and the Institute of Public Accountants — have all expressed disappointment with the review.
CPA Australia general manager of external affairs Paul Drum said the review had failed to address concerns by the industry.
“The primary issue members have raised with us over many years is that they perceive access to the current scheme to be extremely difficult, and given the limited amount of success as well as the potential compensation quantum, making a claim has not been seen as worth their time,” Mr Drum said.
“This is borne out by the relatively low numbers of claims and the average claim amounts per annum.”
The IPA’s Tony Greco said lobbying government directly would be the most likely next move.
“We thought this was an opportunity to address the limitations of the scheme and how it doesn’t recognise non-economic loss, how it doesn’t address tax administration stakeholders, but it seems like this inquiry hasn’t helped our cause,” Mr Greco said.
“It is basically saying it is up to the minister and the government and it is not even recommending to the government to consider it.
“It looks like we have to go straight to government because it looks like this inquiry doesn’t want to go to the issues that we’ve raised.”
CA ANZ senior tax advocate Susan Franks also criticised the lack of recommendations on the issue.
“It is disappointing that the review did not make any recommendations about the issues raised by the three accounting bodies and the Inspector-General of Taxation concerning the impact of digital outages on the ability of practitioners to conduct business,” she said.
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