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Overall revenue raised by the ATO nearly doubled in 2016-17 with the establishment of the tax avoidance taskforce but a comprehensive methodology to track its effectiveness was missing, says the national auditor.
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Auditor-General questions ATO tax avoidance taskforce effectiveness
02 January 2020
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The Australian National Audit Office’s (ANAO) performance audit report has found that the ATO cannot conclusively demonstrate that the Tax Avoidance Taskforce has met the revenue and resourcing commitments set out in the 2016-17 budget.
In the 2016-17 budget, the ATO was provided $679 million over four years from 1 July 2016 to enhance its compliance activities through the establishment and operation of the Tax Avoidance Taskforce.
The Taskforce was forecast to raise an additional $3.7 billion in tax liabilities while also providing other benefits, such as deterring taxpayers from future tax avoidance.
In 2016-17, the ATO raised $6.3 billion in liabilities and $6.5 billion in the following year, compared to $3.3 billion in 2015-16.
According to the ANAO, the ATO attributed a considerable portion of this revenue to the taskforce, reporting that it had raised $5.5 billion in the first two years – which was nearly 150 per cent of the total four-year budget commitment of $3.7 billion.
However, the national auditor contends that the accuracy of this attribution is questionable due to a lack in comprehensive methodology to attribute resources between the taskforce and business-as-usual activities.
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“The lack of a comprehensive methodology to attribute resources to the taskforce has meant that it is unclear whether overall resourcing has been consistent with budget estimates,” said the Auditor-General.
“Without accurate attribution or a baseline comparator, the exact amount raised by the taskforce cannot be verified.”
While the ATO has agreed to develop a framework or set of principles to support accurate monitoring of actual costs and revenues of compliance measures, it argues that there is a clear methodological difference of opinion between the ANAO and the ATO on how the ATO attributes results and expenses to government-funded initiatives, particularly large and integrated initiatives such as the taskforce.
“Since its inception in 2016, it has been clear that the taskforce is not a separate program but a combination of effort across various business areas of the ATO to tackle tax avoidance,” said the ATO in its formal response.
“The ATO has been very clear from the start on the methodologies it would use in attributing revenue outcomes and expenditure for the taskforce.
“The methodologies were built on the basis of the collective efforts across the office and are reviewed and updated annually to ensure they are appropriate and reflective of the funding levels and organisational structures each year.”
In closing, the ANAO also called for all Australian government entities the need to be able to demonstrate both the additional outcomes from budget funding measures and the continued achievement of outcomes from business-as-usual or “base” activities.
“Budget funding measures represent a commitment to government and the Parliament. Approval of the funding is granted based on the expenditure and outcomes set out in the budget papers,” said the ANAO.
“Entities must be able to measure and demonstrate the extent to which they have met these commitments.
“This and other recent audits have shown that some entities appear to treat budget measures as a supplementary source of ongoing departmental funding, rather than as a separate funding mechanism with conditions attached that are closely linked to the approved basis of the funding.”
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