Yesterday, the Inspector General of Taxation released his report on improving the self-assessment system.

This review comes in response to ongoing taxpayer concerns about the operation of the self-assessment regime and the related taxpayer risk and protection offered. 

From this review, the Inspector General has made 33 recommendations to the ATO and Government regarding ways to improve taxpayer certainty, reduce compliance costs and rebalance taxpayer protection.

Although a number of these recommendations have been identified for further consideration by Treasury, there are a few major recommendations which have been outright rejected. One of these rejected proposals is that penalties should be slashed where the ATO has not given guidance on a topic. The Government’s response was that by allowing a high level of blanket protection, there could be a significant risk to government revenue.

Whilst these recommendations are a substantial step in the right direction, they will only be worthwhile if a detailed and ordered process is undertaken to examine them and their likely effects. As such, it will be interesting to see over the coming months how the Government and the ATO prioritise and respond to the Inspector General’s recommendations.