Fed: Tax office faces paying legal costs in lost cases

AAP General News (Australia)
08-07-2006
Fed: Tax office faces paying legal costs in lost cases

By Shane Wright, Economics Correspondent

CANBERRA, Aug 7 AAP - The tax office faces paying the legal costs of taxpayers who
enjoy a courtroom victory under proposals put to the federal government.

The Inspector-General of Taxation, David Vos, also believes the tax office needs to
clearly outline its approach to litigation, with a focus on resolving disputes fairly,
quickly and in a cost-effective manner.

It follows a report by Mr Vos which reviewed how the tax office managed litigation,
including an evaluation of test cases.

The report was prompted by concerns that the tax office pursued court action in inappropriate
cases, that in some cases the court action argued points which had already been ruled
upon and that the tax office used selective precedents to argue its point.

There had also been concerns that taxpayers were often unable to access funding for
test cases which are often used to test tax office rulings.

Mr Vos, in his main recommendation, said the tax office had to set out a corporate
philosophy which committed the organisation to resolving litigation quickly and fairly.

Such a philosophy would also commit the tax office to administering tax laws as enacted
by parliament, and interpreting those laws in an impartial and transparent manner.

In another recommendation, Mr Vos said taxpayers' expenses in defending cases, where
the tax office is unsuccessful, should be covered by the tax office.

The government has agreed to ask the Treasury Department to work with the tax office
and the Attorney-General's Department on coming up with guidelines to cover taxpayers'
costs.

The government will also provide a right of review by a Treasury-headed body that will
look at test case funding decision taken by the tax office.

Tax Commissioner Michael D'Ascenzo said he was happy with the report, saying it had
found test case litigation was important and should be continued.

"We agree with most of the recommendations in the report and will implement them accordingly,"

he said.

"There is always room for improvement in our performance and these reports assist us
to ensure the effectiveness and transparency of the revenue system."

Mr Vos has supported the creation of a single area within the tax office that will
have responsibility and authority over all aspects of tax office litigation.

AAP sw/sb/it/jlw

KEYWORD: TAX

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