The Australian Taxation Office (ATO) administers the tax and superannuation systems that support and fund services to Australians. As part of its ongoing operations to ensure that all taxpayers pay the correct amount of tax, the ATO undertakes risk and compliance activities. These activities may be undertaken either as part of business-as-usual activities or through separately funded Budget measures.
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). The funding was intended to increase the resources available to the ATO for compliance activities focused on multinational companies, large groups and high-wealth individuals. 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.
The ATO receives ongoing funding to undertake its core departmental functions, including monitoring and enforcing compliance with Australia’s taxation system. The ATO also receives substantial additional funding through specific Budget measures. The decision to provide this additional funding is based on an estimate of the likely cost and benefit to the government, which is set out in the corresponding Budget measure. Entities that receive funding through Budget measures should be able to demonstrate their performance against these estimates.
The objective of the audit was to assess the ATO’s effectiveness in meeting its revenue and resourcing commitments for the Taskforce. The high level criteria were:
- Has the ATO resourced the Tax Avoidance Taskforce in accordance with Budget estimates?
- Has the Tax Avoidance Taskforce performed in accordance with Budget estimates?
While there has been a significant increase in compliance revenue over the life of the Taskforce, it is not clear the extent to which this is a result of Budget measure resources provided for the Taskforce. This is because the ATO’s approach of attributing revenue using a percentage of total resourcing did not necessarily provide an accurate indication of Taskforce revenue. The ATO also had not implemented a methodology that accurately monitored Taskforce resourcing. The ATO therefore cannot conclusively demonstrate that the Tax Avoidance Taskforce has met the revenue and resourcing commitments set out in the 2016–17 Budget.
The ATO had not implemented a methodology to clearly demonstrate that the Taskforce had been resourced in accordance with Budget estimates. The ATO recruited staff for the Taskforce broadly in line with Budget estimates. At the same time, there was an overall reduction in business-as-usual staffing in the relevant business lines.