The ATO has traditionally guarded taxpayer confidentiality with zeal. It takes its role in that regard very seriously.
But proposed changes to law will mean that other governmental agencies, previously prevented from doing so, will gain access to taxpayer information from the ATO.
Big Brother is on the march, or so it seems.
A Bill currently before Federal Parliament – the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2009 – innocently purports to amend the secrecy and disclosure provisions applying to tax information that are currently spread over many taxation law Acts, and consolidate and standardise them into a single new framework in the Taxation Administration Act 1953.
Sounds relatively innocuous, but the devil is in the detail – isn’t it always!
Under the Bill, the ATO will be permitted to disclose information in instances where the “public benefit of those disclosures outweighs privacy concerns”. This is a new twist on tax disclosure laws. The kinds of information affected includes information disclosed under or for the purposes of a taxation law which relates to the affairs of an entity (including but not limited to the entity’s tax affairs) and which can identify the entity.
The Bill will also allow disclosure (in a limited way) of tax information by the ATO to the Fair Work Ombudsman. One begins to wonder just how many government agencies will be getting access to ATO information… and for what purpose?
In the case of the Fair Work Ombudsman, the access is purported to allow the Ombudsman to better target compliance activity with the Fair Work Act 2009. Apparently, the thinking is that non-compliance with tax obligations (such as group tax) might be an indicator of non-compliance with other laws such as under the new Fair Work regime.
The changes proposed will allow the ATO to provide information to the Fair Work Ombudsman that identifies non-compliance with tax obligations, so the Ombudsman can use that in Fair Work compliance work.
For instance, if the Fair Work Ombudsman was preparing to conduct an audit of a particular industry to check its compliance with obligations under the Fair Work Act, the Ombudsman could request information from the ATO on entities the ATO knows, or reasonably suspects, are non-compliant with their tax obligations. It is understood that while company names would be disclosed by the ATO, the tax and financial details of the company would not.
It seems the effects of lodging a tax return, or failing to remit tax deducted from employees’ wages, could stretch a long way these days.
Failing one or more tax obligations could in future mean a business might receive visits from all sorts of government officials, not just the tax man!
The amendments in the Bill will also remove the current limitation on the use by law enforcement agencies (such as ASIO) of taxpayer information. Under the new framework, such agencies would be able to access taxpayer information for both the investigation and subsequent enforcement (including prosecution) of serious offence provisions in the law.
Under the new secrecy and disclosure framework, while the majority of “protected information” captured by the framework will be information provided by taxpayers to the ATO, it will also include information generated by the ATO itself – this would include the ATO’s view that a business is not complying with its obligations under a taxation law. Data-sharing just got a whole new meaning.
The Bill purports to provide strict obligations, and strong and adequate safeguards about the disclosure of tax information, but SMEs would do well to be aware that the hand of Big Brother seems to be extending further all the time.
As if getting into trouble with the ATO is not bad enough, that could also lead to a visit from a fair work inspector. The ATO collects lots of information, and it seems other government agencies are lining up for their take – all within the bounds of the confidentiality laws of course.
Terry Hayes is the senior tax writer at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
For more Terry Hayes features, click here .
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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