Granting more power to ATO 'could do more harm than good'

The Treasury handed down a consultation paper late last year outlining recommendations aimed at tackling the black economy by amending the taxation penalty regime, reversing the onus of proof for some offences, and providing the ATO with more access to data.

The IPA supports the endeavours of the Black Economy Taskforce, but is concerned that increasing ATO's powers, without sound justification, would only create distrust and reinforce the current community perceptions, it said in its latest submission.

"In the current environment, small businesses and individual taxpayers, whether rightly or wrongly, are sensitive to the wide-ranging powers of the ATO,” IPA general manager of technical policy Tony Greco said.

"These concerns follow reports of unfair influence being exerted. As such, there is a perception that the revenue authority has too much power, which could be open to misuse without appropriate safeguards and oversight.”

Mr Greco noted that to build community confidence in the tax system, the government must ensure that there are safeguards, accountabilities and oversight in place for any new powers granted.

These, he suggested, may include restrictions on how certain powers are to be applied, regular reporting to the government on the exercise of those powers, as well as additional oversight from the Inspector-General of Taxation and the Australian National Audit Office.

"It is hoped that such safeguards will go some way to allaying community concerns that the powers granted are not misused or abused,” Mr Greco said.

Reverse onus of proof

Another concern proposed in the consultation paper, the IPA found, is the reverse onus of proof for certain elements of black economy activity, where the onus is placed on a defendant to disprove certain elements of their offence.

Worryingly, Mr Greco said, such measures could adversely impact the rights of individuals and their liberties.

"We therefore strongly urge that the government give due consideration to any proposal and that caution and restraint be exercised and take time in considering the possible ramifications,” he concluded.