ATO Receivables Policy
PART B. The collection of taxation debts
Chapter 25 WAIVER OF TAXATION DEBTS
| The policy in this chapter is to be followed by Tax Office staff. We have made every effort to ensure it is technically accurate, but in the interests of clarity it has been written in 'plain English' and should not be read or interpreted like legislation. If you feel that something in the chapter is wrong or misleading, please advise the Tax Office.
|
Date of effect: 24 July 2008 (This version replaces the 2006 version.)
Key legislation: Section 34 of the Financial Management and Accountability Act 1997.
PURPOSE
1. This chapter deals with the waiver of taxation debts.
INTRODUCTION
2. The Minister for Finance and Deregulation has the power to waive a debt due to the Commonwealth. Such a waiver expunges the debt, such that the legal right to pursue and recover that debt is irrecoverably abandoned.
3. The Minister has not delegated this power to the Commissioner. There is no equivalent power expressly conferred upon the Commissioner in tax legislation, or elsewhere, to waive tax debts. However, the Commissioner can approve release from payment of some taxation debts on the grounds of serious hardship.
4. Debtors have a right to apply to the Department of Finance and Deregulation or the Minister for a waiver of their debt. Under the Financial Management and Accountability Act 1997 (FMAA), the decision maker has an unfettered discretion to consider each request for a waiver on a case by case basis. The most common condition under which a waiver may be granted is where, due to the particular circumstances of the case, the decision maker concludes that there is a moral obligation, rather than a legal obligation, on the Commonwealth to extinguish the debt due to equity or ongoing financial hardship considerations. Finance Circular 2006/05 outlines three broad categories of applications that are commonly considered in relation to waiver of Commonwealth debts. These categories are:
- ·
- Applications based on the Tax Office's actions or omissions in administering the tax laws where those actions or omissions have caused the taxpayer to incur unintended debts to the Commonwealth (Note: this chapter does not deal with acts or omissions that may warrant the payment of compensation.)
- ·
- Applications based on the operation of the tax laws themselves, in that the relevant Act has caused the taxpayer to incur an unintended debt to the Commonwealth, the recovery of which would produce an anomalous or inequitable result.
- ·
- Applications for waiver of Commonwealth debt on the ground that repaying the debt will cause genuine and significant financial hardship.
5. Sometimes, debtors write directly to the Tax Office. There is no specific form of application, but it is expected an applicant will provide sufficient information to enable a decision to be made (for example, details of the amount for which a waiver is sought, how the liability arose, the grounds for the application, details of assets and liabilities/income and expenditure and any other relevant information that will assist the Minister to reach a decision).
6. Generally, where the application is sent directly by the debtor to the Department of Finance and Deregulation, the department will notify and consult the Tax Office about the case before briefing the Minister or relevant delegate on the request.
POLICY
7. In cases where an application for waiver is received directly by the Tax Office, the request should be referred to the Department of Finance and Deregulation. To the extent that the relevant secrecy provisions permit the disclosure of taxpayer information in this situation, the Tax Office should, upon request, provide the Department of Finance and Deregulation with sufficient information to enable an informed assessment of the case including, as appropriate:
- ·
- details of the debt(s) and any other relevant information in relation to the debt (that is, how the debt arose, action taken to recover the debt, whether there is any dispute in relation to the debt, offers of payment and the Tax Office decision in relation to those offers)
- ·
- specific details of the Commonwealth's role, if any, that may have directly contributed to the debtor's situation
- ·
- any history/background to the case, including any available information on the person's assets, income, future income earning capacity, other debts, health and family circumstances
- ·
- any other information that may be relevant to the decision maker's consideration of the particular circumstances
- ·
- a recommendation, either supporting or not supporting the application and the reasons for adopting that stance.
8. Where advice is received from the Department of Finance and Deregulation that it is in receipt of a waiver request, the information detailed above should be provided, to the extent that the disclosure of the taxpayer information is permissible under the relevant secrecy provisions.
9. Although secrecy provisions in the acts administered by the Commissioner would generally prevent the disclosure of taxpayer information, such information may sometimes be divulged where it occurs in the course of the performance of an officer's duties. Disclosure of information to either the Department of Finance and Deregulation or to the Minister pursuant to an application for waiver is considered as being within the performance of an officer's duties as it has a direct effect on the amount of tax recoverable by the Tax Office.
10. Although the wording of some secrecy provisions creates an absolute prohibition on disclosure of information to Ministers, where the FMAA requires the Minister for Finance to consider applications, this specific requirement of the FMAA overrides the general prohibition on disclosure to Ministers created by the secrecy provisions.
11. The debtor should be provided with a copy of any information, comments or recommendation provided by the Tax Office to the Department of Finance and Deregulation to afford them the opportunity to provide an alternative view to the Minister.
12. Where the application for waiver of the taxation debt is made solely on the grounds of serious hardship, it is more appropriate for the request to first be considered by the Tax Office pursuant to the Commissioner's power under Division 340 of Part 4-50 of Schedule 1 to the Taxation Administration Act 1953 (TAA) to grant release from certain taxation liabilities. The liabilities which may be considered for release are listed at section 340-10 of Schedule 1 to the TAA, and in Chapter 24 'Release from payment of some taxation liabilities'.
13. Action to recover an amount for which the debtor has sought a waiver may not necessarily be stayed while the application is being considered. A decision in this regard will need to be made in light of the particular circumstances of the case. The Department of Finance and Deregulation should be advised of these developments.
14. Department of Finance and Deregulation guidelines state that waiver claimants will be provided with adequate information regarding the details of the decision of their application including a summary of reasons for the Commonwealth's acceptance, partial acceptance, or rejection of their claim. The Department has also stated that a copy of the letter advising the claimant of the decision will also be forwarded to the relevant agency for information and action.
TERMS USED
Waiver - is a special concession granted to a person or organisation by the Minister for Finance and Deregulation that expunges the debt owed to the Commonwealth. That is, the debt is completely wiped out so that the Commonwealth cannot pursue the debt at a later date.
|
