Review of tax regulator secrecy exceptions
The Tax Institute welcomes the opportunity to make a submission to the Treasury in respect of its consultation regarding the Review of Tax Regulator Secrecy Exceptions – Consultation Paper December 2024 (Consultation Paper).
The Tax Institute supports the Government’s initiative to expand the tax secrecy exceptions in circumstances where the public interest is at risk. However, we emphasise the need for careful consideration regarding the sharing of confidential tax information obtained by the Australian Taxation Office (ATO) and the Tax Practitioners Board (TPB) with designated bodies or agencies for non-tax purposes. The sharing of such sensitive information with designated bodies or agencies for purposes that are not directly related to tax administration raises significant concerns about privacy and confidentiality. We advocate for a balanced approach that prioritises protecting sensitive tax data while also meeting the legitimate needs of the public interest.
This means that any decision to share protected tax information should:
- be made with great caution;
- be permitted only by a legislative change through amendments to the Taxation Administration Act 1953 (Cth) (TAA);
- ensure that only relevant and appropriate information is shared; and
- be accompanied by robust safeguards to prevent misuse or unauthorised access to this data.
Such caution is vital to uphold taxpayers’ trust in the tax system and ensure that the integrity of the tax system is not compromised.
Further, particularly in light of recent major data breaches such as the Optus and Medibank incidents, and the implications that ensued for affected individuals and broader public confidence, data security is paramount, and any framework to share data should be designed with the strongest safeguards possible.
The proposal to expand the tax secrecy exceptions to enable relevant agencies to take appropriate action in relation to suspected serious misconduct formed part of the package of reforms announced on 6 August 2023. We generally support the proposals that would allow the limited disclosure of protected information to other agencies and certain ministers where required, and to the professional bodies in certain circumstances. However, we would like to understand how the further expansion of the exceptions to allow disclosure to third parties (i.e. non-government agencies) is warranted. There would seem to be an unacceptable risk without the highly robust safeguards and oversight that apply to government agencies, for example, sharing protected information under the fraud prevention program (FPP).
Further, we recommend introducing any new exceptions in gradual or incremental phases, with a thorough review conducted after each implementation to assess the effectiveness before proceeding to the subsequent phase of exceptions. This will avoid unnecessarily and prematurely expanding the range of organisations and bodies to which protected tax information may be made available.
We provide the following general feedback on the Consultation Paper:
- We note several highly complex and convoluted matters are listed as proposals in the Consultation Paper. The issues are framed merely as questions with limited context or rationale provided, and no data indicating why the current exception may be deficient so as to merit consideration of a new exception. The questions raised are very broad, making it challenging to provide a comprehensive response. The breadth of the questions requires careful consideration and analysis, which can be time-consuming and complex.
For example, one particularly challenging question is whether there should be any other limitations on what types of fraud prevention programs could be approved by the Minister. It is not clear to us whether any policy has been determined in respect of some of these matters. The nature of the information proposed to be shared through some new exceptions is not specified in the Consultation Paper. This has made it difficult to provide constructive feedback on such matters. Stakeholders are best placed to provide meaningful responses to assist the Treasury where they are provided with all the relevant information for consideration and adequate time to respond.
A more targeted approach to framing these questions would facilitate a more productive dialogue and yield insights that are both actionable and relevant to the government’s ongoing efforts to undertake effective consultation. We would be pleased to work with the Treasury on these issues once further consideration has been given to them by the Treasury and there is a clear indication of what may be proposed and the basis for such proposals.
- The extensive consultation document, comprising 49 pages and covering various exceptions, could have been more effectively organised into three distinct consultations and streams:
- proposed exceptions relating to the ATO;
- proposed exceptions concerning the TPB; and
- further exceptions for future consideration.
We recommend that going forward, further consultation on these matters is undertaken separately under these headings. We would expect that such an approach would also help to mitigate any conflation of issues and proposals.
For the reasons stated above, our comments in this submission are limited to the broader proposals and do not attempt to address each question raised in the Consultation Paper.
Our detailed response and recommendations are contained in Appendix A.
Importantly, and particularly in light of our comments above, our submission is intended to be a starting point for further discussion and consultation. We consider it essential to ensure an ongoing dialogue between the ATO, the TPB, the Treasury, and the tax profession, on the matters considered in our submission and ways in which information sharing would help improve the integrity of the tax system. Such an open and collaborative process will help to build and maintain trust, and alleviate concerns of the community about the sharing of sensitive tax data.
The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.