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Joint Committee of Public Accounts and Audit - 23/09/2011 - Biannual hearing with Commissioner of Taxation

BUTLER, Mr David, Second Commissioner, Australian Taxation Office

D'ASCENZO, Mr Michael, Commissioner, Australian Taxation Office

DUFFUS, Mr Paul, Chief Operating Officer, Australian Taxation Office

GRANGER, Ms Jennie, Second Commissioner, Australian Taxation Office

PETERSON, Mr Brett, Acting Deputy Commissioner, Australian Taxation Office

RAVANELLO, Mr Robert, Chief Finance Officer, Australian Taxation Office

REARDON, Mr Shane, Acting Second Commissioner, Australian Taxation Office

Committee met at 09:16

CHAIR ( Mr Oakeshott ): Before the hearing commences, I ask that someone move that the proceedings of today’s public hearing be permitted to be broadcast.

Mr CHEESEMAN: I so move.

CHAIR: There being no objection, it is so resolved. Welcome, everyone. I declare open today’s ninth biannual Tax Commissioner public hearing. Today the committee will hear from the Australian Taxation Office, the Taxation Ombudsman, the Inspector-General of Taxation, the Auditor-General, the Tax Institute and the Association of Taxation and Management Accountants. The committee thanks each and every witness for making time to meet with the committee and looks forward to discussing a range of issues at today’s hearing.

I now welcome representatives from the Australian Taxation Office. Participants are asked to remember that only members of the committee can put questions to witnesses if this hearing is to constitute formal proceedings of the parliament and attract parliamentary privilege. If other participants wish to raise issues for discussion, they should direct comments to the committee. It will not be possible for participants to respond directly to each other.

Given the short time available, statements and comments by witnesses should be relevant and succinct and appreciated. Although the committee does not require you to give evidence under oath, I advise you that these hearings are formal proceedings of the parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. Before we proceed to questions, would anyone like to make a brief opening statement to the committee?

Mr D'Ascenzo : Given the shortness of time, I am more than happy not to make a statement. We have provided a submission and we look forward to the discussions.

CHAIR: Do you have a submission with you?

Mr D'Ascenzo : No. I was referring to the submission that we submitted to you previously.

CHAIR: We will stick with that. Today is part of some ongoing work from previous public accounts and audit committees, but also largely in response to some recommendations made several months ago by this committee. Commissioner, would you like to take the opportunity to place on the record the work that the Tax Office has been doing specifically in regard to those recommendations?

Mr D'Ascenzo : As to the recommendations, one was for this committee to take a strong oversight role of the governance of the ATO. As representatives of parliament, I think it is most appropriate for this committee to do so. When the opportunity arose a number of years ago for the ATO to attend on a regular basis, biannually, to this committee and to be forthright before this committee in terms of our plans and our performance, we welcomed that opportunity and we continue to do so. At our last meeting the committee raised issues associated with increasing levels of complaints and diminution of service standards last year, a lot of it associated with the bedding in of a new major transformational change program. As I foreshadowed at our last meeting, the ATO expected a bounce back with reduced complaints and good performance in terms of processing standards. We have achieved that and provided those statistics to the committee.

CHAIR: There was one practical story that captured the committee’s attention around the compromised tax file numbers. I gather from feedback that all 900 of those compromised tax file numbers have been addressed, and I hope that means that they have also been finalised. Can you provide some advice on that?

Mr D'Ascenzo : I will ask the chief operating officer to do that. However, we have noticed an increase in compromised numbers. There has been nearly a 100 per cent increase over the last couple of years. They are still small numbers. I think it is something like 30,000 this year compared to 27 million TFNs in the system, so it is still very small but it is a significant increase. Part of that is associated with people becoming more aware, as part of our education program, about personal information and how important it is to keep that safe and secure. There has also been an increase in fraudulent attempts to steal people’s identities, and that is part of this exercise. When we have to deal with compromised tax file numbers we have to balance people who may be trying to act fraudulently in terms of trying to get new tax file numbers for fraudulent purposes and those people who genuinely have their tax file numbers lost and need to conduct their activities. We take an approach based on what we think is a risk assessment of the circumstance, with the priority being to make sure that people who need their tax file number are given a file number as efficiently as we can.

Mr Duffus : On the 900 cases, I would like to note that in respect of what the commissioner said about identity concerns, since 1 July this year and our Tax Time processing we have stopped 4,700 cases where we suspect there is an identity crime of some sort. We have not worked that through. As the commissioner said, the numbers are higher than they have been. July/August is often when we see a spike in the numbers as well.

CHAIR: So, the 900 identified in our recommendations have been finalised in some form?

Mr Duffus : The 900 have been finalised, but of course they are replaced by other cases.

CHAIR: That is right. I just want to step this through. What does ‘finalised’ actually mean? Do we have 900 people who are now able to do business, claim Centrelink and live a normal life?

Mr Duffus : They are able to interact with the ATO, because they either have a new tax file number or we have been able to work out that there is very low risk with what we thought might have been a potentially fraudulent tax file number. Those 900 are able now to deal with the ATO, other agencies, banks and so on.

CHAIR: So, your new information now is that, since our report of three or four months ago, you are saying there is a group of 1,700 compromised tax file numbers?

Mr Duffus : We are up to approximately 3,000 now.

CHAIR: Is it 1,700 or 4,000 unresolved?

Mr Duffus : We currently have 3,000 compromised tax file numbers on hand. Just to show you how quickly these can grow, at the end of July this year we had 1,600 on hand, and in the last month that has grown to 3,000, but that is because this is our peak period for tax return processing. So, as fraudulent returns come in we are identifying compromised TFNs or taxpayers who would be telling us there is some concern with their identity, as indicated in the documents through which they deal with us.

CHAIR: Based on the work that you have already done, you should not have any compromised tax file numbers to resolve that have gone for longer than a year?

Mr Duffus : We currently have around 300 or so that are over 90 days, but of that 300, 85 per cent of them have been given a new tax file number so that they can interact with us. The work we are doing with them is trying to fix up their account details in house, but they actually have their tax file number so they can deal with us. With the other 15 per cent, we are waiting for further information from taxpayers themselves to address some of the issues with their accounts, but they have been given a new tax file number where necessary.

CHAIR: So, internally it is roughly a 90-day rule?

Mr Duffus : For many compromised TFNs our processing time is now down below 28 days. For many taxpayers who, for example, might have just lost their wallet, all we do with those taxpayers is put a flag on the system so that when the return comes in we would ring the taxpayer to make sure we are dealing with the right taxpayer. There is no need to give that taxpayer a new tax file number, but we have protected their identity by putting a flag on the system. So, for many taxpayers that interaction would be very quick, within a day or so, where we would put the flag on the system. For other taxpayers we issue those tax file numbers in less than 28 days. With the more complicated ones, where there are complex tax affairs, it would take longer, but we would have sorted out the tax file number issue with them.

Mr D'Ascenzo : The average time is under 28 days. So, it is a 28-day rule rather than a 90-day rule or an average time.

CHAIR: Internally it is a matter of priority. Our concern was less around the number. Nine hundred was a worry, but it was that there were several of them that had been going on for more than a year and there was even one case that had been going on for a couple of years.

Mr Duffus : Just to give you some indication, the number of complaints has reduced by 91 per cent, and we do not have any complaints currently with the Ombudsman.

CHAIR: I am conscious of time. Mr Cheeseman.

Mr CHEESEMAN: You indicated that there has been quite a sharp rise in the number of compromised tax file numbers, and I think you quoted a figure up to about 30,000. In terms of drilling down into those compromised tax file numbers, has there been any pattern emerging of perhaps organised crime somehow getting involved in this space and, if that is the case, are you working with the Australian Crime Commission on strategies with which that might be overcome?

Mr D'Ascenzo : There is no doubt that there is much more concerted attacks on the revenue system through organised crime. It is still at a small level compared with the broad span of work that we do. The answer to both of those questions is, yes and yes. We are working with relevant authorities and, yes, there is some organised crime involved in a minority of cases.

Mr Butler : The total compromised tax file numbers for the year ended 30 June 2011 was 31,000, as the commissioner mentioned. Of those, 12,000 are in respect of one particular employer whose own computer systems were hacked into. We counted all employees of that particular organisation as having a compromised tax file number, and we are working through with them. The numbers have gone up, but we have had one or two cases like that which have added to that increase.

Mr BRIGGS: With some of the more high-profile cases that we have been reading about for some time now, Paul Hogan in particular, what is the longest major investigation that you have ongoing at the moment? I do not want to know the name of it, I want to know the time that you have spent on it. Do you have an average time that you are spending on major investigations?

Mr D'Ascenzo : It cuts across so many areas of our work that I could not give you the longest major investigation, audit or other activity. If you look at our large case audit approach, we have a benchmark there of something like two years, and in fact if we go past the two-year period we will remit any interest that might be accruing on any debts that might be owing. That is in relation to the most complex audit—

Mr BRIGGS: Do you have many that are more than two years?

Mr D'Ascenzo : There would be some that go further than that period. Again, if it does goes further than that time, and if the reason for that is not because of the taxpayer not providing us with relevant information, then we remit any interest that might be applicable. Our broad benchmark is to try to do that within a two-year period. That is for the largest, biggest and most complex investigations in terms of auditing.

In relation to work that we do with other law enforcement agencies in relation to criminal prosecutions, that is often run through other agencies such as the Australian Federal Police. They can take a long time because of the difficulties of getting evidence, questions of extradition and questions of information offshore, and so they will vary on their complexity. It is not an average, because each case is very peculiar to its own facts.

CHAIR: Are you going to stay on this topic?

Mr BRIGGS: I was going to add one more topic.

CHAIR: I would like to come back to that.

Mr BRIGGS: In recent times there has been some attention on the use of a work related credit card by officials at a trade union. There are obviously tax implications of using a work related credit card. Are you investigating any complaints or is there any information you have seen that would lead you to investigate the appropriate tax paid on the use of those credit cards?

Mr D'Ascenzo : Mr Reardon might be able to give you more information.

Mr Reardon : There is nothing specific in relation to that issue, but if somebody advises us about some tax mischief that they see through tax evasion activities we will investigate all of those issues up to a point and make a decision about whether to investigate things further. In relation to the credit card activities, there is potentially a tax mischief if somebody is using an employer’s credit card, getting reimbursed and then claiming tax expenses, but it is not something on its own that is part of our focus.

Mr BRIGGS: I am referring to public reports. There are allegations about using a credit card supplied by an employer to pay for private school fees, for instance. Does that have taxable implications?

Mr Reardon : Potentially. We also scan the media for reports of tax mischief. That all goes into our intelligence gathering and our risk profile, and we make decisions about starting investigations and so on.

Mr BRIGGS: I asked very specifically—

CHAIR: We are on a clock. I know where you are going, but if we can keep it as broad on policy as we can.

Mr BRIGGS: Are you investigating allegations that have been made in recent times in the media and, if not, will you?

Mr Reardon : We do not talk about individual cases.

CHAIR: This is about the broad policy questions. It is an important point in a broad sense, because I thought it was an extraordinary figure from March to June that you are doing 600 prosecutions, with 450 individuals and 140 companies, resulting in penalties and back taxes of more than $9.5 million. The prosecution’s tally for the past financial year is almost 1,700, which came up in compromised tax file numbers as well. I do not know why it is 1,700. The way the courts are interpreting your prosecutions it seems to be a question of the integrity of the tax system generally. There seems to be quite a high strike rate of losses in rulings of the court. Do you have any comments or reflections on that which are either cause for concern about the prosecutions you are taking or about the responses you are getting in law and, therefore, the implications for the integrity of Australian taxpayers?

Mr D'Ascenzo : There are two aspects. Prosecutions are really when we talk about actions that either have a civil penalty or a criminal penalty. You will find that the courts have almost unanimously been finding for the commissioner in those areas. Indeed, in relation to the sentencing of offenders, there has been quite significant comment made that white-collar crime is crime—crime against the community and against your neighbour. I think there has been a very positive message from the courts in terms of prosecutions that we have taken. Of the 1,700 that you mentioned, most of them are really failure to lodge-type prosecutions, but there are some high-profile ones such as the ones in the Wickenby space.

You might be referring more specifically to litigation in relation to whether or not someone is claiming for not having to pay tax on income or for deductions, in terms of the legal position and interpretation of the law. We still have a very good success rate across-the-board in terms of our litigation. You need to remember that litigation is in relation to part IVC of the act, which is the ability for taxpayers to have the courts say, ‘This is the commissioner’s assessment. We think it’s excessive’, and therefore they have a right to appeal to the courts on that aspect. Our success rate is still very positive in terms of numbers, but there are some very worrying signs in relation to the courts’ approach to the general anti-avoidance provisions of the law, both in terms of part IVA of the Income Tax Assessment Act and also Division 13 of the Income Assessment Act.

At the end of the day, the courts are the arbiters on those provisions. We will have to take stock of what the court says and try to apply our approaches consistent with those rules, but if those general anti-avoidance provisions are found to be ineffective, then it is a matter of concern for government, parliament and the community.

CHAIR: Do you have some concerns regarding the integrity of the taxpayers in relation to some of the recent court rulings?

Mr D'Ascenzo : That is where the argument gets you. If you do not have an effective tax rate, the tax base is in that way diminished. If the activities in question are activities the parliament and the community believe they are contrary to the proper operation of the law or proper operation of the policy, it is then a matter for government and parliament to say that we think this degree of structuring of arrangements is more than the tax base can bear, because if that is not within the net then the base is diminished accordingly. These are policy issues.

This is a worrying concern for us. We are looking for further guidance through the courts. There is a matter before the High Court where we have asked special leave to appeal, and we will see what guidance the court can provide. If the court says that the way that we thought the law might operate in this area is not the way that the provisions operate, then it is a question for government and parliament to see whether or not they want to make any changes.

CHAIR: The Law Council of Australia, for example, has made some comments that they would like more help and guidance with the interpretation of the law. I am just wondering whether it is because of some of these rulings that the allegation that the Tax Office makes U-turns every now and again on particular interpretations is the reason why or whether it is because of policy issues between Treasury, Treasurer, the Tax Office and more of those policy considerations that that allegation is made, or is it because of people just complaining about tax, and they need to learn and understand? What is going on with that issue and is there more work that can be done at the Tax Office level in providing guidance at a community level in how the law is interpreted?

Mr D'Ascenzo : I suspect all three of those issues apply. It is hard to know what weighting to give to each of those. It is very important to note that the proposition is that the ATO operates on what we call a risk management basis. In other words, we are not the ones who really know day in, day out the fine details of what various taxpayers and their advisers are doing, and so what we try to encourage—and you will see this in a lot of our strategies that we have outlined to the committee—a culture within the community of being much more up front, open and transparent. Therefore, together we can isolate the sorts of issues that create levels of uncertainty. We can see whether or not there are things that we can do to make things clearer for people or whether or not there are things that we need to take to government or to improve in the way that we do our law design work. There are good opportunities for us to improve, but there is a real need for people to come forward and talk to us about the areas of concern and to try to find ways to minimise that concern.

That is one of the reasons we have the 50-odd formal consultative and advisory bodies that we have in the ATO—to give people opportunities through their representatives to bring these matters forward in a very upfront and collaborative way. If they do that, sometimes we can provide more guidance. Sometimes we can say, ‘This is the way we think the law operates.’ Sometimes we say that but, people say, ‘We don’t like the way you do it’, and then it becomes more of a political issue. Or sometimes it is a political issue. That is what the tax issues entry point system is about, which allows taxpayers or their representatives to put issues that have small ‘p’ policy opportunities on to a register where Treasury and the ATO can have a look at the matter to see whether something requires legislative change, and then put it on to a very full government legislative timetable. To me, I would welcome more upfront real-time sharing of information so that we can make it clearer for people and give practical certainty where we can.

CHAIR: You are here to help. Senator Kroger.

Senator KROGER: Is it your responsibility to make the decision whom you prosecute?

Mr D'Ascenzo : In relation to failure to lodge, which is more routine-type prosecution action, the Commonwealth Director of Public Prosecutions has given us authority to make that decision for those simple matters. In relation to more complex matters, we would refer the matter to the Director of Public Prosecutions, and so at the end of the day it is the DPP’s role to make that choice.

Senator KROGER: I was just thinking about the likes of Project Wickenby and other high-profile cases. Is there a formula, for want of a better word, by which consideration is given in terms of to what stage proceedings are advanced? For instance, if it is a prosecution in relation to a determination that $1 million in tax outstanding or there is a dispute over, say, $1 million of outstanding tax that a business is disputing, at what point in time does that prosecution continue? At what point in time is there consideration given that it is costing the ATO and therefore taxpayers too much money to pursue a case?

Mr D'Ascenzo : Again, we are in the space of prosecution rather than just normal appeal to an assessment. Basically, those choices are made by the Director of Public Prosecutions.

Senator KROGER: I guess you are talking more than civil; that in criminal matters it becomes a space for the prosecution?

Mr D'Ascenzo : That is right.

Senator KROGER: I am trying to determine where it ultimately comes down to you in terms of making that call. If it is an investigation—and we touched on situations earlier—is it your call if it is not something that has come through your processing? I think one of your colleagues mentioned referrals picked up in the media or something like that. Is that your judgment call in terms of pursuing an investigation if you read something in the media that you consider to be of interest?

Mr D'Ascenzo : This is across-the-board in terms of the use of scarce resources. That is where the risk management approach comes into play. We have to make some risk judgments about where to allocate these priorities. Mr Reardon said that we would follow them up. There is a point about whether or not it would be cost-effective, and we do make those choices in those sorts of cases. We have that level of decision about, with our limited resources, where we apply those resources.

In terms of a more general approach, we have been trying to have an annual public compliance program, which we put out into the community. We seek feedback from this committee and others and we say, ‘This is where we think our risks are to the community. Please tell us if you think we are right.’ By and large we corral a lot of our resources in a way that matches the focus areas that we have outlined.

Senator KROGER: In terms of the way it works up the chain, perhaps a second commissioner makes that referral to you? Is that what happens in terms of whether it is an investigation?

Mr D'Ascenzo : No, it would not work that way. If that were to happen, I would be spending all of my time looking at each individual case. Mr Reardon can give you more information.

Mr Reardon : Across our compliance program, as the commissioner said, we adopt a risk based approach. We look at the issues through the lens of risk and likelihood or consequence. Revenue is certainly one consideration, but it is not just revenue. We look at risk and the integrity of the tax system. If it was only revenue, we would probably spend all our time in the large market. We look at the issues across-the-board.

Across our compliance program and our compliance areas, as the commissioner said, we publish our compliance program. We have identified the areas of interest for us where we are likely to put our audit and review activity. In our business areas people are delegated to make decisions about selecting cases for further review, audit and investigation.

Senator KROGER: Part of that would come from the newspapers and so on?

Mr Reardon : Part of it. We have fairly sophisticated analytical models that we use, looking at third-party information and our own information. We look at business activity data and income tax returns. There is a whole range of inputs in helping us assess risk and then make our decisions.

Mr D'Ascenzo : That is a very important point to make there. For many years we have tried to work it out in terms of much more objective case selection methodologies. We do a lot of the profiling, data matching and analytics. Out of that comes these sorts of cases that people on the ground pick up and work on.

Ms O'NEILL: So, you would characterise your investigation as scientific evidence based rather than a witch-hunt methodology?

Mr D'Ascenzo : That is right.

Ms O'NEILL: Returning to the service standards, I know that you have the 900 compromised tax file numbers sorted out, which we are glad to hear, but having implemented the traffic light system what is the rationale for how you set those service standards and how they are revised? Is that decision to revise, say, 85 per cent as a standard that you set downwards to 80 per cent provided by anybody external to the ATO or do you do that yourself, and do you have any plans to increase the service standards and what methodology would enable that to occur?

Mr D'Ascenzo : We looked at service standards on a regular basis to see how they matched our capabilities in the past. We had regular reviews and there were some adjustments in terms of service standards. As an organisation you are always trying to improve the service standards rather than going backwards, but there have been situations where our capabilities were such that we have had to make adjustments both up and down. More recently we have asked whether we can get some external focus on the service standards to see whether or not they are matching community expectations. We are conscious that the community expectations of a well run tax administration are always going upwards rather than downwards and that is what we would expect. We have engaged Boston Consulting to do a review of our service standards. In the past you might say they have been built upon our capabilities to deliver. That is still going to be important, because it is no use promising something that we cannot deliver. But we are trying to match that with what is best practice in terms of service standards. So, when we know where the gap is, we will put some focus and direction into trying to improve and shorten that gap. We are hopeful that what I think is a very important initiative will find us some further improvements that will reflect in better service for the community.

Ms O'NEILL: Where are the best practice standards being devolved from and how involved are the consumers in helping set those standards and having some input into that?

Mr D'Ascenzo : Again, we have Boston Consulting. They have benchmarked our service standards against what they see as international best practice. Ms Granger might be able to add to that.

Ms Granger : To answer the first part of your question, we also annually review service standards both from the point of view of where the gaps are and also from a very pragmatic business point of view, because obviously there are changes in the work of the Tax Office every year to make sure we can achieve them. You were also asking about the current ones. In terms of this review, we posed two questions to Boston Consulting. One was around where there were some better practices that we could pick up both internationally and from Australia. They looked at, for example, the financial sector. One of the difficulties with the Tax Office is how to benchmark, because we have a different range of functions from any other organisation.

We are concerned about two things. Firstly, do we need to modernise some? Obviously there are changes in how people interact with us. Whether we can cope with that is the other side of that. We do not want to promise something and then not be able to deliver it. For example, some of the things that came back from the airline industry included texting people when there is going to be a delay around their flights. To start with, people do not routinely give us their mobile phone numbers. So, it is about how we translate that sort of responsiveness and what is appropriate responsiveness in our environment. I have given that as an example of some of the things and then saying, ‘This is how people manage at the front end, for example, that there is going to be some kind of disconnect. There are others as well.

They have given us a very first set of observations around where we could make ourselves more externally focused. The next job—and I will be chairing this process—is that we now look at two things. Any transition in service standards by the Tax Office has to be very transparent, because otherwise it can seem like we are trying to not tell the story of our performance over time. We have also asked them for advice on how to do that. In the next part of the process, when we start to test which of these is pragmatic, we will be involved in community consultation. What we would like to do is get some core information together about the sorts of areas. As I said, it is very important in doing the process that we put on the table the things that we can realistically promise and not just the possibilities. That is where we are at. We are still at an early stage of it. We have actually started putting together a project team to look at that and then we will start to organise to test it.

Ms O'NEILL: In that pragmatic response, if we look at the 900 people who were waiting for their tax file number issues to be sorted out, prior to our last meeting there was not a pragmatic response to that, even though it was there. How vital are the consumers’ needs in terms of how you organise what you consider pragmatic?

Ms Granger : They will be. Interestingly, Boston Consulting observed that we are very focused on time standards as opposed to other ones ironically, which is different from what you are saying. They are saying, ‘You need another range of things. What is the better response?’ They are not saying to go to SMS messaging, which we do in certain circumstances. We have just started to play with that. They are saying, ‘You need more standards; measuring things just by time can actually make the Tax Office internally focused about the time we are taking and not whether it is the appropriate response.

Ms O'NEILL: I agree. My question was targeted at the whole quality of the experience, and time not being the only thing that needs to be measured, by any stretch of the imagination. One of the things that was expressed last time, particularly by Gai Brodtmann, was concern about small business. In the time since we have seen you, what can the ATO point to that has been done to make compliance for small business in particular much easier?

Mr Reardon : We continue to provide assistance to small business, as we have done for the last few years. As was reported at the last committee, our responses to small businesses in distress through the natural disasters that occurred in Australia earlier this year are evidence of that, with an approach to record reconstruction, deferring lodgements, negotiating payment arrangements and the like. That continues. There is the work that we have done with the tax agent community in publishing benchmarks to assist business to help with their performance. There is an emphasis on record keeping, giving businesses information to assist them to keep good records so that their business performance is enhanced as well as the tax obligations that flow from that. That is an important part of what we have done.

With the small business advisory service that we have had for a number of years businesses can request a one-on-one visit from the Tax Office no strings attached. We just go out and talk with them. It is not an audit. We just sit down with the business and their records and give them advice about their situation. It is tailored and practical. Some of our products that we send out now through the mail are much more tailored to the business. Instead of sending them a booklet that covers every possible obligation, it is tailored to them. If they are not an employer they do not need to know about the obligations of an employer. If we can get industry specific information, that is useful, and some of our benchmarks go down to that level of detail. There are over 100 industries that we have benchmarked using income tax return data. There are also a number of industries where we have information from the industry associations and the like about our expectations from businesses in those industries. All of that assistance work for small business continues, including lodgement assistance and debt assistance.

Ms O'NEILL: Has there been any simplification of the lodgement processes, because that is still a sticking point? I appreciate that you are providing assistance, but I wonder how many people are actually taking up the one-on-one in their business. Are they still telling you that they are having trouble filling out too many forms?

Mr Reardon : We provided over 85,000 assistance calls through the course of last year, which was significant. In terms of what businesses are telling us, we get a lot of good feedback from those sorts of visits and telephone calls. The commissioner meets with the Small Business Advisory Group a number of times a year, and small business representatives are part of that. I have certainly been a part of those meetings, along with the commissioners. We get feedback and guidance about where we might improve our services. Lodgement on its own has not necessarily come up to us as a significant issue. The small businesses that seek help from us are usually seeking help about their specific circumstances, particularly the newer businesses as people enter business for the first time. We know that is a reasonably high risk area and we make sure that we provide every possible assistance to new businesses where we can. In answer to your question, lodgement on its own has not been a major issue that the business have raised with us in the many forums where we talk to them.

Mr D'Ascenzo : One of the reasons we are promoting online electronic approaches, including lodgement, is we think it will make it easier for businesses and individuals into the future to carry out the obligations that they need to do. As part of my Australian Business Register hat, trying to promote online dealings is really all about trying to make it a bit more efficient for businesses to carry out their affairs.

In terms of the debt area, we have been taking a very balanced approach in looking at the particular circumstances of the matters. Where you have viable small businesses with short-term difficulties we have been very empathetic to their needs. There are interest-free payment arrangements involving debt of in the order of half a billion dollars, which for small business is a significant help.

CHAIR: We are running behind. We have a bit of musical chairs to play. I invite the Office of the Commonwealth Ombudsman, the Inspector-General of Taxation and the Auditor-General to join the table. This is new territory and hopefully this will work.