What this Practice Statement is about
The Commissioner's general administration of the taxation laws
The scope of decisions that can be made in the Commissioner's general administration
Seeking guidance on whether a proposed general administration decision is within scope of the Commissioner's general administration
The appropriate authority for making a general administration decision
What attributes indicate that a decision cannot be made on the basis of implied authority and may need to be escalated to the Commissioner?
How do I put a general administration decision proposal to the Commissioner?
More information
APPENDIX B – The Commissioner's general administration explained
With parliament holding the Commissioner responsible for the general administration of the taxation laws, the courts have recognised the conferral on the Commissioner of the authority necessary to discharge those responsibilities [31] , reinforcing the principle of statutory interpretation that express powers will be construed as impliedly authorising whatever may be fairly regarded as incidental to, or consequential upon, the express power itself. [32] For example: • The Commissioner's decision to audit taxpayers, even at random, supports the administration of the taxation laws which place a duty on the Commissioner to make assessments of tax due (Industrial Equity Ltd v Deputy Commissioner of Taxation [1990] HCA 46 and Knuckey, Ross Randall v Commissioner of Taxation of the Commonwealth of Australia [1998] FCA 1143). • The Commissioner's power to settle or compromise proceedings to which they are a party is derived from the administration of the taxation laws which places a duty on the Commissioner to pursue the recovery of tax-related liabilities (Grofam Pty Ltd & Ors v The Commissioner of Taxation of the Commonwealth of Australia [1997] FCA 660).
So, while the Commissioner is often referred to as having the 'powers of general administration' or 'general powers of administration' (GPA), this must be understood in the context of the Commissioner's administration of the express provisions of the taxation laws, rather than as an independent source of 'power' in the Commissioner.
Further, while reference might be made to the Commissioner's general administration as a 'power' or being the 'GPA', this does not give rise to any power 'to make decisions that create, extinguish or modify the legal rights of taxpayers; nor does it include a power to promulgate rules that create legal rights or immunities or that otherwise have the force of delegated legislation'. [33] Nor does this '[permit] the Commissioner to convert the liability imposed by the statute into one mediated through an unstated discretion'. [34] To the extent that the Commissioner can do those things, that ability arises out of express powers in taxation laws.
It should also be noted that section 16 of the TAA restricts what the Commissioner can do in reliance on the general administration provisions. In an exception to the general rule, any payments made under the general administration provisions are not able to be paid out of the Consolidated Revenue Fund.
The table below outlines the scope of decisions that can be made in the Commissioner's general administration. Table 1: Scope of decisions that can be made in the Commissioner's general administration Extent of scope Operating within the scope The Commissioner can make management and administrative decisions, such as about the allocation of ATO resources. While the Commissioner might not be able to exhaustively discharge all of their duties because of the finite resources available, this does not modify or discharge any obligations imposed by the law, they still exist. The Commissioner must operate within the bounds of the powers conferred on them by parliament and use the powers to give effect to parliament's legislative intent as discerned by the application of the principles of statutory interpretation. [35] The Commissioner cannot administer the law so as to extend, confine or undermine parliament's intentions. The Commissioner must apply the law not the policy; general administration decisions cannot be used to remedy defects or omissions in the law. [36] The Commissioner must advise Treasury where the taxation laws do not give effect to their underlying policy. For example: • where they produce unintended consequences, anomalies, or significant compliance costs inconsistent with the policy intent, or • where a legislative solution may be needed to address an emerging compliance issue. The Commissioner's general administration does not displace the need to interpret the law. All powers and duties relevant in the circumstances must be discerned. This means that where the law is open to more than one interpretation, the alternative interpretations of the law must be explored as part of making a general administration decision. The boundaries of the Commissioner's general administration are not constant. The relative weighting of individual duties can shift depending on the focus of administration at any given time, for example the introduction of new legislation, natural disasters, a global financial crisis or other adverse events.
The Commissioner's general administration of the taxation laws is constrained by the principles of administrative law. These principles govern whether: • the administrative authority has the power to deal with the subject matter, or • the mode in which the authority deals with the matters entrusted to it satisfies certain standards that have been developed by the courts in interpreting the common law. [37]
How administrative law principles govern the Commissioner's general administration of the taxation laws is summarised below: • What the Commissioner must do - Make decisions based on merit. - Act fairly, in good faith and without bias, enabling each party the opportunity to state their case. - Treat taxpayers fairly and equitably. This means treating taxpayers equally, rather than treating them in exactly the same manner. - Avoid conferring an advantage on a taxpayer (or taxpayers) thereby creating 'a privileged group who are not so much taxed by law as untaxed by concession' [38] . • What the Commissioner cannot do - Exceed the authority conferred on them by the law – such actions being invalid and of no legal effect. - Use powers for improper purposes or in bad faith – powers must be used for a purpose that is stated in, or implied by, the taxation laws. - Limit their discretion by inflexibly applying a policy or rule. Policy must not conflict with another principle of administrative law, and the Commissioner must generally be prepared to depart from the policy in appropriate (if only exceptional) cases. - Act at the direction of someone else, delegate their power to anyone else (unless authorised to do so), or enter into a binding undertaking regarding the future exercise or non-exercise of their discretionary power in a way that is against the public interest. - Be prevented from lawfully exercising their discretion by the doctrine of estoppel.
As with many other powers and duties conferred on a minister or statutory office holder, no one person could ever personally attend to all aspects of the general administration of the taxation laws. [39] Consequently, the courts recognise that the Commissioner is able to delegate or authorise others to make decisions on their behalf. In this regard, the general principles of administrative law apply. In practice, general administration decisions will sometimes, but not always, be made under a general or specific delegation or authorisation from the Commissioner. Generally, when not oral or written, they will happen according to an authorisation that is implied from our structure and practices.
Relevantly, the Commissioner has made 3 specific delegations in relation to the general administration concerning the settlements of tax issues, the compromise of tax debts and the taking of security. Most other decisions reliant on the general administration provisions would be covered by an express or implied authorisation.
If a general administration decision or action has financial (in a non-tax sense) implications or consequences and is covered by the PGPA Act, the delegation is administered by ATO Finance.
The decision-making process to provide practical compliance solutions involves balancing different perspectives and needs to be transparent.
Consider the following criteria when making general administration decisions that help taxpayers meet their compliance obligations. Note that not all these criteria may be relevant to the proposed general administration decision.
The Commissioner cannot fetter their duty to assess or re-assess when they have formed the view that the law imposes a liability (that is, the Commissioner cannot accept non-compliance with the law). However, as part of their duty of good management, the Commissioner can decide not to apply compliance resources to a particular issue that affects a class of taxpayers or industry group for prior years or periods.
In making a decision, the Commissioner will consider all of the relevant circumstances, which may include: • estimated amount of revenue at risk • potential number of taxpayers affected • cost of identifying and pursuing non-compliance • extent to which some taxpayers have complied with an ATO view in respect of the issue, where known • whether we have contributed to non-compliance [41] • whether inaction could reasonably be expected to undermine the integrity of the tax system including by affecting future voluntary compliance by taxpayers if compliance action is not taken • relative priority of the compliance risk compared to other identified risks • strength of the ATO view on the issue, and • any proposed change of law affecting the issue including the proposed date of effect of any such change.