Concerns over Australian Tax Info Privacy

June 30, 2010 Taxation in Australia

Public telephone reduxConcerns have been raised about the privacy issues surrounding information provided to the Australian Tax Office by tippers and whistleblowers concerning tax evasions.

Last week the Australian National Audit Office (ANAO) released Community Intelligence – Collecting and Processing Tip-offs, a performance audit of the Australian Tax Office’s (ATO) treatment of tax information provided by anonymous tippers on other taxpayers. The report revealed the ATO’s procedure of indefinitely retaining all information provided by tippers, even if an investigation proves the data to be false or irrelevant.

The ATO currently manages all of its community sourced intelligence regarding possible fiscal crimes at the Tax Evasion Referral Center (TERC). In the 2008-2009 period, the TERC received 60 000 public tips regarding suspected cases of tax evasion. Information submitted to the TERC is referred to the appropriate ATO departments, in the case that the tip is deemed appropriately suggestive of tax evasion. It was shown in the report, that the TERC still holds taxpayer information predating 1998, and some information was deemed irrelevant to tax matters. According to information disclosed in the report, TERC mandates that all its staff record only relevant tax information during any telephone submission. However, Ian McPhee, Australian Auditor-General, stated that during online submissions, tippers are urged to provide as much information as possible, which “…could encourage informants to include allegations of behavior that is not related to tax evasion.” He added that even the telephone staff were at risk of inadvertently breaching the Australian Information Policy Principle 1, which states that organizations must not collect personal information unless it is absolutely necessary to their activates or functions.

The ATO has justified the TERC’s privacy and information retention policy, saying that the stored information could prevent previously cleared individuals from being repeatedly investigated. Also, information which currently seems irrelevant or unusable could be useful in future investigations. However, the ANAO report cited a previous statement by the Privacy Commissioner, which said that culling information in a timely manner will reduce any incidence of ATO workers disclosing, modifying or generally abusing the recorded information. The ATO responded with assurance that tax workers are bound by strict laws governing access to the potentially harmful and false data recorded by TERC.

Photo by Imroy