Maria: ATO officers don’t always understand or apply their full suite of powers, leading to worse outcomes for taxpayers.

Maria had a tax debt because her ex-partner’s tax agent lodged an unauthorised and fraudulent tax return on her behalf. The ATO told her to amend her tax return if it was not correct.

Maria’s financial counsellor contacted the Inspector-General of Taxation and Taxation Ombudsman about the ATO’s response. We confirmed that the ATO’s advice was correct and provided information about tax clinic services and options such as applying to the ATO for a release of the debt or to the Department of Finance for a waiver of the debt.

Maria and her financial counsellor contacted the ATO again, including the ATO Advocate Help Desk. They questioned why they should seek to waive a debt that was created from fraud and expressed concern that lodging an amendment would be an admission of liability. The ATO explained that lodging an amendment was not an admission of liability and provided information about seeking a debt waiver from the Department of Finance.

The ATO can release taxpayers from debts if certain criteria for serious hardship are met but, although it did discuss debt waiver by the Department of Finance, it did not consider whether they could release Maria from her debt themselves.