Tax Office watchdog investigating Bill of Rights for taxpayers

The man who watches the tax man is investigating calls for a special Bill of Rights for taxpayers who think they're getting a raw deal.

The Inspector-General of Taxation - whose job it is to scrutinise the operations of the Australian Tax Office - has put the proposed Bill of Rights at the top of ten systemic issues he wants to review this year.

A Bill of Rights if approved by the Federal Government could replace the current Taxpayer Charter which is administered by the ATO and not legally enforceable.

Ali Noroozi is reviewing the viability of a Bill of Rights for taxpayers as part of his powers to monitor the ATO's systems and to make recommendations for improvement.

"People have come to us saying they've had bad experiences with the Tax Office and they don't feel they're being appropriately compensated or that there is not an appropriate avenue for them to take complaints further," Mr Noroozi told AM.

"The question I'm asking if whether there is a systemic issue here and I want to explore whether what we already have by way of the Taxpayer Charter, whether they are adequate and whether we need to go down somewhere towards a taxpayer Bill of Rights."

While Mr Noroozi says there is not a groundswell for better taxpayer protection, some jurisdictions in the United States have introduced a taxpayer bill of rights and Canada is also considering one.

But he agrees that agrieved taxpayers want "some kind of enforceable remedy" which is not available through the ATO's taxpayer charter.

"They want something they can go to court with when they feel that the Tax Office is not living up to its charter. The taxpayers charter is just a declaration by the Tax Office  as to what taxpayers can expect from them and what it expects from taxpayers.

"It does not necessarily create any legal right as such."

Mr Noroozi says the ATO's taxpayer charter - created in 1997 under the Howard government - was designed for different times. But he agrees its administration by the ATO creates at least the perception of a conflict of interest.

"You're right. And that's why people have come to us because they feel that it's all very well for these expectations but without something they can act on, it's not all that useful."

Ali Noroozi first raised the issue of a taxpayer Bill of Rights as "an emerging theme" in last year's annual report from the Inspector-General of Taxation but has now put it on the agenda of his new work plan for 2014.

But the path to a taxpayer Bill of Rights could be a long one.

If make Mr Noroozi makes a recommendation after extensive consultation, the Abbott government would need to pass legislation to introduce a Bill of Rights.

But as the Federal Government seeks to cut costs across departments and agencies, any threat to tax revunue through legally enforceable taxpayer rights could rule out any changes.

Ali Noroozi would not comment on how the ATO would respond to his investigation but conceded that tensions are inevitable.

"My job is not to have cups of tea with the Commissioner of Tax. My job is to scrutinise. But naturally there would be some tension from time to time," Mr Noroozi said.

"But I think that's good for the system and why you have a scrutineer."