27 June 2007

ONE IN TEN LAND TAX ASSESSMENTS WRONG, FINDS AUDITIOR GENERAL

An audit of the management of land tax and the metropolitan regional improvement tax (which collectively raise over $450 million a year) has revealed that 10% of land tax assessments had to be reissued in 2006-07 – in addition to a significant number of taxpayers receiving adjusted assessments for previous years.

WA Auditor General Colin Murphy has found that Office of State Revenue (OSR) land and ownership records are not entirely accurate and reliable, with the high reassessment rate principally caused by data inaccuracies in the OSR’s Revenue Collection Information System (RCIS) database that’s used to generate the assessments.

Although work is being done to address the cause of the inaccuracies, Mr Murphy foresees it as “an ongoing problem”.

The inaccuracies in the database had resulted in a situation where in 2005-06 OSR issued 6,109 adjusted assessments for prior tax years with a net increase in tax raised of $1.2 million; whilst in 06-07 it issued 2,159 adjusted assessments for prior tax years that resulted in a net reduction of $1.7million in tax raised.

The reissued tax assessments would cause justifiable dissatisfaction amongst affected land owners, particularly where they involve back-year assessments, said Mr Murphy.

Of further concern to Mr Murphy was that errors in the granting of land tax exemptions by OSR could be costing the State significant sums in lost revenue.

Testing by the Auditor General found that three per cent of approved exemptions were incorrect, suggesting that exemption errors are resulting in some individuals and organisations not paying tax when they should be.

The report found that OSR has not done a full audit of the accuracy and validity of land tax exemptions granted since the inception of RCIS approximately nine years ago – however, limited testing of the database identified some 397 company and trust owners who received a residential exemption though such owners rarely qualify for an exemption.

Mr Murphy’s concerns are outlined in his Third Public Sector Performance Report, tabled in State Parliament today, which also details the results of two other audits:

• “Legal Aid in Western Australia” – examining the Legal Aid Commission’s processes for making and managing grants for legal representation.
• “The Administration of Grants” – reviewing the administration of grants by the Department of Culture and the Arts and the Pilbara Development Commission.

Findings from the Legal Aid audit concluded that:

• Grants of aid for legal representation are made in a timely manner.
• Grants of aid generally comply with the relevant legislation and guidelines though improvements are needed to aspects of the administrative process such as:
  • adequate verification of applicants eligibility under income and asset tests
  • regular quality reviews of decisions to grant aid to ensure appropriate decisions are made by assessors
  • regular reviews by grant managers of case progress and of continued eligibility for funding
• The Commission has a satisfactory understanding of the demand placed on its services, however, like all other Australian Legal Aid commissions, it lacks information as to whether any ‘expressed demand’ is representative of a total need for legal assistance.

The examination into the administration of grants by the Department of Culture and the Arts and the Pilbara Development Commission found that:

• DCA and PDC are adequately administering their grant programs.
• Weaknesses exist in some aspects of the administration process, specifically:
  • a lack of documentation to demonstrate that applicants’ eligibility for funding was assessed
  • funding agreements and other documentation that contained errors and inconsistencies
  • inadequate review of acquittal reports or follow-up of late reports – acquittal reports provide evidence that funds are spent appropriately.
    
    

  
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