Ex gratia payments:A level playing field? Open and accountable government? Reform required here.

Cartoon: Plain clothes militia guard the Revenue Office front door

How can a tax administration require a taxpayer to pay a tax to the relevant State/Territory but then that taxpayer receiving an “ex-gratia” payment for the same amount be justified? What’s going on, please?

Such payments are available in nearly all of the States and Territories and are separate from the appeal systems. Such administration reeks of the cherished place that policy has in some of the jurisdictions which provide them fn1. And in so doing breaches the Rule of Law fn2. The law applied has been described as discretionary or made on moral or equitable grounds fn3. In other words, forget about the place that the relevant legislature may be thought to have. All smoke and mirrors.

The payments have variously been described as ranging from “ex gratia” to “unforeseen expenditure” to “act of grace payment” to “special circumstances.”

A question then for the revenue offices/Treasurers: having conceded that the act does not work as intended, why not amend the relevant revenue law? The Tax Reformer has never heard of this happening. And what about making the new law retrospective not only to exclude this taxpayer but also any other taxpayer in the same position? And why not have a register of such payments so all taxpayers can see whether their matter should be similarly treated? And telling self-assessors about it?

The correct, technical application of the relevant act leads according to the relevant revenue office to “an unintended result,” that is, the wrong policy outcome. Don’t worry about the proper interpretation of the legislation! “Never mind the quality, feel the width!” fn4. Perhaps the taxpayer can be invited to lodge an application for “ex gratia” relief. Or the taxpayer’s advisers may be aware of this system and make an ex-gratia application. The difficulty in doing so is that the taxpayer needs to know about this administrative system and then make an application. The Tax Reformer has never heard of a revenue office bringing these systems to the attention of the relevant taxpayer.

The Tax Reformer has sent a letter to the Queensland Revenue Office fn5. But no one should hold their breath waiting for an answer. This is another example of the motto “Just because taxpayers ask for clarification of a provision or section or whatever, there is no need to give it to them!” There are so many provisions, rulings and practices in this description. Time for open and accountable government and relevant revenue offices relationship with the tax paying community and their advisers.


Fn1 Qld Financial Accountability Act 2009 s. 35; SA Treasurer’s Instruction 14; NSW Government Sector Finance Act 2018 s. 5.7; Tas Financial Management Act 2016; Vic FDR 11A; NT Financial Management Act s. 37: ACT Financial Management Act s.130; WA: only for charities. This does not purport to be an exhaustive statement of the provisions in any jurisdiction but is
given to demonstrate that the general position in the jurisdictions. Subscribers need to consult the legislation in any particular jurisdiction.

Fn2 see generally Rule of Law.

Fn3 see Vic Disclosure of ex gratia expenses FRD 11A, 6.1.

Fn4 see Urban Dictionary.

Fn5 The letter dated 29 January 2024 read:
“Taxpayers and their advisers have a right to be able to see the topics/circumstances where ex-gratia relief has been granted. This ensures a “level playing field” for all.

Could you kindly therefore answer these questions:

  1. Can the QRO please confirm that ex gratia relief payments are made by the Treasurer pursuant section 35 of the Financial Accountability Act 2009?
  2. If they are paid under some other Act (s), could the QRO kindly please provide the name of the relevant Act(s) and the relevant section(s)?
  3. Can the QRO please confirm that ex gratia relief payments are made by the Treasurer pursuant section 35 of the Financial Accountability Act 2009 (or other Act(s) if applicable) on the recommendation of the QRO in the form of a submission from the QRO?
  4. If the recommendation from the QRO is agreed to, are the payments made by the Treasurer to the taxpayer and if not, by whom?
  5. Alternatively, does the QRO simply credit its file?
  6. Without of course naming any taxpayer, could the QRO kindly please provide details of the subject(s) /circumstances where ex gratia payments have been made over the last 5 years?
  7. Is the ex gratia payment usually made to overcome “unforeseen circumstances” in the operation of a relevant Act?
  8. If there are other reasons, could you kindly provide details of the reasons for ex gratia payments?
  9. Does the QRO keep a register (or some such) where ex gratia payments and the results of any of your recommendations are kept/entered.
  10. Is that register (or some such) open to the public to search so that taxpayers can see if their particular circumstances have been the subject of an application by a taxpayer and there is a “level playing field”?
  11. If not, why not?

These and other questions need to be answered and published in the name of open and accountable government. The Rule of Law for one requires it.