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ATO exposed again! Systemic mistreatment of small business people

Monday, April 29, 2019

It doesn’t seem to stop. The ATO continues to deny that it does anything wrong, but official reviews and reports keep slamming the ATO. We listed in early April this year the string of parliamentary and other reports calling for urgent reform of the ATO.

This time it’s the Small Business Ombudsman reporting on the ATO’s enforcing debt even while the debt is being challenged in the Administrative Appeals Tribunal. The report finds that the ATO does this on 12 per cent of occasions. This destroys the small business and their ability to challenge the alleged debt. The Ombudsman severely criticizes the ATO and calls for legislative reform.

Here are the Ombudsman’s:
The report refers to
  • …an inconsistent and undisciplined approach to debt collection by the ATO.”
And quotes an anonymous submission from a current ATO employee saying
  • The imbalance of power and unconscionable conduct of the ATO leads most to relent as they don’t have the resources to continue.”
The Ombudsman calls for legislative reform to require “mandatory external oversight”. We totally endorse the Ombudsman’s call.

A year ago we released one of our reports on the ATO calling for reform—The Power to Audit is the Power to Destroy. We called for:
  • The ATO to be divided into two separate authorities, one for tax collection and auditing; the other for objections and appeals.
  • The Commissioner-with-all-powers concept be changed, so that each authority is headed by a CEO answerable to a board. (Similar to ASIC, ACCC, etc.)
  • A Small Business Tax Tribunal to be established.
  • Transparency to be required on actual debt and prosecution management.
  • Disputed debts cannot be collected until disputes are settled.
  • Capping of penalties.
  • Judicial oversight of ‘fraud’ action.
  • Strengthening of the Administrative Appeals Tribunal.
We’re delighted that the Morrison government has implemented the Small Business Tax Tribunal and that Labor has endorsed this. But we need this locked into legislation. This new Small Business Ombudsman report strengthens the need for legislative action.

After this election, whoever governs, legislative reform of the ATO must be an item high on the agenda. The integrity of the tax system relies on tax collection being fair and being seen to be fair.


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