Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has encouraged business owners to urgently contact her office if they have experienced “heavy handed tactics” by the Australian Taxation Office.
The Ombudsman, together with the inspector-General of Taxation Ali Noroozi, has been directed by the Treasury to examine cases of unfair conduct the ATO. The investigation, announced last week by Minister for Revenue and Financial Services, Kelly O’Dwyer, is the Government’s response to allegations raised in a joint investigation by Fairfax and the Four Corners (ABC).
Whistleblowers informed the investigators of “a toxic internal culture where vulnerable small businesses… are deliberately targeted to help meet revenue goals”, with the use of “unethical tactics…at the expense of correct procedure and fairness to taxpayers”. One whistleblower cited the “inappropriate” use of garnishee notices – a debt collecting tool allowing the ATO to order a bank to hand over money from a taxpayer’s account, without first consulting the taxpayer.
The ATO executive released a statement “strongly” disagreeing with the allegations on the grounds that “the media have taken a handful of isolated cases, presented only one side of the story, and then extrapolated these to suggest systemic issues with our administration of the tax and super systems.” The executive added, “We are concerned this coverage serves only to create tension and worry for small businesses where it did not previously exist, and perhaps even stop people from coming to us to get things sorted.
According to Carnell, although the ATO’s culture towards the small business sector has “improved markedly”, it “doesn’t take too long for a small business to go broke” when the ATO behaves particularly “heavy handed” or makes a mistake that takes a long time to fix.
“The reference to the ATO as judge and executioner rings true when you understand there is no independent review available to small businesses; only big business,” she said.
“Then there’s the added distress of the ATO being able to take money straight out of your business bank account, without your agreement.
“We believe the powers and capacity of the Inspector General of Taxation should be examined, so it has a greater ability to assist vulnerable taxpayers.
“There should also be an ability for small businesses in trouble to access an independent body, to hear and act on their case, and if they have been wronged or suffered financial loss, determine the right amount of compensation.
“We already work closely with the ATO and will continue to do so in light of the allegations. The ATO has said it is committed to helping viable small businesses thrive, and through this inquiry, we hope to help them do just that.”
Carnell advised there are ‘extremely tight’ timeframes for the inquiry and that affected small businesses should share their story with her office “as a matter of urgency – within the next week or two”.
“My office is interested in examples where the ATO has targeted small businesses unfairly and the business owner has been affected financially,” she said.
“According to the ATO’s latest annual report, there are 3.8 million small business taxpayers, including sole traders, in the tax system. The Inspector-General says in roughly 5% of cases, the ATO gets it wrong… which on the face of it is way too many.
“We want to gain a better understanding of how the ATO is adversely interacting with small businesses so we can provide government with constructive and realistic advice.”
“With complete anonymity assured, small business owners can explain their situation by emailing email@example.com. If you have raised your concerns with the ATO and the Inspector-General and your matter has not been resolved, ASBFEO may be able to assist via emailing firstname.lastname@example.org.”