How the taxman’s unfair tactics crush small enterprises
AUSTRALIAN BUSINESS REVIEW April 29, 2019 Robert Gottleibsen
Australian Small Business and Family Enterprise Ombudsman Kate Carnell. Picture: AAP
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell’s horrific description of the abuses of small business by the Australian Taxation Office looks like a mirror image of the bank scandals.
The ombudsman’s report reveals ATO concealment and denial of its shocking abuse of small business — the engine room of Australian employment.
That’s exactly what happened when the first bank scandal, the Commonwealth Ban’s Storm affair, was uncovered.
The brief for the ombudsman was to concentrate on garnishee notices but, as I and others have documented, the ATO abuse of small business covers a much wider area and, like the bank scandals, abuse of small clients has become deeply embedded in the culture of the Tax Office.
Nevertheless, I was shocked by the sheer brutality and mindless destruction of national income undertaken by the power-obsessed ATO abusers.
This was most graphically illustrated by what happens to at least 12 per cent of the small businesses that raise the large sums required to take their case to the Administrative Appeals Tribunal, which is part of the court system. These will be businesses with money and a good case.
Nevertheless, during the appeal, 12 per cent are issued with garnishee notices, which usually destroys their business and causes their employees to be retrenched.
If the business is destroyed, the ATO as administrator gets control of the now bankrupt operation and withdraws the appeal. And because the aim appears to be to destroy the business for having the audacity to appeal, a garnishee notice is usually provided electronically to the bank and applied almost instantly to an account, which usually smashes the business because suddenly it can’t pay workers or creditors.
However, the notice to the small business taxpayer, although dispatched at the same time, is delivered by physical letter via the postal system and commonly from an ATO office in a different state. This adds to the delay, so as to enhance the likelihood of the destruction of the business. And remember almost always the nation receives no money from such actions.
This system of communication in ATO business destruction via garnishee is not confined to appeal situations but was applied to most of the other 50,000-plus garnishee notices issued last year.
I knew the ATO culture was bad but it is much worse than anything I imagined. And remember the ATO, like the banks before the royal commission, is still in denial. The ATO does not understand that such actions not only break all community standards but over time they will destroy the revenue-raising capacity of the nation once they becomes widely known. People will revolt.
Normally such a damning report by the ombudsman over a restricted area of ATO activities and the ATO’s failure to apologise to the nation would require a royal commission to discover just how widespread the abuse culture has spread through the small business sector.
Large business has the funds to look after itself; there are battles but normal rules of community behaviour are followed. Not so in small business.
I am very proud that the Australian democracy and the power of journalism has moved ahead of the official report.
Small Business Minister Michaelia Cash and Assistant Treasurer Stuart Robert rammed through the cabinet and forced the ATO to accept a small business appeal tribunal outside the control of the ATO with greatly restricted use of lawyers, and specified no right for the ATO to take action against the small business taxpayer while the appeal was going on.
But while the ALP and Coalition are engaged in a fierce election battle, opposition small business spokesman Chris Bowen and assistant treasury spokesman Andrew Leigh have supported the tribunal.
Until the Ombudsman report came out, I don’t think Cash, Robert, Bowen, Leigh or myself realised how rotten the ATO culture against small business has become.
Irrespective of who wins the election I plead with both parties to enshrine the tribunal in legislation. At present because of the chaos during the last weeks of the parliament the tribunal was brought into operation via regulation.
To underline the ATO culture, the ombudsman report sets out how it uses an easily eliminated stunt to make life miserable for both personal and small business taxpayers.
Ombudsman: “One of the regular complaints about ATO debt recovery calls is that the ATO telephone number shows up as ‘private number’. A small business cannot return the call if a voicemail message is not left by the ATO.
“Then, when a small business taxpayer contacts the ATO to discuss debt recovery and what can be done to help resolve the issue, their call is placed in a queue for prolonged periods to be answered. The small business must then wait for the ATO staff member to familiarise themselves with file notes and/or start their discussions again.
“Small businesses are notoriously time-poor and the process of repeatedly dealing with the ATO is overwhelming. Anonymous calls, long wait times and repeated conversations of distressing situations do not assist a small business (nor the ATO) to resolve disputes in a timely way.”
Footnote: The nation owes a debt to whistleblower Richard Boyle whose revelations led to the work of the ombudsman. The ATO charges against him should be withdrawn and replaced with a public apology.