This report summaries the activities of Self Employed Australia (Independent Contractors Australia) for presentation to members at the Annual General Meeting to be held on 17 October 2019. In all, another very busy year.
Prepared by Ken Phillips, Executive Director.
Norman Lacy retired as President of ICA after nearly a decade in the position. We held a ‘thank you Norman’ dinner and presented him with our first Lifetime SEA membership. Peter Murphy took over as President in November 2018.
ICA is managed by a Board, all members of which are volunteers. We raise around $100,000 a year. All money is spent on our website, social media, membership services and public policy advocacy work.
3. Social media
Our website averages around 2,500 unique visits a month. Our Facebook page has 1,400 followers and 1,300 likes. Both the website and our Facebook page experienced high levels of activity during the May federal election period. (More detail below.)
4. Members-only newsletters
In 2018 we Initiated a members-only newsletter targeted as a quarterly report to members.
5. Launch of National Bricklayers Australia
In early 2019 we were pleased to form a special membership category for Australia’s bricklayers following approaches from bricklayers themselves. The group is headed by Jason Mills—a bricklayer himself who now sits on our Board. Moving forward, we’re developing support services for bricklayers—particularly in relation to contract management and being paid on time.
6. Transcriber Industry
Transcribers have been particularly targeted by the ATO, with systemic denial of ABNs to self-employed transcribers working through the company Outscribe. We can report that, after a two-year effort, the ATO has finally withdrawn its activity against these people.
7. Assistance to members
In the last 12 months we have provided assistance to about 26 members in addition to the three significant tax cases discussed below. The assistance related to:
- People behind in tax lodgements. These have been referred to our networked accountants: Your Business Angels.
- Concerns over contract terms, how to negotiate a contract and how to manage a dispute. Each of the cases were highly specific to people’s unique circumstances.
8. ATO cases
We supported Rod as he took his case to the Federal Court in 2019. The issue at stake is whether, as an IT contractor, Rod passed the ‘results test.’ The legal issue related to an interpretation of what constituted ‘custom and practice’ in the IT sector in which Rod worked. Unfortunately he did not win in the Federal Court.
Peter Fortunatow Case
Peter’s case was heard in the Federal Court with a decision handed down in August 2019. The legal issue is over whether Peter’s LinkedIn activity constitutes ‘advertising’ for the purposes of the Personal Services Income Tax laws. The Federal Court ruled in Peter’s favour—that is, that LinkedIn activity is advertising and Peter’s advertising reached end user clients. We’ve been supporting Peter in his defence efforts against the ATO since 2015.
Linh Nguyen Case
We assisted and supported Linh in his appeal through the new ATO internal ‘independent’ appeals process. The outcome, we believe, was most fair both for Linh and the ATO.
9. ATO—Rules for the Rich
In September 2018 we released our major 24,000-word investigative report into the ATO amnesty for high-wealth individuals who had large sums of money hidden in overseas bank accounts. We believe the amnesty should be subject to an independent investigation. We assess that somewhere between $1.8 and $4.3 billion in unpaid tax has been ‘gifted’ to high-wealth individuals by the ATO through the amnesty. We have called for the ATO internal corruption investigation unit to investigate, along with the Federal Integrity Commission. Both have rejected our approaches.
Our report has been downloaded 1,200 times and has generated 13,000 Facebook reaches.
10. ATO—Reform Agenda
We have a vision for the reform of the ATO and are advocating strongly and persistently for that reform. Our current focus is on advocacy in the Australian Parliament which includes discussions with the government, the opposition and independents.
Our Reform objectives are as follows:
1. Split ATO into two Authorities:
• Collection and auditing body (ATO)
• Objections, appeals & prosecutions under the Attorney-General.
2. Small Business Tax Tribunal
3. ABN registration: Major review
• Unilateral ABN denial/withdrawal to be removed. Appeal before denial.
4. Garnishees and Fraud & Evasion
• Judicial approval required for ATO to take action.
5. R&D grants
• ATO removed. Department of Innovation, Industry and Science only. Cash grant not tax rebate.
6. Compensation for ATO wrongs
• Remove from ATO. Independent assessor.
7. ATO independent probe into Project Do it
• Suggest Federal Police or Law Enforcement Commission to investigate.
8. Suspend expansion of ATO powers
• Halt Black Economy Bills until ATO is reformed.
Small Business Tax Tribunal
We were enormously impressed by the fact that, in March 2019, the Morrison government actually managed to set up the Small Business Tax Tribunal. They did this through a regulatory process. We are now advocating to have the Tribunal locked down through legislation.
11. Block ATO power expansion
The ATO has an extensive agenda to expand its powers. These power extensions, we believe, pose great risk to the rule of law and to core aspects of a properly functioning democracy. We are seeking to stop legislation which extends the ATO’s powers wherever those new powers lack transparency and/or proper independent oversight.
As of September 2019, there are two Bill before the Parliament which we oppose:
a) A Bill that would fundamentally change GST administration and which would enable the ATO to estimate GST liability instead of assessing it, impose GST liabilities on directors and, at the ATO’s whim, withhold GST refunds.
b) A Bill that would enable the ATO to report tax debts to credit rating agencies where the ATO debt assessments could not be guaranteed to be accurate.
12. ATO—Regular Parliamentary advocacy
We are committed to undertake visits to Federal Parliament during every sitting session to promote our ATO reform agenda.
We put a great deal of effort into promoting crowd-funding support for Richard Boyle, the ATO whistleblower. We’re pleased to say that $140,000 has been raised for Richard’s legal defence. Richard is facing 161 years in jail following his blowing the whistle on ATO breaches of garnishee procedures.
14. International Tax Perspective
To strengthen our ATO reform advocacy we are building an international network and knowledge base of tax administration issues.
World Taxpayers Conference
In May we attended the World Taxpayers Conference held in Sydney. It was a great opportunity learn about tax treatment of small business across the globe.
In early August 2019, SEA Executive Director Ken Phillips spent a week in London networking with tax lawyers, industry groups and others on the tax issues confronting UK small businesses. There are a lot of lessons to be learnt for Australia.
In July 2019, the US Congress passed the Taxpayers First Act. It is ground-breaking law that imposes on the US tax collector (the IRS) procedures to protect small businesses and others from IRS abuse.
In late October 2019, SEA’s Executive Director will spend two weeks in Washington DC on a research project on the Taxpayers First Act. The aim is to bring back a report which can be presented to the Australian Parliament as the basis for similar reform to the ATO.
15. Federal Election May 2019
We conducted a strong information campaign during the Federal election, providing our analysis of the policy positions of the major parties as they would impact upon small business people.
We provided seven information and commentary posts during the campaign on the following topics:
- Overview of issues
- The generational debate
- Unfair contracts
- Tax calculator
- Tax policy comparisons
- ATO reform issues
- Truckie issues
Our posts generated 86,184 reaches on Facebook, 18,423 engagements and 2,484 comments. Our website interactive tax calculator had 9,262 individual engagements.
16. Advocacy work
Some of the formal submissions made to governments/parliaments have included:
- Directors Identification Numbers
- Australian Business Number Treasury review
- Black economy taskforce
- Gig economy (Victoria)
- Finance review of CDDA scheme
We gave evidence to Senate inquiries into
- Red Tape (2 November 2018)
- Model Litigant Bill (31 October 2018)
We strongly support the beefing up of the unfair contract laws.
We are members of two government consultative committees:
- ACCC small business (meets 3 times per year)
- ABCC Security of Payments (meets 4 times per year)
17. Gig economy campaign
We are working to defend the right of people to work through gig economy platforms:
- We made a submission to the Victorian government inquiry.
- The ACTU is out to restrict the gig economy.
- The ATO is attacking gig economy operations (e.g., transcribers).