• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Join Self-Employed Australia
  • Protected Members
    • Tax Audit Support
    • Unfair Contract Help
  • About US
    • Who We Are
    • SEA Board
    • Annual Reports
    • No Spam Policy
    • Content Disclaimer
  • Contact Us
  • Log in/Log out
  • Update your details

Self Employed Australia

"Everyone needs an Advocate"

“Everyone needs an Advocate”

  • Current Advocacy
    • Reforming the ATO
    • Small Business Tax Tribunal
    • Fair Contracts
    • Fixing Disputes/Prompt Payment
    • The ‘Gig’ Economy
  • Past Advocacy
    • Submissions
    • Defending ABN Contractors
    • Work Safety
    • Independent Contractors Act
    • Owner-Drivers
    • International Labour Organisation
    • Independent Contractors: How Many?
  • SEA Submissions
    • Submissions
    • Independent Contractors: How Many?
  • Members-only Articles
    • About ICA
    • Contract Design and Templates
    • Independent Contractors Act
    • Practical Assistance
    • Taxation Matters
    • What is an Independent Contractor?
  • News Categories
  • NotAboveTheLaw

ATO abusing its powers – manipulating the law to abuse people

February 4, 2021 by Self-Employed Australia

Our campaign to reform the ATO continues. Good grief it’s an exhausting process! But the ATO keeps demonstrating why the reform is needed because the ATO keeps behaving badly.

Today we’re highlighting another case of ATO bad behaviour.

Many small businesses are structured as trusts. Most are family trusts. The ‘beneficiaries’ of such trusts are typically family members. A trust can distribute profits to the beneficiaries who then pay the tax.

In the ‘Carter case’ (see full details here) the ATO ‘assessed’ that the trust had made a profit. And here’s what then happened:

  • The ATO declared that Natalie Carter, a mother with two school-age children, had received profit from the trust as a beneficiary.
  • The problem was that no profit had been made. The ATO assessment was wrong. The ATO didn’t deduct expenses (interest etc) from the trust revenue. The trust had not sent any profit to Natalie because there was no profit.
  • But the ATO still said there was profit and forced Natalie to pay tax, even though she had no income.
  • Natalie then did what has been accepted as law for thirty years. She signed papers legally rejecting the (theoretical) profit. Sounds sensible. But no! The ATO refused to refund the tax already paid.
  • Natalie appealed to the Federal court where all three judges agreed with Natalie. She owed no tax! Natalie won. The  ATO lost.
  • But the ATO is now appealing to the High Court, arguing that even if someone has not received a profit they must still pay tax. Crazy!!!! It’s just stupid.

Here’s how this weird obsession by the ATO to win—even when they are wrong—would play out. Say this 30-year law were chucked out.

  • Take a divorce where the husband is a real b…. scam man. He has a business with a trust. He has the trust make a profit but then disappears overseas with all the money and his new mistress. He also makes a theoretical profit distribution to his ex-wife. The ATO says the ex-wife must pay the tax. But if the wife cannot legally declare that she doesn’t want the theoretical profit she is screwed. The ATO force her into poverty. Nice one ATO!

Sensible laws are there to protect people from scammers. What the ATO is seeking to do in the Carter case will enable the ATO to facilitate corrupt behaviour.

The Carter case is just another example of why the ATO must be reformed.

Let’s be clear. The reform of the ATO is needed in the audit and enforcement division where abuse of small business people is pretty much routine. That division is out of control.

Filed Under: News Updates, Reforming the ATO, Taxation

Primary Sidebar

Recent Posts

  • Is your superannuation money safe? Morrison v Albanese May 17, 2022
  • Morrison’s dead flat small business pitch May 11, 2022
  • Albanese plan to smash Australia’s 2 million self-employed May 5, 2022
  • Closing the construction watchdog will harm self-employed tradies April 24, 2022
  • ATO ramps up its aggressive campaign against small and family businesses April 14, 2022
  • Government gets massive tax windfall from Australians who have received no income. Bastards! April 8, 2022
  • For goodness’ sake stop wearing those same pyjamas at work! April 3, 2022
  • Update – Hotel Quarantine Prosecution – Supreme Court Victoria – A bit boring but important! March 21, 2022
  • Confronting bullies in our own (Australian) backyard – Unfair Contracts March 3, 2022
  • We lodge court action against WorkSafe Victoria. No-one should be above the law February 15, 2022

Categories

Footer

  • Facebook
  • LinkedIn
  • Twitter

Copyright © 2022 · News Pro on Genesis Framework · WordPress · Log in