Self Employed Australia

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Self-Employed Australia

ATO Mongrel Bunch of Bastards Continues—Morrison Needs to Act

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Today we release details of continuing abuse of small business by the ATO.

You may remember that in 2018 we were heavily involved in the production of the ABC 4 Corners program Mongrel Bunch of Bastards. The program exposed the gross abuse of small business people by the ATO. Since then we have campaigned hard for reform to the ATO’s audit and enforcement division, which is where the problems exist.

This time, in our view, the abuse looks like a massive ATO cover-up of the largest tax scandal in Australia’s history. Surely not, we ask?

As background, between around 2012 and 2015, international criminals defrauded an estimated $2.45 billion from the ATO through a GST scam involving gold trading. Adding to the scandal is that the scam was well known to the ATO from around 2003. The way to stop the scamming was well known, but the ATO did nothing until it was too late.

In our view and on the evidence, after allowing the scam to occur and after the criminals have disappeared, the ATO is seeking to cover up its huge incompetence or worse. It is doing this by attacking innocent small business people to deflect attention from its own serious shortcomings. This is our assessment. However, an official government report into the ATO’s treatment of small business on this issue is scathing of the ATO.

The report from the ATO watchdog, The Inspector General of Taxation Ombudsman (IGTO), looks at the case of small business owners Lynn and Jerry Reid who run a small gold refinery on the Gold Coast. The ATO has withheld $1.3 million of GST refunds from Lynn and Jerry that is due to them. But get this. Even though Lynn and Jerry don’t owe the ATO any money, the ATO has ‘invented’ a technical ‘tax penalty’ and now say that Lynn and Jerry owe the ATO $173,107. We say it’s a total fabrication. The ATO could pull this sort of stunt on anyone.

The IGTO report says that the ATO has no evidence to justify its raiding of Lynn and Jerry’s bank accounts to collect the $173,107. The ATO has not accused Lynn and Jerry of criminal activity or of doing anything wrong. The IGTO says that the ATO must:
  • Issue an apology to Lynn and Jerry.
  • Compensate Lynn and Jerry for harm done to them.

It’s an appalling story of abuse which we’ve detailed in our summary/commentary. Here is the IGTO 77-page report.

Lynn and Jerry are just two more victims of an abusive, dysfunctional ATO audit and enforcement division. This sort of ATO abuse must be made to stop. We call on the Morrison government to recognise that it has a serious problem with the ATO and to urgently undertake ATO reform.

We have studied the USA reforms to its tax authority—the IRS—and submitted a report to parliament. The US model provides a valuable, proven template for Australia.

Frankly, enough is enough. Reform action is needed now. Continuing abuse of small business people like Lynn and Jerry must stop. The Morrison government cannot sit back and continue to watch this destruction of small businesses.

‘Homework’ takes on a totally new meaning … for adults!

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The global energy giant BP has told around 25,000 of its staff that work from home is now permanent. This is confirmation that ‘home-work’ is now globally locked in and not a temporary Covid ‘thing’.

BP is selling offices and moving to smaller premises as staff move to working two days and more from home. This is evidence of a working revolution. It’s a revolution that will throw the legal, academic, tax and political work-regulation establishment into utter confusion.

It makes the recent UK court decision to declare Uber drivers to be a ‘little bit’ employees combined with destructive self-employed tax laws, to be dangerous for the UK economy. It makes the Californian law making self-employment illegal look like a wall of sand trying to hold back an incoming tide. It makes the Victorian government’s agenda to outlaw self-employment look plain dumb.

The fact is that home-work will result in a productivity boom that will be difficult for statisticians to measure. How do you measure output per hours worked when someone is writing a report at home, stops, puts on the washing, returns to writing, stops, hangs out the washing, checks emails, heads off to collect the children from school and has several business phone calls in the car driving to pick up the children? How to you measure the huge time saving when the ‘commute’ to work is from your bedroom to the corner office in the spare bedroom?

But these are the productivity ‘realities’ that self-employed people have enjoyed and delivered for years. This is the self-employed work/life ‘balance’ truth which is now being realized by employees at BP and will predictably move through the corporate sector.

But here comes the push-back.

Property investors are worried about their CBD skyscraper investments.

Corporate power junkie managers wonder how they will ‘control’ staff.

Work safety officers wonder about what happens when people injure themselves at home when working.

Accountants can’t work out how to monitor people on hourly based pay rates.

‘Exploitation!’ scream unions and ‘worker rights’ academics!

It’s all nonsense of course. The incoming tide is largely located in the knowledge-based side of economic activity which is shifting from ‘hours’ to ‘results’ assessment of work. It’s been driven forward by technology for two decades and more, but Covid has given it a great kick along.

What’s happening is the disintegration of the specific legally defined ‘employment’ relationship.

The reality of self-employment based on self-control and payment on results butts up against the social and legal ‘employment’ assumptions. Employment as a generic term is looking more and more like self-employment as time-based pay is replaced by results-based remuneration.

The post Covid home-work revolution is pushing this trend harder. As more people work from home, even if not full-time, results-based remuneration becomes the logical outcome. Hours-based remuneration becomes awfully complicated.

We can probably be sure that this revolution in home-work, ‘employment’ (looking like self-employment) will be a major productivity booster.

BIG change must happen to ATO says government report

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Wednesday, March 03, 2021

The Federal government’s small business agency, the Small Business Ombudsman, has called for major changes to the way the Australian Taxation Office operates. The Ombudsman, Kate Carnell, says “… the time is right for Government to deliver a [tax administration] system that suits the small business sector…”

We totally agree. The ATO’s approach to small business is bullying, unfair and oppressive. We’ve been highlighting this since around 2012 and have been calling for major change. See our 20-minute video.

The Ombudsman has recommended 25 specific changes to the operations of the ATO. (See pages 6-8 of her report released today.) The recommendations are practical and sensible. The one we highlight as top of our list is Recommendation 21. This says:

ATO to be prohibited from charging penalties and interest, issuing garnishee notices or instigating other recovery action on tax debt … until all avenues of appeal taken by the small business taxpayer are exhausted, with general interest charges (GIC) to be applied only from that time.

This is sensible, totally fair and hugely important. And it comes within the context of a big increase in small business tax debt to $21 billion during Covid.

But it’s essential to be clear about what this tax debt actually is. It’s made up of (a) tax actually owed, (b) interest and (c) penalties the ATO adds on. The ATO has continually refused to give the split of these items in reply to parliamentary questions. But here’s just one case as an example.

A small business that we’ve been working with for many years has a tax dispute over

$83,576 the ATO says is owed (over 2 years).

The ATO has added

$41,788 in penalties and
$99,600 in interest (approx.) to today’s date.

That is, the ATO says around $225,000 is owed. The dispute and appeals process has been ongoing for seven years.

However, if the Ombudsman’s recommendation were applied, the actual debt would be $83,576.

This highlights how important Recommendation 21 is. It is a reform which would produce an honest reflection of the truth of the actual tax debt.

In other words, the ATO’s approach to tax debt is, in our view and experience, shonky and misleading. In the case outlined above the real tax debt is only 34 per cent of the ATO’s claim. On this basis the ATO’s headline-grabbing ‘$21 billion’ of small business debt would really only be $7 billion. The point is that we need facts and truth, not misleading media-grabbing headlines.

The Ombudsman’s Recommendation 21 would push toward the truth and make ATO debt management fair and much more efficient. Did we say that we support the Ombudsman in her efforts? Well clearly we do. We’ll produce a more detailed commentary soon.

Australian unions see flying ‘gig’ pigs landing from the UK

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You may have seen reports that the UK’s top court has decided that Uber drivers are not independent contractors. The UK decision seems to support the unions’ campaign against the gig economy. It gives the appearance of international support for Federal Labor’s anti-gig (anti-small business) policy announced earlier this month.

However, sorry to disappoint the small business-haters in the unions and Labor, but the UK’s decision has no relevance to Australia.

The facts in Australia are that Uber drivers have been declared to be independent contractors by:

And last year (2020) the FWC declared that Uber Eats delivery people are independent contractors. In this 2020 decision the Commission looked at the UK law above and stated that its irrelevant to Australia. Here’s why.

In Australia we use the well-known common law tests which identify whether there is a commercial contract or an employment contract. All independent contractors (self-employed people) earn their income through a commercial contract. This is locked in under Australia’s Independent Contractors Act 2006. It protects the right of people to be their own boss.

In 1998 the UK created statutes which say that even if you’re an independent contractor you can still have access to some employment ‘rights’. This is the ‘little bit pregnant’ idea. The UK statute says that someone working under a commercial contract can be a ‘little bit’ an employee. This is the statute that has been ruled upon by the UK Supreme Court last Friday in the Uber case.

The UK has made, and is making, a mess of its treatment of self-employed people. Self-employed UK people have been treated as economic trash during the Covid crisis, receiving little if any income support. For 20 years the UK tax office (HMRC) has been trying to stop the self-employed from having business tax rights. The Uber decision now throws massive uncertainty into commercial contract law.

Fortunately, in Australia since around 2006, we’ve developed policies to support and ‘protect’ self-employed people. This has included the same access as employees to the federal parental leave scheme (2010), JobKeeper and JobSeeker (2020) and the introduction of unfair contract laws (2016) and their planned ‘beefing up this year. Also, this year the full pay-on-time laws for small business should pass.

We ‘protect’ small business people by giving them access to a practical commercial ‘rule of law’ environment, backed by sensible access to social security support where needed. This creates a stronger economy with small business at its core. Let’s hope that the UK small business destruction disease doesn’t spread to Australia.

For a longer version of this article which includes a link to the UK Supreme Court ruling, click here.

Victorian Covid lockdown (again). The evidence. Victorian Government failures. Prosecution

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With Victoria back into another hard lockdown, we are following through on our campaign to have the Victorian government prosecuted for breaches of health and safety laws.

Today we release our YouTube assessment of “Was Covid-19 unprecedented?” The Victorian government uses this excuse to say that it was/is not responsible for over 800 deaths.

We present the evidence that a flu pandemic was expected and that it was well known that Covid-19 was coming. Click on the image to view the 4-minute video.

You can read the full details with links to source documents here.

We are finalizing an assessment of the causes of the latest Victorian hotel quarantine failure and will publish this shortly. This will support an additional letter we will be sending to WorkSafe Victoria. We will be advising them of the need to prosecute the Victorian government for breaches of health and safety laws over this latest quarantine failure. The evidence requires prosecution. More information soon.

ATO abusing its powers – manipulating the law to abuse people

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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.

Covid and the oppression of government regulation and regulators

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As we look to 2021 to be a better year than 2020, perhaps one of the shocks of Covid-19 has been how quickly our freedoms and liberty have been crushed under the weight of health dictates. It’s been done for our own good—that is, to keep us all safe from a silent, unseen enemy killer.

With luck, we will emerge from the Covid crisis this year with freedoms being returned. One fear, however, is that once governments, whether of left or right persuasion, taste the seductive power of authoritarianism, they become addictively hooked. There’s nothing some bureaucrats love more than the scent of their own power first thing in the morning.

That’s why at Self-Employed Australia we were pleased to receive an invitation from the office of Prime Minister and Cabinet to make comment on a regulation review it is undertaking. The review is looking at the expectations of regulators, their reporting and so on. In other words, the Prime Minister is reviewing how regulators should be held accountable. That’s a positive thing.

In our January submission to PM&C we’ve said that instructions to regulators from Parliament should be clear and transparent. We’ve said:

Our recommendation to the PM&C review is to keep firmly in mind that the community needs clear “road signs” in all regulatory matters. There should be a simple question asked of all regulations, namely:

  • Does the regulation provide clear and practical sign posts that can be understood by the community and the regulator in their day-to-day application?

That is, regulators should not be in a position where they can apply their own view of unclear laws to the extent that the regulator effectively become a law-maker ‘on the run’.

We cite the example of the Australian Taxation Office, which all too often is in a position where it effectively ‘creates’ law because unclear legislation enables them to do so. We’ve promoted our ATO reform program as a pathway to fixing the this problem. Here’s our explanatory video.

As Covid recedes (we hope), the balance between health authoritarianism and democracy should be a topic for longer term review. That is, in times of health crisis, are and should health bureaucrats be held accountable under rule-of-law principles?

One example of where bad law gets it totally wrong is in California and its making of self-employment illegal. Go figure? We’ve covered this before. There’s a new YouTube video about this Californian ‘AB5-kill self-employed’ law that explains this. It has good lessons for Australia … of what NOT to do….

California Attacks Santa Claus – A Victorian Agenda?

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Tuesday, December 22, 2020

We’ve covered before the weird laws in California (called AB5) that have made self-employment illegal. On the evidence, it seems that these laws have pushed California’s unemployment rate to 50 per cent higher than the US average. The laws came into force on 1 January this year. But it’s now impacting on Christmas.

Patrick Turnbull has been a Californian Santa for 20 years. He doesn’t work as Santa all year round. That’s logical. Not much Santa work outside Christmas! So, he’s worked as an independent contractor Santa. Now the Californian AB5 law say that’s wrong. In this 4-minute video, Patrick (Santa) Turnbull explains why denying him his Santa ‘rights’ is so bad.

You tell ’em Santa! (click the image for the YouTube video):

What’s worrying is that Dan Andrews’ Victorian government also has an anti-Santa (independent contractor) agenda. We’ve told the government in very blunt terms, ‘leave us alone … we have a right to be self-employed.’ We ‘demand’ the right to be Santa if we want!! Viva la Santa revolution!

Oh yeh. And Merry Christmas! We all deserve it this year.

800 deaths – The facts are clear. The Vic government must be prosecuted

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It would be dangerous to forget or ignore that 800 people died due to the Victorian government’s hotel quarantine disaster. We cannot simply ‘move on’ and pretend that 800 people did not die. That’s dangerous. That’s unsafe.

That’s why today we’re launching the next phase of our campaign to push for the prosecution of the Victorian government under work safety laws.

We write to WorkSafe
Here’s our letter, sent today, to the Victorian WorkSafe Authority, the prosecuting body. We provide them evidence that hotel quarantine plans should have been in place when they were not.

Hong Kong had clear plans that could have been used.

We remind WorkSafe of evidence from one officer who said

“Each outbreak was treated like a secret and nothing seemed to change…”

And a doctor who warned of bad procedures saying

“This is placing individuals at risk”

The pandemic was NOT unprecedented
In separate facts we explain why the Covid pandemic was not unprecedented and was fully expected and planned for, BUT the Victorian government forgot(?) to do a hotel quarantine plan!

And here we explain how the work safety laws apply.

Into and during 2021
This next phase of our campaign will continue through all of 2021. This is just the start. We have a research and legal team. We are preparing more evidence of why prosecution must occur. We will make this public and deliver it to WorkSafe.

Join/support our campaign. You can contribute $s here if you can.

Register your details here for information and updates.

Bad things happen if good people do nothing!

Oz unions’ weird desire to impose ‘permanent’ wage slavery

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News just out is that private-sector union membership in Australia has plunged to 9 per cent of the workforce. Unions are rapidly becoming public-sector-only, with about 37 per cent of that workforce. Perhaps this is why unions are campaigning so hard to try and force ‘wage slavery’ onto all of us. They are fighting for survival.

The ACTU’s core campaign is against ‘insecure work’. It aims to impose ‘permanent’ employment on Australians. But it’s illogical. In particular their campaign has been mugged in the blink of Covid eye reality.

When planes can’t fly, ‘permanent’ airline jobs also ‘fly’. Empty hotels mean an emptying out of permanent hospitality jobs. When cruise ships no longer cruise, the impermanency of every ship job hits home. Economic reality determines everything. Like it or not!

The ACTU’s claim that ‘insecure workers’ are more likely to face unemployment is just plain wrong. No job type—permanent, casual, part-time or contract—escaped the Covid mugging.

The illogicality of the ACTU stance extends to statistics. Unions portray ‘insecure’ work as a growing ‘problem’. That is false. Recent analysis from University of Melbourne Professor Mark Wooden confirms the following.

Casual employment has remained at around 20 per cent of the workforce for 20 years. Labour hire and gig work is small, at less than 5 per cent of the workforce. Self-employment has sat at around 2.1 million people but declined slightly as a workforce percentage to around 17 per cent over the last 15 years or so.

What’s also illogical in the ACTU stance is the complaint about casual employees’ lack of access to ‘entitlements’ such as holiday pay. This is plain nonsense.

Casuals get paid 25 per cent plus more than permanents to make up for holidays and so on. Casuals receive holiday pay built into their hourly pay. Permanents get paid less upfront and get paid the money when they take holidays. In fact, casuals end up with more money than permanents because full-time ‘entitlements’ usually only add about 19 per cent to their pay. Casuals can receive up to 6 per cent more than permanents.

The Federal government’s proposed new workplace laws will allow casuals to access permanent part-time work after 12 months. They will allow part-timers to work extra hours. The ACTU continues to find problems even under these reforms.

Even the economic ‘war’ with China has taught Australia that there is no such thing as ‘permanent’. We now are fully aware that reliance on permanency of trade with China or any one big national market is massively risky. Trade security is found in having a wide range of trading partners. It’s the same with work for individuals. Having a range of work and income sources is safer than relying on one ‘permanent’ job. In reality, ‘permanency’ is insecurity.

Too often the ACTU agenda falls apart in the face of the facts. On this issue their ‘anti-insecurity’ agenda looks like a policy solution searching for a policy problem that doesn’t exist.

We need to focus on ‘solutions’ for a 24/7 economic reality in which Covid and China have both taught us that nothing is permanent. To pretend otherwise is to live with fantasies that will harm us.