Self Employed Australia

"Everyone needs an Advocate"

“Everyone needs an Advocate”

Defending ABN Contractors

Reflections on an incompetent ATO—ABNs & Gig stuff

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Friday, June 28, 2019

Earlier this week we discussed the history of Uber in its global legal battles to have its drivers accepted as independent contractors. The Uber battle is at the forefront of the gig ‘question’.

Today we focus on the Australian Taxation Office and its incompetence (from our experience) in assessing employee vs independent contractor status. The ATO should learn from a significant Uber legal decision in Australia. It probably won’t though

The issue is important because the ATO has the unrestrained power to destroy the business of self-employed individuals simply by denying individuals their Australian Business Number. It can do this by declaring an independent contractor to be an employee.

This is because under the ABN legislation a person is entitled to an ABN if they are ‘carrying on an enterprise,’ a business being a ‘Profession, trade, employment, vocation or calling.’ But a business does not include an occupation as an ‘employee’.

Under this definition, self-employed people should easily qualify for an ABN because the definitions are so broad, intentionally so we believe. However, the ATO can legitimately deny a person an ABN if the person is an employee at common law.

We have sighted ATO assessments of ‘employment’ when the ATO has denied or withdrawn people’s ABNs. The ATO did this to some 17 individuals in late 2017. The story of the case is here. The ATO was eventually pressured into returning the ABNs to these people.

We have sighted the ‘employment’ assessment done by the ATO in this case. On our assessment the ATO’s process was amateurish and incompetent at best and at worst was manipulated by the ATO to achieve its predetermined view that the independent contractors were/are employees. By these actions the ATO strips itself of its legitimacy.

One of the ATO’s current obsessions is the gig economy and an apparent determination to deny that gig platforms legitimately use self-employed independent contractors. If the ATO is to have legitimacy in this area, it must demonstrate that it follows proper common law processes in undertaking its assessments.

Fortunately, there are some authoritative recent Australian examples that the ATO should replicate if it is to have legitimacy in this area. We present and analyse the major Uber case here.

Will the ATO fix its incompetency? On past experience, probably not.

Hysterical reaction to Uber (gig) drivers not being employees. ATO wake-up call

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Tuesday, June 25, 2019

Earlier this month the Fair Work Ombudsman released a statement that, after a two-year investigation, it has concluded that drivers working through Uber are not employees.

The Transport Workers Union described the decision as ‘…devastating for workers in the gig economy’. One academic said the decision was ‘very disappointing’.

We disagree. The Fair Work Ombudsman’s decision is consistent with a highly detailed investigation and legal ruling on Uber drivers by the Fair Work Commission in December 2017.

We have a message for the labour movement and its apologists: Wake up! The world has changed. By their actions people demonstrate that they want to be independent and control their own working lives. The worker vs bosses war is irrelevant to most people. Read the tea leaves from the recent federal election. You’re flogging a horse that will kick you! Our message is equally directed to the Australian Taxation Office: We reckon that you’re breaching the law!

So, after getting our ‘rant in reply’ out of our system, let’s look at the facts.

There’s a big push from the Victorian Labor government, the unions, some academics and many in the federal bureaucracy (particularly the ATO) to clamp down on or stop the gig economy. They have similar motivations in our view. They don’t like, understand or accept that independent work can actually exist. They are obsessed with controlling all work.

But independent work is a legal, economic and behavioural fact discovered and found in clear, established processes of investigation. There is no mystery or confusion about this. Unless it’s confusion created by those who want to stop it. (Oooops. I think we are still ranting!!!)

The Uber decision matches those facts. Proper investigative process was followed by the Fair Work Commission and, it would appear, the Fair Work Ombudsman. On the basis of the facts, Uber (gig) drivers are engaged in independent work.

It’s important to base analysis on facts. We’ve put together an analysis of the facts and issues relating to the Uber/gig economy issue. It covers:

And we have a message for the ATO. In our experience the ATO demonstrates gross incompetence in its investigations and analysis of who is an ‘enterprise’ for the purposes of ABN allocation. The ATO needs to learn from the Fair Work Commission and the Fair Work Ombudsman and become competent in this area.

Powerful ‘anti’ forces need a bucket of icy-cold water poured over their heads

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Monday, March 04, 2019

According to demographer Bernard Salt, there’s a big cultural shift in Australia towards being your own boss. And it’s a lifestyle thing. In The Australian Bernard referred to:

… profound changes to the way we earn a living…Part … caused by the rise of the gig economy … but part is also due, I think, to the ageing of the population and to a cultural shift in attitudes to work.

Bernard said that there has been a six-fold increase in the sole-trader population since the end of the mining boom. He gives a break-up of the data by state, capital city and regions. He refers to entrepreneurial ‘hotspots’ such as the Melbourne CBD, but also regions such as Kings Meadows in Launceston with a 23 per cent increase. Bernard asks:

What could be better than living in a seachange idyll? Being your own boss in a seachange idyll like Victor Harbor, or Torquay, or Busselton, or Ulladulla, or the Gold Coast.

He concludes that:

A new be-your-own-boss narrative is driving the Australian obsession with lifestyle.

But there’s a problem. There’s a whole bunch of powerful groups who hate this Australian lifestyle urge.

The anti-gig economy thrust is simply an excuse to hit self-employed people, a decades-old agenda.

And a key indicator of what’s coming is the Victorian government’s inquiry into the gig economy intended, in our view, to build a false reason to clamp down. The inquiry’s discussion and approach, however, are full of misleading drivel. And we’ve said so in our lengthy detailed submission, In Search of Unicorns:

  • For more than a century, variants of the same gloomy fiction have been cycled and recycled, almost in clock-like manner. On-demand platform work is the latest variant of a moral fairy-tale that pits the ‘good employee’ against the ‘wicked independent contractor’.
  • …the (Victorian) Background Paper … assumes an air of suspicion about independent contractors.
  • So much of the discourse around both the platform economy and the independent workforce is inflated, overstated and alarmist … [with] … nightmare scenarios of Technological Armageddon and the End of Work.

Oh spare us the idiocy! And we appeal that please—

  • A good bucket of icy cold-water needs to be tipped over the protagonists of this hyperbole. That includes governments.

It looks like we’re in for a long argument with these self-employed haters. But that’s what we’ve been doing for almost 20 years!

The gig economy is exploitation by an evil empire. Discuss!

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Wednesday, August 22, 2018

The supposed ‘rise’ of the ‘gig’ economy is causing much debate on whether its impacts are good or evil for society. There’s much confusion.

The author of a new book, Gigged: The End of the Job and the Future of Work, was interviewed on the USA Public Broadcasting Service (PBS) this week where the social issues were discussed. The four-minute interview can be seen here.

The debate is, in fact, quite old. In my book, Independence and the Death of Employment, first published in 2005, I addressed all the issues brilliantly (of course!) (Um, my book is not on a best-seller list but I’m sure my brilliance will be recognised one day in the dim, distant future!!)

The gig economy is in truth just another model of independence at work. And people who work in the wage-‘controlled’ employment environment have great difficulty understanding true independence at work. This particularly applies to academics, bureaucrats, unions and policy-makers who overwhelmingly work in the ‘controlled’ structures of managerial employment. It’s these people who often generate the debate, accusing ‘work independence’ of somehow being exploitation!

The International Labour Organisation started debating this in 1996. But in 2006 it resolved that self-employment was legitimate. We attended the debates in Geneva and wrote this report on the outcomes.

But questions about the legitimacy of work independence were raised in Australia again late last year (2017) when the ATO decided to deny Australian Business Numbers to self-employed transcribers. We fought successfully to have the ABNs reinstated. Here’s our campaign and we described the policy issues here. We’ve discovered the extent to which the ATO was acting on its social view—namely, that self-employment is bad—and that tax collection was not the issue.

We see this debate now reaching a new fever pitch. The issue is simple. Is managerial controlled wage employment the only legitimate form of work? Or is independence and self-control of work—that is, self-employment—also legitimate and worthy? In many respects it’s a debate about freedom!

It’s the gig economy, stupid!!

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Friday, January 19, 2018

Technology is crushing traditional jobs. The command-and-control factory is being replaced by robots. Banks are rapidly removing pen-pusher jobs by the tens of thousands!!! For those with an economic bent, the Milton Friedman-type assumptions about how an economy operates are dead!

What’s taking over is the ‘gig’ economy. But what is it?  It’s pretty simple really.

Traditional jobs (Friedman assumed) involved an employer having a legal ‘right to control’ an employee. The gig economy does away with this wage-slave-like setup. Instead, the contractual relationships are entirely commercial. The on-line business platforms that facilitate this are many. For example, Uber (ride sharing), Airbnb (accommodation), Amazon (manufacturing and retailing), Airtasker (home and other services) operate like stock markets.

The platforms connect people wanting something (for example, to buy shares) to people delivering something (for example, selling shares). The platforms facilitate and manage the commercial transactions including invoicing, payments and so on. Every transaction is commercial.

If you’re scared of this, well, move over and crawl into a hole!!! Some people claim it’s a crisis and we have to regulate this quickly as if its employment.

But other jurisdictions are being positive:

And, in a major development, the Australian Fair Work Commission has just declared an Uber driver to not be an employee. This makes sense.

The importance of properly approaching the gig economy cannot be underestimated. To fail to embrace it is to be a wrecker of opportunity and an oppressor of people.

This is one reason why we attacked the Australian Taxation Office hard late last year over its removal of Australian Business Numbers from 16 gig economy workers. Yes, we were damn angry with the stupidity of the ATO and succeeded in having the ABNs reinstated. Now that were a bit calmer, we’ve summarized the ‘transcribers’ case here.

And we’ve just added a new piece about how this transcribers case relates to the gig economy.

Remember, this ATO-style attack can happen to anyone. The ATO has gone rabid on this. You need protection. Check it out here.

More thanks on ABN restoration. Including the ATO! Hey?

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Yes, I know. We don’t have much of a reputation for giving praise to the Australian Taxation Office. In fact we’re probably pretty mean. Here’s us calling the ATO lifeless, frozen dinosaurs and that they must think that the world is flat.

Given our comments, we’ve had people ask us how in the world we managed to have the cancelled ABNs reinstated.

Well, first we had great legal leadership. Here’s John and Paige Findley (our primary legal team) with Annette Pike (she’s on the left) from OutScribe shortly after the agreement to reinstate the ABNs was formalized.

Then, the support of key journalists was critical:

There were also key people in the ATO with whom we had pretty full-on discussions, but we can’t directly identify them. We’ve got to thank those people. The ATO is a complex machine with lots of moving parts, many of which don’t seem to communicate all that well with each other. The ATO people we dealt with on this issue put in a huge effort and were pivotal in the ABN reinstatement outcome. Our thanks to them.

Further, there is the team at OutScribe, the Pike family. They are super-well organized and run a great small business. We worked very tightly with them. They’ve said this about the reinstatement campaign:

We feel very fortunate that we came across SEA. Ken and John have worked tirelessly on behalf of OutScribe and the contractors, with the result that the contractors’ ABNs have been reinstated. OutScribe’s case is still open to investigation with the ATO but we’ve got the SEA in our corner.

Remember: you need to be a member before you have a problem.

We’ll have more information about this story soon.

‘Thank you. Thank you. Thank you.’ ABNs reinstated

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You might notice that we haven’t issued a News Alert for about two weeks. That’s been for a very good reason. We’ve been involved in deep and complex negotiations with the Australian Taxation Office over the cancelled ABNs.

You might remember we highlighted this last on the 22nd November where we accused the ATO of being a Frozen Dinosaur—Cold. Lifeless. No connection to reality. Before that we said that The ATO thinks the earth is flat. Yes, that’s perhaps ‘over the top’ of us to refer to the ATO that way.

But we were pretty churned up with the way the 16 vulnerable workers had been treated. Their incomes had been chopped off and they were desperate. We told their stores here.

Happy news however! Their ABNs have been restored. Yeh!!!! It’s been a heck of a lot of work. And we wanted to wait until we were sure that restoration of the ABNs had actually happened before making comment. We’ll tell you the story in follow-up emails, but we’ve got some pretty pleased people. Sarah says the following:

Thank you, thank you, thank you. I can’t believe a few short months ago I didn’t even know you existed! After being self-employed for eight years and suddenly finding myself facing a battle with the ABR/ATO to retain my business, SEA, Ken Phillips and John Findley were my saviours! I can’t express how much they turned things around for me, knowing what to do and who to speak to and what was a just outcome! SEA is vital for small business to help “keep the bastards honest”.

Each of the women were members of Self-Employed Australia, which meant that we could jump to their defence. If we are to defend people effectively, they need to be a member.

It’s like house insurance. You’re only covered if you are insured before your house burns down.

More information soon.

ATO a frozen dinosaur. Cold. Lifeless. No connection to reality

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We informed you yesterday about the ATO’s cancelling the Australian Business Numbers (ABNs) of work-from-home mums and dads. The people targeted are all on low incomes, most supplementing their spouse’s incomes, disability or other pensions or just struggling on their own.

There are 16 of these people: five in Queensland, two in South Australia, three in Victoria, five in New South Wales and one in Tasmania. These people are not ‘case numbers’ on some mindless ATO computer system. They are real people. And because of the ATO’s bullying aggression these people are now in crisis!

All had their ABNs withdrawn en masse on the 14 September, nearly ten weeks ago. As a result, their incomes have collapsed or stopped. We’ve been in contact with them. Read this briefing note on just some of them. I defy you not to get really angry when you realize what’s going on! I’m angry!

We’re doing something! We’re actively involved in fighting to have their ABNs restored. But the ATO is like a frozen dinosaur. You know there’s the potential for life there somewhere. But it’s cold, lifeless and there’s no connection to reality.

Here are some facts:

  • The ATO has, on our assessment, applied an illegal process in cancelling the ABNs.
  • The targeted people have been declaring all their income and paying all required tax. We’ve checked!
  • Superannuation payments are in order.

In other words, there is no reason that can justify the ATO’s withdrawing the ABNs. Sorry—yes there is! It’s spiteful, vindictiveness from within the ATO born from a hate of people being independent, standing on their own two feet and being confident Australians. These people are now being forced by the ATO on to social welfare. Well done, ATO.

We need your help.

  • Join us. Isolated we are vulnerable. Together we defend each other.
  • Send an email to your local federal Member of Parliament to demand the return of the ABNs.

Let’s do this!

The ATO thinks the earth is flat. That’s how dumb and dangerous it is!

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I’m sure the ‘employment assessors’ at the ATO are members of the Flat Earth Society. Yes, a ‘flat-earthers’ group actually exists. It was formed in 1956. Its members are not comedians but serious. Here’s their logo and website. Go figure!

The ATO flat-earthers are the high priest enforcers of the ATO’s flat earth bible: its ‘employee-contractor decision tool’. Have a look at its ‘terrible friendly’ video saying how the ATO will help you. But everything on the video and in the decision tool is wrong at law and promotes a dangerous ATO-manufactured myth. In fact, the very decision-tool itself is an instrument of illegality. And it’s not there to help you but oppress you!

In 1600, during the Great Inquisition, the Italian Dominican friar, Bruno Giordano, was persecuted for claiming the the earth was round and the stars merely suns like our own. Today, the ATO is financially persecuting ordinary people for being self-employed. The ATO does this by applying the illegal ‘decision-tool’, ‘deciding’ people are employees, taking away their Australian Business Numbers—thereby destroying their businesses and incomes.

I’ve had a gutful! When small businesswomen break down on the phone with me because the ATO has done this to them, I say, ‘no more Mr Nice Guy!’ When women who were financially proud are now on social security, I say ‘NO More!’

We’ve been on about this since at least 2013. In 2014 we made a submission on this to the Board of Taxation Review of the ATO. The Board’s 2015 recommendations to fix the decision tool have been ignored by the ATO. Some time after this, I had a yelling match with the Tax Commissioner in front of a Federal Minister over the issue, with me saying there was a problem and the Commissioner saying there wasn’t.

But now we’re handling the fallout from the ATO’s conducting mass ABN withdrawals, mostly against work-from-home mums on very modest incomes. We’re helping these people fight the ATO. The ATO is playing with people’s lives, burning them. More specific information will be forthcoming.

The ATO’s decision-making ‘flat earth’ tool must be abolished. Our campaign begins and will continue long term.

Paralysed in a tax office trap

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The Australian union movement has been quite open about its campaign to stamp out independent contractors wherever it can. Running parallel to this, it’s instructive to see that the Australian Taxation Office has shifted to a decidedly anti-independent contractor stance over the last few years.  The outcome (intentional or not) is to aid the unions’ objectives.

Last week Robert Gottliebsen described the behaviour of one tax official as demonstrating a “blood lust in the tax office” toward small business people (Call off the small business attack dogs, April 19). This attitude goes deep because it’s entrenched in ATO’s administrative systems. Take this example.

Over about the last two years the ATO has started rejecting more applications by individuals to receive an Australian Business Number (ABN). The implications are significant because effectively, if you have no ABN, you can’t be in business for yourself!

First, under new national business name registration rules, if you don’t have an ABN, you can’t register a business name. And it’s an offence to use a business name that isn’t registered.

Further, if you operate a business without an ABN, anyone paying you is required to withhold 46.5 per cent of your payment and send this to the ATO. No-one can operate a small business under this cash-denying arrangement.

In addition, without an ABN you’ll find it impossible to register under state workers’ compensation schemes and to receive other regulatory registrations and approvals. Also, submitting tenders for government or private-sector work become impossible without an ABN.

By controlling to whom the ATO allocates ABNs, the government has massive big brother/sister type, master control of the make-up and structure of the Australian workforce and business. This works against the original intent of the ABN system, which was to give the ATO significant auditing capacity to detect non-declaration of incomes.

When the Australian Business Number system was established around 2000, the process intentionally gave an ABN to everyone who applied, including individuals. The reasoning was that this supported tax compliance and auditing. The ATO can and does cross-reference ABNs to bank account details and so on. This huge trawling of data enables, or should enable, the ATO to check claimed business income against actual bank deposits and other transactions.

Over about the last few years this started to change. The ATO began to stop allocating ABNs to individuals. If someone’s a labourer, for example, they now automatically have their ABN application rejected.

ABN applications can be done online through an ATO ‘decision-making’  tool. The tool takes applicants through a series of questions to determine if the individual is an employee or contractor. As an applicant steps through questions, different answers trigger alternative additional questions. Eventually the tool will declare the applicant to be either an employee or contractor. If the declaration is ’employee’, an ABN application is rejected.

More recently the ATO tool appears to have undergone fine ‘tweaking’. It’s not noticeable to the casual observer but to others familiar with the tool, the differences are noticeable. Meanwhile, people applying as individuals are having difficulty obtaining an ABN. At Independent Contractors Australia we’ve been receiving a steady stream of information and complaints for around 9 months. People who want an ABN are being told ‘no’ on the basis of allegedly being an employee, according to the ATO.

In my view the legal basis for the ATO setting itself up as a God-like, online determiner of an individual’s employment status is highly questionable. The  ABN legislation is clear that the main objective of the ABN is to enable businesses to interact with the ATO for taxation purposes. The Act’s objectives do not include that an ABN is a determiner of employment or contractor status. It’s perhaps arguable that the way the ATO currently behaves is beyond its legislative authority.

On a practical level the ATO is likely contributing to a growth of the black/cash economy and tax compliance headaches. The ATO automatically gives an ABN to individuals applying under a company, partnership or trust structure. Yet the ATO has tax compliance problems stopping illegal income-splitting and tax avoidance with small companies and trusts.

And imagine the reaction of people who have their ABN application rejected? They either set up a sham company structure or operate in the cash economy, thus more easily avoid declaring their incomes.

On every measure the denial of ABNs works against the social and economic responsibilities of the ATO. Yet why is this happening? Look back to the objectives of the Australian union movement. Denying ABNs is a most effective way of using the power of government to suppress independent contracting.