Self Employed Australia

"Everyone needs an Advocate"

“Everyone needs an Advocate”

News Updates

One giant step for taxpayers – ‘Taxpayer Rights’

by

taxation-rightsThe key Parliamentary Committee overseeing the Australian Taxation Office this week released a report calling for major reforms to the way the ATO treats taxpayers. At the core of the report is the recommendation for Taxpayer Rights.

What does this mean?

If you’ve followed our ATO reform campaign, you’ll likely be aware that we’ve studied the US laws covering its tax office, the IRS. The US legislation stipulates specific “do’s and don’ts” with which the IRS must comply to treat taxpayers fairly. And there’s a watchdog, the Taxpayer Advocate, with real powers. We presented our full report on this to the Parliamentary Committee in mid-2020. Here’s a summary.

We’re very pleased to see that the Committee Report calls for substantial reforms to ATO administration with significant elements drawn from the US laws. The Committee looked at the US closely, including interviewing the retired US Taxpayer Advocate.

The Committee has 19 recommendations all of which strongly we endorse. The key highlights include that the ATO:

  • would not be able to collect a debt until all appeals (tribunal/court) have been decided. In fact, the Morrison government has already committed to this. Watch Small Business Minister Stuart Roberts in Parliament 13 April this year.
  • bear the onus of proof of allegations of fraud or evasion. The Committee notes that this has been recommended in past years but never implemented.
  • cannot charge an interest rate on debts that’s greater than the interest rate the government pays.

What would probably stagger most Australians is that such ‘reforms’ are needed. It demonstrates just how dictatorial are the current powers of the ATO.

But there’s more. The Committee’s recommendations also include:

The Committee Report is a major step forward for a better, more efficient and fairer tax collections system. It’s important to note that when Jason Falinski MP (Liberal) presented the report to Parliament, the Deputy Chair Julie Owens MP (Labor) also endorsed the report. That is, the recommendations have support across the (normal) political divide. This is the Australian Parliament working at its best.

In presenting the report to Parliament, the chair of the committee Jason Falinski MP first praised the ATO for improvements it has made to date. He particularly praised the ATO’s work to implement JobKeeper. We agree. That praise is well deserved. But Falinski went on to say that improvements must continue.

The ATO does a great job for Australia. But the evidence is overwhelming that, in the debt assessment and enforcement area, major abuse of taxpayers is endemic. The ABC covered this (again) just last week. See TV coverage and online articles.

Often big government organisations that have dictatorial powers are blind to the community and to the individual harm they do in the abuse of those powers. And they don’t view their abuse as abuse. They see the abuse as them doing their job!

These reforms recommended by the Tax and Revenue Committee are massively important. We hope the Morrison government will move to implementation. But also we would hope that the ATO would see the reforms as positive for them as an organisation as well as the community. We hope!

Again, here’s the Parliamentary Committee report.

ABC confronts ATO – Time for a Taxpayer Bill of Rights!

by

bill-of-rightsYesterday the ABC launched major coverage of a campaign to achieve a Taxpayer Bill of Rights. The coverage included TV, radio and online all day.

Here’s the major online article.  And here’s part of the TV coverage (3’ 42”).

It seems to have generated some serious movement.

The article quotes Federal Liberal MP, Jason Falinski saying, “Australians need to be protected against what has become a very powerful tax office”.  Jason’s comments are especially important because he chairs the key parliamentary committee that oversees the ATO.

Jason also says that the ATO should have to prove a tax debt against someone. Currently the ATO doesn’t have to prove a debt. The burden of proof is on the taxpayer. Jason says “I think that there are a lot of people in government that want to have a very close look at this”. Wow! That’s big. The government is seriously looking at the ATO’s behaviour and powers.

This is supported by the Inspector-General of Taxation, Karen Payne. We talked about her last week exposing really bad ATO behaviour.  In the ABC article Karen suggests that the ATO could face sanctions for breaching taxpayer rights. The article says that Karen’s “…point is that having sanctions would force a cultural shift within the ATO”. We say ‘Yes’ to that!

The need to fix the ATO’s power imbalance is based on strong evidence.

The article features one of the ATO victims who appeared in the 2018 ‘Mongrel Bunch of Bastards’ 4Corners TV exposé. Helen Petaia once had a thriving IT company. But the ATO moved against her on a ‘fabricated tax debt’. The ATO eventually admitted that it was wrong and after six years of fighting Helen was paid compensation by the ATO. But by then her business had collapsed and she was forced to sell the family home. Helen says a Taxpayer Bill of Rights would have saved her from the ATO fight.

The model is based on the US Taxpayer Bill of Rights. It’s legislation. It’s not just simply the tax collector’s policy or ‘code’ that it can ignore at whim.

The Taxpayer Bill of Rights has 10 practical requirements. The right of taxpayers:

  1. To be informed
  2. To quality service
  3. To pay the correct amount of tax
  4. To challenge the tax collector’s position and be heard
  5. To appeal a tax decision in an independent forum
  6. To finality
  7. To privacy
  8. To confidentiality
  9. To retain representation
  10. To a fair and just tax system

This seems damn sensible to us. Here’s a copy of the US Taxpayer Bill of Rights.

And, yes, this is something we’ve been campaigning on since 2019. See here. We’d be very supportive of such a reform. Ummm! More campaigning then!

Hard evidence of ‘bad’ ATO grows – It’s official!

by

monsterGoodness, we’ve been campaigning since around 2010 about the bad behaviour of the Australian Taxation Office. It’s one thing for us, a small business advocacy association, to expose systemic ATO misbehaviour. It’s entirely different when an important government agency does the same!

The Inspector-General of Taxation (IGT) is the taxpayers’ friend. It is an ATO watchdog. During the last few months it has released several significant investigations and reports into the ATO. It’s a nasty ATO picture that the IGT paints.

Now mind you, the IGT is much more polite and bureaucratic in the way it exposes the ATO than we are! Yes, our commentary tends to be ‘robust.’ But here are some of the things the IGT has revealed (we’re using our ‘robust’ language).

The ATO can crush your credit rating: The ATO has new powers to report you to credit rating agencies if it claims that you owe the ATO money. Remember, the ATO does not have to prove that you owe money. It only needs to say that you do. This clearly opens up the opportunity for ATO abuse. It’s paradise for ATO bullying! The IGT seems to be concerned.  The IGT has put a warning banner across the top of its website with a link to help available from the IGT.  It’s almost as if the IGT is warning taxpayers about a potential scam. (Although the IGT does not say this!)

ATO – You owe us money – We don’t have to tell you why!

The IGT has done a detailed study into whether the ATO must give you reasons for any decisions it makes. That is, the ATO explaining why it says you owe money. Incredibly, the report finds that the ATO does not have to give you reasons. There’s all sorts of law that pretends to require the ATO to give reasons. But these laws are so weak that they effectively mean nothing. And far too routinely the ATO does not give reasons.

As a taxpayer you are rubbish. You have no rights

The latest IGTO report released just days ago looks at what ‘rights’ taxpayers do have. Effectively the answer is none!

For example, the ATO has a Taxpayers’ Charter of Rights. But this is ignored by the ATO. Few ATO staff are trained about the Charter. Taxpayers are mostly not told of their ‘rights’ to internal appeal, or referral to the Small Business Tax Tribunal or to the IGT.  The Charter talks of ‘fairness’ and other motherhood statements. But in essence the Charter is a public relations cover for what the ATO really does. The Charter is not law but ATO internal policy. It’s rubbish (that’s our term!)

The IGT’s series of reports are important. The reports forensically lay out the actual behaviour of the ATO. What’s highlighted, to us, is that actual law or statute that might require the ATO to operate in a fair and reasonable way is simply non-existent. This surely must not continue.

Reform is possible. We’ve laid out a template for ATO administrative reform that would bring fairness and balance. It’s modelled on US laws covering the IRS.

 

ATO abuse has to be stopped. This can only be done through legislation.

Small business hugs Karl Marx? That’s a turnaround!

by

karl-marxIn the nineteenth century, the father of communism, Karl Marx, ‘created’ class ideology where ‘evil’ capitalists always exploited the working class (who were little more than wage slaves). The worker–bosses war has been fought ever since. Workers have been allowed to strike and bargain collectively through unions to secure their rights against the exploitative bosses.

However self-employed, small business people upset this simple idea because we are both the worker and boss in one. How is it that we can ‘exploit’ ourselves? This has resulted in confused law. It’s confused unions who try hard to force self-employed people to be employees so we can be ‘exploited’ and join the union class. It’s pretty silly really.

But the Australian Consumer and Competition Commission (ACCC) has come to the rescue. The ACCC regulates the economy, checking that big businesses doesn’t use their dominant power to exploit consumers. But now the ACCC has taken another step to stop big businesses using their dominant power against self-employed, small business people. The ACCC is making it really easy for small businesses to bargain collectively with big businesses.

Small business collective bargaining has been available for a few years, but you needed significant legal knowledge to do it correctly. And you had to receive ACCC approval. Now it’s very simple. It:

Only requires a one-page form. No lodgement fee.

Authorisation is then automatic.

Your business turnover must be less than $10m a year.

The ACCC link is here.

What does this mean in practice? Here are some simple examples:

If you are (say) an IT contractor supplying services to (say) a government department that applies a standard pay rate across all similar services, a group of IT contractors could get together to negotiate a different rate.

If you are a retailer and want to bulk buy a product from a supplier, you could get together with other small retailers to negotiate a better price if you buy collectively.

If you are putting in a tender to supply (say) HR services to a large company, you could get together with other HR independent contractors to put in a collective tender.

This collective bargaining process offers opportunities to at least partially match the bargaining power of big business and government by self-employed, small business people. It creates real, additional opportunities for small business.

Combine this with the new pay-on-time laws and the planned ‘beefing up’ of the unfair contract laws and Australian small business people are really starting to receive a fair go in the Australian economy. These are big, important reforms.

The only problem is that unions and others who passionately believe in Karl Marx’s workers–bosses war might feel a bit annoyed. If class ideology is suppressed by new, fairer market regulation, how do unions and others still maintain the battle?

Unfair Contracts BIG Beef UP. Fantastic! Bank of Queensland slapped down

by

dragon-slayerWith all the focus on Covid, it’s good to see that major reform efforts are still underway. Last week the Morrison Government released the Bill to ‘beef up’ the unfair contract laws. It’s a ripper. It’s a game changer.

In 2015 the Coalition government passed unfair contract laws for small business people. As Self-Employed Australia was the primary, often the only, advocate for the laws (we campaigned for seven years) the laws achieved about 70 per cent of what we wanted. This new law will make the laws really strong.

The new Unfair Contract Bill

The Exposure Draft Bill has been negotiated with and supported by the states. It applies both to consumers and small business people.

The Bill Expands the definition of small business to businesses of up to 100 employees. Currently it’s only 20 employees. The Bill applies no limit on the value of the contract. Currently it’s only contracts to $300K. Plus the Bill clarifies what is a ‘standard form’ contract to one where the contract has been used before.

The Bill also expands the scope of Court Orders. If a clause is declared unfair in one contract, it will be unfair in all contracts. Fines can be imposed for using unfair clauses. A person can be banned from ‘managing a corporation’ for using unfair clauses.

The Bill gives real teeth to the laws. Big businesses and their managers will be in major trouble if they try to use unfair contract clause under this proposed legislation. It truly will make for a greater power balance between big businesses and consumers/small businesses.

Bank of Queensland slapped down

Take this example: The Bank of Queensland (BOQ) has known about unfair contract laws for six years. They were dumb if they didn’t! Yet they ignored the laws. The Federal Court has now slapped down BOQ. They had clauses in small business contracts that (1) let them change contracts at their whim, (2) allowed BOQ to declare a default anytime, (3) allowed BOQ to charge customers for BOQ negligence and (4) forced the customer to disprove a debt if BOQ declared a debt. These are all bastard clauses that have now been removed by court order.

But under the new Bill, BOQ and their managers would be in real trouble for having these unfair clauses. Their executives, lawyers and managers could face been banned from being a manager in banking or any corporation. Are you listening big business managers? Now it’s serious.

The Bill is subject to further consultation. We’ll be putting in a submission of STRONG support. Here’s our summary of the Bill.

Is the ‘gig’ up? Is a ‘secure’ job a fiction? We say it is!

by

security-blanketThe Senate is currently holding an inquiry into ‘insecure’ work. The Terms of Reference state: “…to inquire into and report on the impact of insecure or precarious employment on the economy, wages, social cohesion and workplace rights and conditions….”

Well we, self-employed, independent contractors, gig workers, contractors and so on—that is, people who are their own boss—are seen by labour academics and unions as doing ‘insecure’ work. And they see that as a huge social problem that has to be fixed. The Victorian government wants to ‘fix’ us as a problem by outlawing us. Some fix!!

We say that ‘secure work’ is a “figment of imaginations searching for legal expression”. In other words, ALL work is insecure. What people need is not a ‘secure’ job but continuity and certainty of income. This is a more sensible way of approaching the issue. Trying to manufacture ‘secure’ jobs is just the old left-vs-right thing. It’s plain dumb and doesn’t get us anywhere.

We say that self-employed people need ‘protections’ through commercial regulation, such us the unfair contract laws and pay-on-time laws. These sorts of things provide real, practical solutions.

We were asked to appear before the Senate Committee which we did on Tuesday 27 July (this week).

Here’s our one-page summary of our stance on the issue.

And here’s the 37-minute video of our discussion with Senators on the issue.

If you owe the money, pay up! That’s damn good policy

by

pay-on-timeMy heart was gladdened recently by the spectacular collapse of Greensill Capital, once a darling of the financial and (some) political elites in Australia and the UK.

Greensill was a ‘leader’ in reverse factoring, also known as supply chain financing. In its simplest formulation, reverse factoring enables a supplier to receive faster payment of money owed to it by paying a fee to a finance company. The finance company pays the supplier and takes over the debt. It can be good.

But the way it was working under Greensill had the stench of ‘come in sucker’.

Greensill claimed to have hundreds of clients, all of whom seemed to be big-end-of-town types such as Telstra.

But the trick that was happening under Greensill is that its clients seemed to routinely screw their small business suppliers by extending payment terms out to 90+ days. The deal then was that the small businesses would pay a commission to Greensill so that Greensill would pay them the money they were owed by the conglomerate.

In summary, the conglomerate takes money from the small business by extending payment terms. Then the small business had to pay Greensill to be paid. For small business it was rip-off territory.

But what was really on display here was capitalism at its grubby, manipulative worst.

Market economies and societies are not Wild West, unrestrained capitalist societies. Successful markets regulate behaviour. Good market regulation is as ‘light touch’ as possible. In the Greensill case, the regulators had moved in on this reverse factoring model and went further.

In the 2019 Federal Election campaign the Morrison Coalition made a firm commitment to introduce a package of small business pay-on-time laws. This included the government paying small business suppliers within 20 days, as well as requiring large businesses contracting with government to do the same. And further, establishing a compulsory small business pay-on-time reporting system for all large businesses.

As of now, each of these promises has been implemented or is in the final stages of implementation. Cross-party political support has been firm.

In this case of Greensill the damage to small businesses by the exploitative reverse factoring game was limited. The regulatory push moved in comparatively early. Too often, if the market is unregulated and left to ‘self-correct’, the damage to individuals is horrendous. Harm done to a few cannot be justified by the alleged benefit of the greater good in the long term.

In this ‘pay on time’ story we can witness perhaps an example of quality, ‘light touch’ regulation.

And there’s one simple principle in play. If you owe money: Pay!

Without doubt, for small business people, being paid on time is the BIG issue!

How the ATO ‘manages’ parliament – ATO techniques as ‘lawmaker’

by

In 2018, high-profile tax lawyer Mark Leibler stated that the ATO effectively makes tax law. He said:

“…for all intents and practical purposes, it’s effectively the (Tax) Commissioner who lays down the law.” “…Commissioner effectively continues to act as lawmaker…”

The accuracy of this statement can be seen, in part, in the way the ATO ‘manages’ its appearances before Parliamentary Committees.

Our observation is that the ATO is polite, professional but provides answers only in general ways, avoids specifics and always emphasises how ‘nice, reasonable, and sensible’ it is. It uses the ‘you can trust us’ approach. By using this approach the ATO deflects attention away from facts that show them to be unreasonable, unfair, aggressive, breaching rules and intent on being an arbitrary tax ‘lawmaker’. In our view the ATO usurps the parliamentary process of democracy in this manner.

We’ve monitored some of the recent Senate quizzing of the ATO (2 and 3 June). Here are some YouTube clips you might find interesting. We think these clips give an insight into the ATO, but we’ll let you decide what you think of the ATO’s parliamentary management techniques.

In our view the Australian Parliament needs stronger oversight of the ATO’s tax management processes. Legislation is needed to achieve this.

Deliveroo decision is NOT a win for unions. Just normal stuff!

by

There’s a lot of excitement coming from the union movement over the recent ‘Deliveroo’ decision. ‘This is the end of gig’ they say.

They are excited because the Fair Work Commission (FWC) has declared that Deliveroo food deliverers are employees and not independent contractors.

However  there’s nothing at all unusual about the decision. In 2018, a similar company to Deliveroo, the German-based Foodora, left Australia after its delivery people were declared to be employees. Conversely, in April  2020, Uber Eats delivery people were found to be independent contractors not employees.

You might ask, ‘is there some inconsistency here?’ Well, no! In fact the FWC (and the courts) are being entirely consistent. What the law requires is the application of the standard common law tests to distinguish an employee from a self-employed person.

The process involves considering up to about 20 or more factors such as: Did the worker have to work certain times? Was the worker ‘required’ to work? How was the worker paid? The task at law is to look at all the  factors and give an overall assessment.

Even though Foodora, Deliveroo and Uber Eats appear to do the same thing—organise riders to collect food from restaurants and deliver the food to customers at home—in fact they each have different contracts and manage the process differently. That’s why the rulings differ.

I’ve examined both the Deliveroo and the Uber contracts. I’m not surprised by the Deliveroo decision. There are major operational differences between the companies. The fact is that the Deliveroo decision supports the legitimacy of the gig economy.

In 2006, Federal legislation secured across the country the ‘common law’ test for employee vs contractor determinations. The Independent Contractors Act followed on from a 2006 International Labour Organisation declaration which secured the right of people to be self-employed. Australia is a signatory to that international obligation.

Further, Australia has done more than any country to protect and defend self-employed people.

The Independent Contractors Act has unfair contract provisions. In addition, we have specific Federal unfair contract laws for small business people that are currently being ‘beefed up’. Then there are the current moves to create pay-on-time laws for small business people. The JobKeeper and JobSeeker benefits were made immediately available to self-employed people during 2020.

At the same time, there is no tolerance for sham contracting, with specific laws against that practice.

These Australian protections for self-employed independent contractors are world-leading.

But this regime that protects the right to be self-employed is hated by Australian unions and labour in general. They run scam media plays trying to boost the argument that self-employment is on the way out.

This ‘we hate independent workers’ movement is deeply embedded in Australian Labor.

The Victorian government is proceeding with an agenda to kill off self-employment. But Victorian Labor’s plan is confronted by the Independent Contractors Act which overrides state laws on the issue. This then explains the hype around the (very normal) Deliveroo decision.

Labor is eager to turn ‘gig’ into an election issue. But it’s up against the most advanced package of self-employment protections in the world. Labor’s agenda threatens those protections.

ATO relies on ‘gossip’ to manufacture tax debt, defiling the rule of law

by

An April 2021 High Court outcome demonstrates that the ATO has chucked the rule of law into the bin. The ATO asserts that it can manufacture a tax debt based on gossip.

Between 2012 and 2015, criminals defrauded the ATO of at least $2.45 billion in GST in the ‘gold scam’. In happened arguably because of ATO incompetence. We’ve explained this before.

In our view, to cover its tracks, the ATO is attacking innocent parties.

Around 2016 the ATO withheld GST refunds of around $209 million due to a large gold refiner. The ATO knew that the big refiner was not part of the GST gold scam. The ATO won in the Administrative Appeals Tribunal. The basis of the ATO win was (hold on to your hats) that emails between two people, not associated with the refinery company, discussed issues around the gold scam.

This email exchange amounted to gossip and hearsay, contained no evidence and was essentially idle chat between the people involved and was ‘hidden’ amongst 44,000 pages of ‘evidence.’ The persons were never questioned.

The company appealed to the Full Bench of the Federal Court and won (November 2020). In layperson’s language, the Federal Court effectively said that reliance on gossip to ‘invent’ a tax debt was nonsense.

But the ATO took a further step that demonstrates just what a threat it poses to justice and the rule of law in Australia.

The ATO went to the High Court and asked the High Court to consider that the AAT ruling was correct. Think of that. In seeking ‘leave to appeal’ to the High Court, the ATO was saying that it has the right and legal capacity to invent a tax debt based on gossip.

In other words, if there were, for example, a Twitter or Facebook haranguing session between two people you did not know and they were saying that you were a tax cheat, then that would be enough for the ATO to declare you a tax cheat. The ATO could then raise a tax debt against you and proceed to collect that ‘debt’ by raiding your bank account.

This is not how justice in a rule-of-law society operates. Justice is based on facts and truth which are tested by examination and cross-examination. We are not held responsible for what we have not done because someone makes a gossipy comment.

Thank goodness the High Court rejected this ATO application. The company is not guilty. Gossip does not rule.

But consider further. The ATO has spent in excess of $40 million on legal fees pushing this case. Ordinary taxpayers and small business people cannot defend themselves against such ATO aggression.

In asserting its right to raise tax debts based on gossip the ATO is saying that it is the law and not subject to the rule of law.

This cannot be allowed to continue. Justice must prevail. We need action if tax justice is to be delivered in Australia. The case for reforming the ATO just keeps getting stronger.