Self Employed Australia

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Tax Reform

Fearing the truth – Australia’s government institutions – ATO

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Richard-BoyleIn April 2018 we were intimately involved in the production of the ABC Four Corners program ‘Mongrel Bunch of Bastards’. The program exposed evidence of the ATO’s abuse of small business people. The program brought real ‘grunt’ to our campaign to reform the ATO. And we have to say that in our observation the ATO has improved since then. There’s still much to be done, but it is better.

Included in the Four Corners program was the profiling of Richard Boyle. Richard was a case officer in the ATO who exposed ATO abuse of small business people and he explained this on the program. The consequence of this is that Richard was charged and is being prosecuted. Richard has become one of Australia’s most high-profile whistleblowers. He faces a lengthy jail sentence if convicted.

In the production of the program, and subsequently, SEA has had considerable dealings with Richard. In July 2022, SEA released a statement joining the call for the charges against Richard to be dropped. In the statement we explain our dealings with Richard as well as our view of him and his whistleblower actions. We said:

…in our view the charges against Richard must be considered within the ambit of Richard’s whistleblower activity as it exposed malpractice within the ATO.

…Richard’s whistleblowing action (and the activities related to that) were done in order to protect taxpayers from garnishee activity by the ATO which breached the ATO’s own procedural requirements.

In all our dealings with Richard we have found him to be a person of the highest ethical and moral standards.

Our statement provides the full details of the independent investigations into Richard’s whistleblowing. Those investigations detail the maladministration of the ATO at the time and, in our view, effectively support the propriety of Richard’s exposure of the truth.

This Monday (18 September 2023) the ABC 7.30 Report ran a full segment on Richard Boyle. This time they interviewed a small business taxpayer (Dirk Fielding) who Richard had helped in 2017 and who, through the ATO’s actions, has been used to generate Richard’s prosecution. Dirk refers to the prosecution as ‘insanity’.

Further, last week some 30 MPs and Senators joined the call to have the charges against Richard dropped. We again join that call and reiterate the reasons for the dropping of the charges as we explained in our statement of July 2022.

Should gig workers like Mick Jagger, Beyoncé and Harry Styles be worried?

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In late April, we alerted you to the new Australian Taxation Office (ATO) reporting rules for gig workers. We had some queries asking, “what are ‘gig’ workers?” That’s a pretty sensible question.

Last week I posted the answer on Substack. You can read ‘To Gig or Not to Gig’ (it’s free!)

Yes, icons of global popular culture such as Mick Jagger, Beyoncé and Harry Styles are all gig workers.

And (believe it or not) gig work is even older than Mick Jagger! Wow! I wonder if Mick’s eight children—particularly his youngest child, six-year-old Deveraux—would realise that Mick’s a gig worker? They probably wouldn’t care…

But the ATO does care about who is a gig worker. And the Albanese government, under Minister Burke, wants to kill off gig. But we assume that it wouldn’t give PM Albanese any ‘Satisfaction’ to attack Jagger, and anyway ‘You Can’t Always Get What You Want’.

But the ATO is really looking at this as a Satellite issue (apologies to Mr Styles).

What the ATO is focused on is the type of gig work that’s done through platforms. No, not the ‘stage’ platforms that Mick, Beyoncé and Harry work on, but the ‘tech’ platforms that Uber and other such companies use to organise work. The ATO calls it the sharing economy.

What the ATO wants to do is track your income if you work as a ride-share driver, rent out your flat/house/room for short-term accommodation and so on. The ‘platform’ companies will be required to report your income to the ATO starting on 1 July 2023 (i.e., soon!) The platform companies will require information from you, notably your:

  • ABN and business/trading name (where applicable);
  • first, middle and surname/family name (for individuals);
  • date of birth (for individuals);
  • residential or business address;
  • email address and telephone numbers; and
  • bank account details.

But we suspect they’d have all this information anyway. The ATO has provided a detailed explanation here.

And just to ensure the message gets through, to steal a line from Beyoncé, these new gig reporting rules also apply to Single Ladies! (But presumably won’t apply if you’re still in nappies.)

Gig workers alert – ATO tracking your income

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gig-workersThis is to alert SEA members and subscribers about new laws affecting you if you earn income through ‘gig’ platforms.  As of 1 July 2023, the platforms will be required to report your income to the Australian Taxation Office. The move is directed to identifying undeclared income and will eventually apply to GST compliance.

Legislation for the Sharing Economy Reporting Regime passed Parliament in December 2022. The ATO is having to design the implementation of the new laws quite quickly. The ATO is seeking to implement this properly and is conducting industry and ‘stakeholder’ consultations on this. We’re involved in these consultations and have raised a number of issues.

To give you some context, the new reporting rules are targeting the (approximately) 970,000 people, or 7 per cent of the workforce of 13.9 million, who earn income using gig platforms. Only 0.19 per cent of the workforce, however, report earning all their income from gig. That’s according to the comprehensive inquiry into gig work done by the Victorian government.

Consequently, the ATO’s gig income reporting regime is overwhelmingly going to affect people who use gig as top-up income. If you’re using gig for income, you’ll need to ensure that you’re reporting that income correctly.

The issues we’ve raised in the consultation so far include the following:

Data collection: The gig platforms will be required to report data other than simply financial—mainly, we’re told, for identification purposes. We asked if the type of data required could be clarified.

GST: How will GST reporting operate? Will gig platforms be required to understand gig workers’ GST threshold limits?

Gross or net income: We assume that reporting will require net income declarations. That is, income after platforms take out all platform and related expenses.

Dispute management: This is our top query.

What if a platform incorrectly reports income or reports income that does not match the ATO’s prescriptions?

Our concerns here are strongly linked to the abuse of social welfare recipients in the Robo Debt scandal. In that case the ATO provided income data to Centrelink which then used that data to allege incomes that were false. The government’s dispute-resolution process was essentially non-existent, resulting in huge abuse of welfare recipients. The same potential exists with this new reporting system—namely, if there are reporting errors, then the gig worker is hopelessly disadvantaged in having them investigated and fixed.

We have to say that the ATO was/is very receptive to our concerns and queries.

If you earn income through gig, we’re keen to hear from you if you have concerns or can identify issues. Drop a line to me (Ken Phillips – kennethnormanphillips@gmail.com)

You can read more from Ken Phillips on his Substack Self-Employed Aren’t Stupid site, including ‘A tale of 2 Croissants.’

ATO watchdog to be closed down/neutered?

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ATO-watchdog-robodebtIf there are two things to be learnt from the current Royal Commission into the Robodebt scandal, it’s that governments can and do ‘get it wrong’ and that governments can and do inflict massive harm on individuals.

In the Robdebt affair the Australian Taxation Office supplied the income data of tens of thousands of welfare recipients to Services Australia, the federal government’s welfare department. The data was misused by Services Australia resulting in up to 200,000 people who didn’t owe the government anything being hounded by the department over incorrectly assessed debts. The scheme was illegal but the department pushed ahead anyway.

Some might say that the Royal Commission is political payback by the Albanese government against the Morrison government. That’s nonsense. The inquiry is an important investigation into how government can ‘stuff up’ even while claiming to be acting in the public interest. Lessons must be learnt, and remedies implemented to limit the misuse of government power over individuals.

That’s why we are deeply concerned to read media reports of a push to dismantle the independent ATO watchdog, the Inspector-General of Taxation and Taxation Ombudsman. The Tax Ombudsman is a small federal government department that is legislatively charged with investigating complaints against, and reporting on the performance of, the ATO.

In our view the ATO hates this oversight because it creates some measure of transparency. The ATO has a powerful media unit that pumps out stories about how perfect the ATO is. But we know that the ATO gets things wrong on too many occasions. Take this one example.

In the Robodebt Royal Commission the ATO has given evidence that the ATO remained silent about the illegality of the Robodebt program in order to protect the Human Services Department (Services Australia) from adverse publicity. The ATO wanted to show solidarity with other government departments. In fact, the ATO should have spoken up, but they didn’t. This is what happens in governments.

Good public servants will often see the protection of the institution as more important than the protection of ‘the people’, even when government inflicts harm on the people. On the other hand, public servants can have their lives destroyed if they tell the truth. Look at the treatment of ATO whistleblower Richard Boyle.

Governments need to have strong internal watchdog departments. This is what the Taxation Ombudsman does. The Ombudsman has a legislative charter to watch the ATO. Such internal watchdogs act as early warning radar systems. They make for better, more transparent government. They reduce the ability of government to harm ‘the people’. Who knows? A Services Australia watchdog might have prevented the Robodebt scandal.

We’re writing to the Prime Minister and others to ask for commitments to retain the Taxation Ombudsman. In fact, we’re asking for reform and an increase in the Ombudsman’s powers. A parliamentary committee last year recommended just this. Read our summary ‘One Giant Step for Taxpayers – ‘Taxpayer Rights’.

ATO Small Business Debt: Patience Needed

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patienceThe Australian Taxation Office views small business tax debt as a major problem. The ATO says that small business debt is two-thirds of the $37 billion owed to the ATO—in other words, $24 billion.

Fortunately, the ATO does recognise that much of existing small business debt is the direct result of huge losses small business people suffered due to Covid lockdowns and restrictions. The ATO is showing some understanding. But we hope that the understanding is sufficient and that it will ‘stay the course’. Here’s one story that demonstrates the ‘Covid business disaster’ experienced by (at least) tens of thousands of self-employed people.

I had a chat the other day with a single mum who’s been running her own small business for about six years. She rents a commercial space that’s critical for her particular business. Things were going reasonably well and in 2019 she needed to move from one premises to another. She spent quite a bit of money upgrading the new premises, moved in and business was looking up. Then Covid hit in early 2020.

During the entire Covid lockdowns of 2020–21 the rules meant that she was prohibited from operating at all. Income dropped to zero. Yes, zero! She’d signed a five-year lease and had a bank mortgage. In early 2022 she could start operating again. But the loyal customers she had built up had drifted away. She’s had to rebuild, and although things are looking better, they are not yet back to pre-Covid (2019) levels.

She owes money to the ATO related to her pre-Covid trading. The ATO (fortunately) has her on a payment plan. She’s been very upfront with the ATO. But she’s still needing to cover her mortgage payments plus pay the rent on her premises. If she loses the premises, she’s out of business.

She talked to me about the struggle. I really don’t know if she can survive. She’s a self-motivated, positive, ‘go getter’. But my words of encouragement and support are just words and don’t cover the bills. She’s the sort of person who is most likely to battle through and, give her several years, get on top of the mess and start to make a profit again.

This lady is just one typical story. The economic pain of Covid has impacted the most vulnerable in our community—the ‘go getter’ small business individuals.

We hope that the ATO maintains its small business patience and support. But this needs to happen on a case-by-case basis, with high quality ATO communication and realistic assessments of individuals’ circumstances. It will be a long haul over several years. This is the economic ‘long Covid’.

If the ATO is serious, it should legislate tax fairness

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JordanWe’re challenging the Australian Taxation Office to enshrine fair treatment of taxpayers in legislation. It’s a major campaign priority for us.

Far too often we see self-employed, small business people in particular being treated badly by the ATO. The ATO has an internal policy that’s supposed to ensure that all taxpayers are treated fairly by ATO officers. The policy is stated in its Taxpayers’ Charter. The ATO is currently reviewing this policy. We’ve made a submission.

Most ATO officers behave fairly. There are some rogue ATO officers and there’s occasional incompetence. Taxpayers deserve legislated protection from rogues and incompetence. That’s fair. That’s justice.

We’ve said in our submission:

The Taxpayers’ Charter is an ATO ‘feel good’ statement of well-meaning intent as to how the ATO will or does treat taxpayers. It does not do anything to create a legislative obligation upon the ATO to treat taxpayers with any measure of fairness.

If the ATO were genuine and serious about ensuring that taxpayers were treated fairly and required to be treated fairly, the ATO would encourage and support a legislated Taxpayers’ Charter. Such legislation would impose sanctions against the ATO and ATO officers for breaches of the Charter. We recommend that the ATO support such legislation.

On a straightforward reading of the ‘Taxpayers’ Charter – essentials’ there is nothing in the wording of the Charter itself that triggers the need for compliance by the ATO if the Charter is breached by the ATO.

Our analysis of tax administrative laws is that any supposed taxpayer ‘rights’ are scattered through complex different legislative Acts that require expensive and specialised legal advice to comprehend, let alone apply. The upshot is that few people outside the ATO know or understand the rules and what the ATO lawfully can and cannot do in administrative terms.

We compare this with the USA, where taxpayers have rights to fair treatment in legislation. The USA tax office (IRS) must comply with these fair treatment laws.

In comparison, the ATO Taxpayers’ Charter is only a public relations exercise. We’re calling on the ATO to support taxpayer fairness in legislation.

Our submission to the ATO is here. It’s not too long a read and sets out:

  • The ATO Taxpayers’ Charter;
  • A table of the complex laws covering alleged Australian taxpayer rights; and
  • The USA Taxpayer Bill of Rights.

We’ve been running this campaign for over a decade now and will continue to do so.

New UK PM sets benchmark for self-employed (tax) rights

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truss-albaneseWe’ve been campaigning for more than a decade for major reform to how the ATO treats self-employed small business people. And since 2000 we’ve studied how the UK tax authority (HMRC) treats the UK’s self-employed. Both the ATO and HMRC seem to have been trained at the same bureaucrats’ ‘bully school’. Both defile the ideas and practices of justice and fairness.

But late last week, the new Truss government took a giant leap by repealing tax administration laws that HMRC has been using to bludgeon the UK’s self-employed. The Albanese government should take note.

What drove the UK repeal was a realisation that the UK laws were doing major harm to the UK’s economy. But more, the issue was cancerous for the Conservative Party’s political future.

The UK issue goes back to 2000. The UK tax authority, His Majesty’s Revenue and Customs (HMRC), views all self-employed people as tax dodgers. In 2000, laws were introduced (called ‘IR35’) which enabled HMRC to declare self-employed people to be employees. The trouble is that, invariably, when the courts looked at HMRC’s declarations, HMRC lost. But they kept destroying small businesses.

In 2017 HMRC shifted tactics. Instead of directly attacking self-employed people, additional new rules, called ‘Off Payroll’, required the engaging business to be responsible for deciding if a person was self-employed or an employee.

In 2021 HMRC applied the new Off Payroll rules to the private sector. This is where disaster struck (again). Third-party operators had evolved since 2017 who claimed that they could manage the Off Payroll rules. The public sector, followed by the private sector, forced self-employed contractors to work through these third-party operators. But far too many of these operators ran their own tax-dodging schemes, stole from contractors, and operated outside the UK to avoid UK laws.

In August 2022 the London School of Economics reported that UK self-employed numbers were down by 500,000, and dropping. It said, “The economy is not going to recover until we start treating them (self-employed people) better.”

This message about economic reality was delivered shortly after Boris Johnson had resigned as PM, but it was already resonating throughout the UK. Rishi Sunak was Johnson’s Chancellor. He introduced Off Payroll to the private sector in 2021. When Sunak made his pitch to become Conservative Party leader he was hammered on social media for his trashing of the self-employed. Liz Truss promised to do something about IR35. Truss won the leadership.

What has caught everyone by surprise is that the new Chancellor’s announcement last week is a complete destruction of Off Payroll. This is a massive embarrassment for HMRC but shows the extent to which the Truss government is seeking a total reset. Dumping Off Payroll is a headline part of a substantial package of UK business encouragement reforms aimed primarily at easing regulatory complexity.

What has all this to do with Australia? Business regulation complexity and bureaucratic stupidity grinds down economic growth. The UK’s HMRC has been doing huge harm to the base of the UK economy, self-employed people.  The ATO is doing the same in Australia. At some point we need a government that will seek a fix.

It’s about collecting tax within a framework of legislated fairness and justice. Here’s our model for a solution. (YouTube)

In London on joint international self-employed defence campaign

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London-QueenI’ve been in London over the last week-and-a-bit. We (SEA) have a long association with several UK self-employed associations and have been working with them on common issues to defend self-employed people. Hence the London presence.

The two big issues are:

  • The UK tax authority’s (HMRC’s) unfair treatment of self-employed people. (Sound familiar to the ATO??)
  • Identifying whether an individual is an employee or self-employed and what ‘rights’ each has.

Reforming tax administration

After many months of planning we were lined up for meetings/presentations with UK MPs in Westminster. These meetings were to discuss how HMRC could be reformed along the lines that we’re campaigning on for reform of the ATO. That is, using the USA laws covering the IRS as a template. However, the passing of the Queen and her funeral have meant that all these meetings were cancelled. Once the Royal transition is complete and the UK Parliament starts operating again, we’ll be working with our partners to re-initiate the campaign.

Our aim is to see if we can get a common movement in UK and Australia for reform of the HMRC and ATO. The treatment of self-employed people by both administrations is terrible, and their intimidatory behaviours share similar features. With a joint campaign effort we may increase our chances of achieving fairness for self-employed people.

Self-employed status and ‘rights’

We did, however, go ahead with a planned workshop session on self-employed status and ‘rights’. Included in this workshop were like-minded friends from the USA. This issue is ‘hot’ in the UK and USA (think California outlawing self-employment). Even though the media were present, we’ve recorded the workshop and presentation and will also release this once the Royal transition is complete. This issue has great importance for the UK, the USA and Australia. In Australia the Albanese government is committed to ‘smashing’ the self-employed. And the Albanese government, we predict, is likely to replicate very confusing UK ‘little bit pregnant’ laws to achieve its aims.

We’ll have a lot more to say about this and to explain the issues over the coming weeks/months. But at this stage we’re putting together a UK/USA/Oz ‘team’ to focus on the common themes to defend the right of people to be self-employed. We’ve gotta be organised!

More soon.

The truth needs to be told about the ATO.  Drop the charges against Richard Boyle

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richard-boyle-protestEarly this week the trial for ATO whistleblower Richard Boyle was to start in the Adelaide District Court. However, Richard and his entire legal team came down with Covid and the trial could not proceed.

But the trial cancellation didn’t stop us joining a rally of citizens calling for Richard’s case to be dropped. In the photo are SEA members Annette and Tina making our views known. The Australian Financial Review gave Richard’s case good exposure on Monday.

Background

On 9 April 2018 an ABC Four Corners exposé was aired that exposed malpractice and small business abuse by the Australian Taxation Office. Ex-ATO debt collection officer Richard Boyle featured in the program, detailing malpractice in the ATO’s debt collection division. Essentially the ATO was raiding people’s bank accounts in defiance of its required rules.

Richard had lodged an internal report to the ATO detailing the malpractice which was ignored. Richard then followed lawful whistleblower procedures in going public. However, the ATO still went after him, initially with charges that would put Richard in jail for 161 years.

Richard’s report on ATO malpractice was subsequently proven to be accurate by both the Inspector-General of Taxation and the Small Business Ombudsman. A Senate Committee criticised the ATO.

Why the charges should be dropped

We have detailed why the charges against Richard should be dropped. See our full reasons here.

In summary, our reasons include:

  • Richard’s whistleblowing was the moral thing to do. This impacts upon the appropriateness of the prosecution.
  • The charges against Richard are the product of a witch-hunt.
  • The length and expense of a trial is a waste of public resources.
  • There is a need to maintain public confidence in the administration of justice.

In undertaking Richard’s prosecution, the Commonwealth risks creating the impression of conducting a cover-up of evidence of maladministration by the ATO. If not a cover-up, then at least a diversion from the truth. This seriously diminishes the confidence of the public in the tax administration system. Further, it seriously diminishes trust in the justice system itself, by delivering the potential impression that the justice system is likewise involved in covering up maladministration by the ATO.

Stop prosecution/ persecution of ATO whistle-blower Richard Boyle

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richard-boyleIn a truly important development, Labor’s new Attorney-General, Mark Dreyfus MP, has ordered the dropping of charges against whistle-blower lawyer Bernard Collaery. Collaery had supported an ex-spy who exposed a 2004 Australian spying operation in East Timor.

We ask Mr Dreyfus to now seriously consider the dropping of charges against ATO whistle-blower Richard Boyle.

Richard was charged in 2019 with offences that would have put him in jail for 161 years. This occurred after Richard exposed serious misbehaviour inside the ATO in their debt actions against small business people. Richard went public with this in 2018 on the Four Corners exposé of the ATO’s bad behaviour.

Richard’s reporting of ATO misbehaviour has proven accurate in the following years. Further, a Senate inquiry heard that because the ATO ignored Richard’s internal reporting, this led to investigations from the Inspector-General of Taxation, the media and so on.  Even an ATO-funded survey found that the ATO acted unfairly.

Australian whistle-blower laws are supposed to protect public servants who follow set procedures, principally issuing public interest disclosure documents. The legislation on this supposedly facilitates “… disclosure and investigation of wrongdoing and maladministration in the Commonwealth public sector…” What a joke this law is.

Richard followed public interest disclosure processes but that didn’t give him any protection. The ATO went after Richard anyway.

In our view Richard Boyle is an Australian hero. He exposed the truth about  the bad behaviour of the ATO.  In our view, the ATO is not just in the business of prosecuting Richard but rather of persecuting him. Why? In our view it’s because Richard is being used as an example to all other ATO officers. The message is clear. Don’t tell the truth. Don’t expose when the ATO does the wrong thing.

In the United States, whistle-blower protection laws are robust and have a long history dating back to the Civil War. The US recognizes that government must be transparent and accountable if government is to serve the people properly. Protecting people who declare the truth is an essential part of open, transparent and good government.

We congratulate the new Albanese government and AG Mark Dreyfus for dropping the charges against Bernard Collaery. Previous Coalition governments have shown no interest in protecting whistle-blowers but have been active in their persecution. The Albanese government seems to be using a firm broom to sweep up a major mess on this one.

Mark Dreyfus has let it be known that he is reviewing other whistle-blower cases, but has not confirmed if Richard Boyle is one of them. We ask that Dreyfus do for Ricard Boyle what he has done for Bernard Collaery and drop the charges.

We consider this an important step toward better government and a better ATO.