Self Employed Australia

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“Everyone needs an Advocate”

Self-Employed Australia

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.

To gig or not to gig. Is that the question?

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pub-gigIf you’ve ever been to a pub gig, you’ll have taken part in what the Albanese government wants to (effectively) close down. The Albanese agenda is starkly clear after Workplace Relations Minister Tony Burke declared the ‘gig economy’ is a ‘cancer’.

Here’s a simple example of why we strongly oppose the Albanese/Burke agenda.

The gig economy is not something new. The Stones, Cold Chisel, AC/DC all did and/or do ‘gigs’. Gig is the contractual lifeblood of the entertainment industry locally and globally.

A gig is pretty simple. There’s a contract for a set price to do something. “Come to my pub. Play for three hours and I’ll pay you a thousand bucks”, says the pub manager. “Done”, says the singer. The singing done and the money paid. End of contract.

Somehow, for the Albanese government this is a ‘cancer’.

However, this familiar entertainment industry ‘gig’ model has taken new forms. Now gig work is available for ride-share, food delivery, aged and disability care, and odd jobs. The list goes on. And, yes, the entertainment industry has gig platforms. Gigsmash is but one.

What’s happened is that online technology has made gig work secure. Gig platforms enable anyone wanting to do a job to connect with someone needing a job done. The revolution is that job specifics and price are upfront and agreed by the parties. The gig platforms also make the payments and enable both the ‘doer’ and the ‘receiver’ of the service to rate each other.

It’s fantastic. The risk of not being paid is massively reduced. Think of how many times a pub manager has failed to pay the full amount agreed, screwing over the worker (singer)? It’s the security of payment and security and clarity of the gig work agreement that’s made this expansion of gig work so seemingly popular. And it’s all happened without government sticking its nose in!

But Minister Burke has promised to create laws that will require gig workers to have holiday pay as one eample.

So the pub manager will have to pay holiday pay on top of the $1,000 agreed. How is this to be calculated? Holiday pay is for full-time employees who’ve worked a full year. How is this to be calculated for 3 hours work and no more? Ouch! That has heads scratching! But let’s say it’s $10. It’s clear what will happen. The pub manager will only agree to $990 for the gig. $10 will have to be held back.

But when does the gig singer get the $10? Does the singer determine when it’s ‘holiday’ time or does the pub manager decide? Sounds like a recipe for scamming! So will Albanese/Burke then set up a massive new government-run department to manage gig workers’ holiday pay? Will the singer need to apply to the government for the $10?

But there’s more. Around 830,000 Australians do gig platform work in any year. But only 22,000 use gig for their full-time work. In other words, around 810,000 Australians (about 7 per cent of the workforce) only use gig work as part-time top-up work. How is gig holiday pay to be calculated for all these part-timers?

Whatever Albanese/Burke do, it’s destined to be a mess. The proposal/promise is illogical. It doesn’t fit the reality of how people work. It’s dumb. Its dangerous. It will do much harm.

We will keep arguing against this.

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)

Unions and labour lawyers in panic. High Court disaster!

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contract-kingA major High Court decision in February this year has sent unions and labour lawyers into a panic. The High Court declared that when deciding whether a worker is an employee or self-employed that the written contract is king!

We’ve waited until we received detailed legal analysis of the decision before making comment, which we can now do. We’ll send out several news alerts on this. It’s extremely important.

In simple layperson’s terms the High Court has said that:

  • If a written contract is clear and comprehensive, a court must primarily rely on the written contract in coming to a decision.

This seemingly knocks out what’s been used for the last 40 years or more. Courts have applied the ‘multifactorial’ test, which is a basket of behavioural indicators only one of which is the written contract. The High Court has said that the lower courts have misunderstood the situation and that the High Court has always had the view that the written contract is supreme.

This has sent unions and labour lawyers into a spin. The multifactorial test has been great for lawyers and unions because they could retrospectively examine a case going back years. It is a great source of income for lawyers and has allowed unions to intimidate businesses and self-employed people.

But the High Court has said that it has a duty to create certainty, stating that the multifactorial test:

“… is apt to generate considerable uncertainty, both for parties and for the courts.”

And

“It is the task of the courts to promote certainty with respect to a relationship of such fundamental importance.”

We see this as extremely important. There are 2.1 million self-employed people in Australia. We have a right to clarity and certainty. The High Court has done the right thing by society in its drive for clarity.

But there are others who want uncertainty. This is bad. And the pressure is already coming on the Albanese government to pass legislation to create uncertainty. We will campaign strongly against this.

But first we want to ensure that there is clarity about what the 99-page High Court judgement says.

We’ve prepared the following links for SEA members:

We’ll have more information and comments soon.

Paying small business on time. Albo: Please keep the good bits of the ABCC!

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paying-on-timeThe most important, practical issue facing all small business people is getting paid on time. But when working for a large business, far too many of us self-employed ‘mugs’ discover that we’re being used as a cheap source of finance for our ‘clients’ through delayed payments.

Payment reporting

The Morrison government set up a ‘big business–pay small business on time’ reporting system. The Small Business Ombudsman’s latest analysis of payment times shows that ‘more than half of big businesses are missing their own deadlines for paying their small business suppliers’. This is damning of Australian big business. It’s a rort that’s being going on for decades.

Construction sector ‘pay on time’

But there is one brighter spot. In the construction sector, subbies are routinely screwed over by big builders paying invoices really late. However, the construction regulator, the ABCC, runs a system requiring builders to pay subbies on time. It’s very effective.

This is because the ABCC’s power enables a significant ‘closing of the stable door before the horse bolts’. The key is that the ABCC’s powers rely on commercial triggers, rather than complex legal or administrative processes.

That is, construction contractors risk losing access to Commonwealth government-funded contracts if they fail to pay their subcontractors on time. It works really well. The outcome is that big builders don’t dare pay subbies late. The commercial risk is too high.

However, the construction unions hate the ABCC because the ABCC takes militant unions to court for breaking the law. Now the Albanese government is to close the ABCC to keep the unions happy. Okay. Fair enough. We all understand the political play.

Please keep the good bits, Albo!

We’re asking the Albanese government to ‘please keep the good bits of the ABCC’. In other words, keep the processes in construction that ensure that small business subbies are paid on time. It’s really important.

Numerous attempts by governments to find regulatory fixes for late payments in the construction sector have a poor record. The ABCC’s model, on the other hand, has worked.

  • When payments are within agreed/required terms, better cash flow management operates throughout the sector.
  • Better financial discipline operates through the sector when builders do not/can not exploit subcontractors as forced financiers of their businesses.
  • When payment times are tight and major builders go broke, the loss exposure of subcontractors should be/is limited to the agreed/required terms of trade. That is, loss exposure should be limited to (say) 30 days of trading instead of (say) 90–120 days of trading.

Our interest is of course the construction subbies—that is, the self-employed people who actually work on the tools, physically doing the building—and the myriad of self-employed specialist construction consultants as well. But frankly, proper payment times are good for everyone.

Great news! Albanese ‘beefing up’ unfair contract laws

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albanese-unfair-contractGet ready for a profound disruption to some core big business operations in Australia. And this is great for small business people, consumers and (believe it or not) big business as well.

The Albanese government has committed to introducing new unfair contract legislation in the current parliamentary sitting period. Labor promised this in 2019—a pledge we totally endorsed. We again strongly endorse this move by Labor.

We campaigned for seven years for the unfair contract laws for small business and achieved these in 2016. But the laws have proven to be too weak.

Australia’s unfair contract laws are arguably the world’s first (and in global terms possibly the only) laws that have addressed the issue of bad standard form contracts in a holistic way. The laws were introduced for consumers in 2010 and extended to small businesses in 2016. Insurance products were included in 2021.

Why the laws

Some lawyers say unfair contract laws are wrong because they override the principle that a contract once entered into is set in concrete, even if it disadvantages one party. This is a perverted view of contract. The Australian unfair contract laws effectively codify in statute the elements under common law that make a commercial contract a proper contract.

As examples, unfair contract laws hold that if a standard form contract enables one party but not the other to unilaterally change the price of a contract, or cancel a contract or change its terms, then the contract is ‘unfair’.

Why the need to ‘beef up’

The Australian Consumer and Competition Commission has been responsible for enforcing the unfair contract laws. Since 2016, the ACCC, with then chair Rod Sims at the helm, has consistently expressed frustration at big business ignoring the laws.

Until now, unfair contract terms could only be ‘voided’. There were no penalties for their use. Unfair contracts could only be sanctioned after they had done harm. This enabled ‘let’s screw people over’ big businesses to laugh off the laws.

To his credit, Rod Sims led the charge for a ‘beefing up’ of the laws. A ‘beefed up’ Bill was presented to Parliament earlier this year. It is this Bill that the Albanese government has as a template for making unfair contracts ‘illegal’.

If Albanese implements the template Bill, unfair contracts will be illegal with civil penalties of up to $100,000 for individuals and $10 million for corporations. A court will be able to make an order if it thinks there might be a loss. In other words, harm can be prevented before it occurs. Other provisions give real bite to enforcement.

Further, the current $300,000 threshold for the size of a contract subject to the laws is being removed. The size of a small business is being lifted from 20 to 100 employees.

On any assessment this is a major economic reform. It will protect consumers. But just as importantly, small businesses will discover a new level of equality of power with big businesses as both buyers and sellers of goods and services. Australia’s 1.3 million self-employed sole traders will have protections from bullying clients that they have never had before.

It’s a huge step forward.

 

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.

‘They’ plan to screw over 2.1 million Australians

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dark-menaceLet’s be clear. There’s a cabal of unions, labour academics and self-interested businesses that are gunning to destroy the right of Australians to be self-employed.

Their strategy is brilliant in its simplicity. They plan to push through new Federal legislation that will throw into chaos the law that defines who is self-employed and who is an employee. This will directly harm the capacity of Australia’s 2.1 million people who are self-employed—people who, by definition, are their own boss.

That’s right. The Australian Bureau of Statistics identifies 2.1 million of us comprising:

  • 1,391,900 self-employed (own boss) who don’t have employees and
  • 805,800 self-employed (own boss) who have employees.

The ‘cabal’ is mostly targeting the 1,391,900 self-employed who don’t have employees. Think hairdressers, owner-drivers, care workers, gardeners, personal trainers, and the massive numbers of IT, accounting (and more) consultants to identify just some. What the ‘cabal’ is calling for is legislation that will strip away your right to be your own boss. They want forced employment.  Such law will also have an impact on the other 805,800 self-employed.

The cabal wants legislation that invents ‘employee-like’ arrangements.

Understand what this would do. It would destroy the integrity of the commercial contract. It would give smart-arse lawyers the ability to carve out and deconstruct the very legal basis of commercial activity upon which our society is based and which defines who is self-employed. It’s a sneak guerrilla attack. But once in place it will have devastating effects.

Legislating to invent employee-like arrangements is to take social or psychological concepts and to fashion law on those concepts. It’s incredibly dangerous for our society. It’s something the High Court seemingly commented against in a ground-breaking judgment in February this year.

The High Court said (See par 44):

The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship.

That is, the employment contract, and its opposite, the self-employed contract are legal concepts. This comment by the High Court was within the context of the most important judgement on the definition of self-employment in 50+ years.

After more than 50 years of legal confusion the High Court said (See par 58):

It is the task of the courts to promote certainty with respect to a relationship [employee/self-employed] of such fundamental importance.…

and

The parties’ legitimate freedom to agree upon the rights and duties which constitute their relationship should not be misunderstood.

The fact is that people have a right to determine their contractual (self-employment) relationship themselves. Employee-like legislation would strip away that right. It would create massive uncertainty in defiance of the certainty the High Court says should exist.

Unfortunately, Labor’s federal ‘Secure Jobs Plan is to create ‘employee-like forms of work’ legislation.

2021: A Victorian Health Department Space Odyssey – Where is Hal?

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space-odysseyTry this piece of strangeness. We now have ‘proof’ that the Victorian Department of Health makes decisions and does things without any apparent human involvement.

The Department, we assume, must operate like Hal in the great, classic sci-fi movie 2001: A Space Odyssey. Hal was the super computer that ran the spaceship without human involvement. Somewhere in the Health Department ‘Hal’ must exist.

The ‘proof’ of Hal is contained in a 4 October 2021 memo to executives in the Health Department. On 29 September 2021 the Victorian WorkSafe Authority announced it was prosecuting the Department of Health over the 2020 Hotel quarantine disaster which resulted in over 800 deaths. The 4 October memo states:

“WorkSafe have advised that no individuals from the department are, or will be, charged.”

Here’s what this means. WorkSafe has found sufficient evidence of breaches of work safety laws to start a criminal prosecution of Health. We updated you on this last week. In other words, the Department did or failed to do things that has resulted in criminal charges being laid. BUT. According to WorkSafe’s advice to Health, no humans committed any of the criminal things. The Department acted criminally but no human acted criminally. Go figure!

But see. We told you so. It’s Hal! And now like the children’s book ‘Where’s Wally?” we have to ask ‘Where’s Hal?’

Here are just some of the questions that must be asked:

  • How did WorkSafe conduct a criminal investigation without interviewing any humans?
  • Or did WorkSafe interview and question humans?
  • If WorkSafe did interview humans, did any of those humans explain how the Department does things without humans making decisions or doing those things?
  • Can humans in the Health Department explain how the Department operates without humans making decisions or doing things?
  • Did WorkSafe meet or see Hal?

Of course, these questions are all nonsense and just as nonsensical as WorkSafe only prosecuting Health but not individuals.

In truth a government department is just a bunch of humans making decisions and doing things. A ‘department’ does not and cannot act criminally. Only humans act criminally. There is no Hal in the Health Department. Only humans.

But WorkSafe is acting on a fantasy, a Space Odyssey.

This is not just an isolated Victorian issue. It cuts to the heart of whether government in Australia operates impartially so that no-one is above the law, including government itself. It’s no joke. It’s serious!

Here’s the Health memo obtained through FOI.

Note the 104-page Charge Sheet but with all important information blanked out!

Prosecution of Victorian Health over 2020 Hotel Quarantine Disaster—Update

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It’s been a little while since we updated you on the legal process of prosecuting the Victorian government over the 2020 Victorian Hotel Quarantine disaster that resulted in over 800 deaths. What’s at stake is whether governments hold themselves accountable to the same standards to which they hold the rest of us.

It’s quite clear that our Not Above the Law Campaign forced Victorian WorkSafe to prosecute the Department of Health. We have to ask the question: how genuine is that prosecution? We’re chasing this and here’s an update:

  • The prosecution of Health was announced on 29 September 2021 and involved the laying of 58 charges. Since then there has been NO, that’s ZERO, further information.
  • We decided to check things out. We went to the Melbourne Magistrates’ Court and were told that there was an online directions hearing on 26 May.  Members of the public could attend and we were told we’d receive an email link. The link arrived. We dutifully attended only to discover that we’d been sent the wrong link. Goodness—what an unfortunate mistake by someone!!!

SO

  • We tried to hunt down the case number. What an effort that was, given that the case name has not been made public from what we could discover. Victory! We discovered the name. It’s Victorian WorkSafe Authority v The Crown in the Right of the State of Victoria (Department of Health). Case number M12097325. If you want to follow the case, check the Magistrates’ Court website, choose the “Criminal List” button in the top left corner and put the case number in the appropriate box. Members of the public have a right to attend, but it seems you’ll need to ring the Magistrates Court to receive a link (assuming you’re sent the correct link) or else attend the hearing in person.
  • Next step is that we’ve applied to the Court for the release of all court documents. We’re after the charge sheet, summons, prosecution summary and so on. Lawyers tell us that in criminal cases (OHS charges are criminal) such documents are ordinarily public documents. But the release will be decided at the next hearing date, Friday 17 June at 10 am (a Committal Mention). It will be interesting to see if WorkSafe and Health both apply to keep the documents hidden from the public.

Justice is something that must be done and must be seen to be done! But, goodness, with the Health prosecution there seems to be a lot happening to keep it ‘unseen’. We’re chasing this up and will update you after the 17 June.