Self Employed Australia

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“Everyone needs an Advocate”

Self-employment

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!

We give the Senate evidence on ATO small business behaviour

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Quite recently (14 June) we were invited to give evidence before a Senate hearing on the behaviour of the ATO towards small business. This was done within the context of proposals to require government departments to comply with ‘model litigant’ obligations. That is, to behave fairly and ethically!

We made a detailed submission supporting the proposal and explained how the ATO regularly abuses self-employed, small business people.

Our evidence was supposed to go for 30 minutes but went for over 50 minutes under detailed Senate questioning. In part we stated:

  • Our observation is that if you are upright, honest and completely forthright with the ATO, you run quite a high risk of getting abused through the system
  • …the behaviour of the ATO I liken to what happens with the churches over the sexual abuse cases and with the banks over their behaviour. At all times, it’s ‘deny, deny, deny’.
  • The tax commissioner has the power of a dictator. If you have dictatorial powers, those powers will be abused.
  • …on the issue of fraud, the taxation office in our view concocts allegations of fraud and any such allegation becomes at law a fact and not merely an allegation, which the taxpayer then has to ‘unprove’.

Our assessment of the behaviour of the ATO was taken with great seriousness by the Senate Committee. The full transcript of our evidence is here (see pages 1 to 8).

Channel 10 News covered our evidence that night. See the news segment here.

And other media outlets also showed great interest:

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.

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.

ICA starts legal battle with the ATO on two fronts

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At ICA, we’ve been complaining to the ATO for years about its bad treatment of small business people. We’ve made major submissions to tax inquiries. Look at this long list. We’ve tried to work with the ATO but there’s been no change!

So now, thanks to some brilliant lawyers, we’re off to court. Here’s an overview of the case we described in March this year.

Finally, we can give some details. It involves 55-year-old IT contractor Rod Douglass, his wife and their partnership and a demand from the ATO for $550,000 backdated to 2006 (10 years!). Rod is accused of tax evasion. Why? Because he complied with ATO tax advice published on the ATO website. Amazing!

This treatment by the ATO can hit anyone working for themselves. Even if you’re totally honest with the ATO, they can and do target you. We’re out to protect Rod. We can’t let him be beaten up by the ATO without helping. We’ve filed in the Federal Court and the Administrative Appeals Tribunal. There’s a lot of information that we’ll release as the lawyers authorize it.

However, Robert Gottliebsen has given some details and commentary in The Australian today. His article is here. Read the article so that you understand how anyone could be hit!

Robert says:

  • …the reason for the bad (ATO) culture is the fact the … tax officials are investigator, prosecutor, judge, jury and appeal court.
  • It was the inescapable intention of the tax officials to bankrupt him (Rod).
  • The precedent could … destroy many husband and wife partnerships around the land.
  • Chris Jordan (The Tax Commissioner) should consider admitting that he has a cultural problem in his middle ranking staff.

Robert’s article gives some details of Rod’s case. ICA will keep you updated and publish much more detail here as events unfold.

 

ICA launches Constitutional challenge to anti-truckie laws

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You’ll be aware of our campaign to stop the Road Safety Remuneration Tribunal.

We can now advise that, as of 4.10pm today in Sydney, the High Court confirmed the filing of Independent Contractors Australia’s constitutional challenge to the Road Safety Remuneration Tribunal Act. ICA is asking the High Court to consider that the Commonwealth does not have the power to fix prices and therefore that the RSRT Act is invalid and that any orders of the Tribunal are consequently invalid.

ICA has at the same time asked for an urgent injunction against the Tribunal and its orders that would effectively freeze the Tribunal’s orders until such time as the constitutional questions have been answered. We are in the hands of the High Court in terms of the timing of an injunction decision. We hope it will be soon.

Last week we asked for your owner-driver stories. We have been inundated. We have not been able to reply or process the huge number. But our massive thanks. We worked with several people to turn their stories into affidavits which involves a lot of work for filing with the High Court. We will ring these people to thank them.

This is the first phase of a lot of work. We may need to use many more stories in affidavits.

Thanks also to the huge number of people who have joined ICA. Your money is going to the legal fees but we will need to raise a good deal more. Lawyers for High Court challenges are expensive.

We will keep you informed.

 

UK self-employment surges—again

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It’s happened again. Self-employment in the United Kingdom has risen again, this time by 154,000 in the three months to December 2015, thereby making up more than half of the increase in UK jobs. We’ve been observing this since 2013. You’d think this surge in self-employment would level out at some stage, but it’s not happening yet.

It’s a structural change in the UK economy and society with significant political standing. A demonstration of this occurred just last week. Our UK ‘sister’ organization IPSE (Independent Professionals and Self-Employed) attended 10 Downing Street as part of PM David Cameron’s preparation for his negotiations in Brussels over the UK-European Union agreement.

IPSE has also successfully encouraged the government to conduct a review of ways to make it easier for the UK’s 4.6 million self-employed to prosper.

The prestigious Institute of Economic Affairs (IEA) has entered the debate, commenting on the structural shift that’s happening in the UK.  Significantly, the number self-employed women in the UK is rising faster than the rate for self-employed men—a major development.

With all the talk in Australia about entrepreneurship and innovation, it’s the self-employed, small business sector where the ‘guts’ of this is likely to happen in the economy. We’ve made big progress with the unfair contract laws. But Australia could well look at the UK to identify the reasons for its current success.

 

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.