Self Employed Australia

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“Everyone needs an Advocate”

Taxation

Reforming the ATO. An urgent but common sense agenda

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If you watched ABC Four Corners last night, the evidence of the ATO’s abusing its powers against small business people was compelling.

However, it’s one thing to understand the abuse! It’s another thing to find solutions. That’s why we’ve put together, with considerable legal input, a reform agenda for the ATO.

Today we launch, The Power to Audit is the Power to Destroy.

The reforms we are calling for do not reduce tax collection powers. But they apply the principles of good policing to create checks, balances and accountabilities to ensure powers are used responsibly. Without checks and balances the ATO will continue to be abusive. The ATO has promised internal reform in the past but failed.

In summary we are calling for

  • The ATO to be divided into 2 separate authorities, one for tax collection and auditing, the other for objections and appeals.
  • The Commissioner with all powers concept be changed, so that each authority is headed by a CEO answerable to a board. (Similar to ASIC, ACCC, etc.)
  • A Small Business Tax Tribunal be established
  • Transparency be required on actual debt and prosecution management.
  • Disputed debts cannot be collected until disputes are settled.
  • Capping of penalties.
  • Judicial oversight of ‘fraud’ action.
  • Strengthen the Administrative Appeals Tribunal.
  • Use of State Supreme Courts for disputes.

Our position and discussion paper, The Power to Audit is the Power to Destroy, gives details and explains the reasons.

But we’re not naïve about the difficulty in having these reforms adopted. Plenty of parliamentary committees and previous government ministers have tried to reform the ATO but all have failed. The ATO is expert at stopping reform. The ATO’s well-placed ‘friends’ are already actively defending the ATO.

But, we’re determined. The ATO abuse will not stop without reform. It took us seven years of hard work to achieve unfair contract laws for small business people. On this tax reform issue we are in for the long campaign!

‘Mongrel Bunch of Bastards’ its viewable here on ABC iview.

ATO: Deny. Deny. Deny.

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ATO today released a Media Statement in response to the Four Corners show (‘Mongrel Bunch of Bastards‘) last night.

To our mind the ATO is in denial. But we will leave you to judge. Its release is below. Also, the ATO union—the ASU—has defended the ATO.

Again you judge!

 

Media statement 10 April 2018

ATO Executive statement on ABC/Fairfax coverage

The ATO strongly disagrees with the allegations and views put forward by Fairfax and the ABC in recent coverage about our administration of the tax and superannuation systems.  The media have taken a handful of isolated cases, presented only one side of the story, and then extrapolated these to suggest systemic issues with our administration of the tax and super systems.
It is our view the coverage includes unbalanced commentary and opportunistic journalism, as well as ill-informed analysis of the facts.
The truth is less sensational.
Several of the cases mentioned are more than five years old, and have already been subject to external review, including through the Inspector-General of Taxation.
The work we have done over the last five years in re-inventing the client experience and our culture means many of the allegations from these cases are not representative of today’s practices.
Where we have made mistakes we will apologise and seek to rectify the position and restore the relationship with the taxpayer.
The majority of our clients have a seamless positive engagement with us.
Of the almost 150 million interactions and transactions with have with taxpayers each year, almost all progress smoothly and well.
Less than 0.1% of all interactions result in a complaint or an objection.
There is absolutely no evidence that in roughly 5 per cent of cases the Tax Office gets it wrong. In addition, no review, scrutineer or credible source has ever found a pattern of abuse towards small business owners by the ATO.
We know the overwhelming majority of small businesses want to do the right thing and we are proud of the work we have done to improve the experience of small businesses, and the transformation of our culture to focus on client service and early intervention. In addition, our capability, resources and laws equip us to effectively administer the tax and super systems.
The feedback we consistently receive from credible sources – like small businesses themselves and their key industry associations – is positive about how we listen and respond to their needs. We are concerned this coverage serves only to create tension and worry for small businesses where it did not previously exist, and perhaps even stop people from coming to us to get things sorted. That’s the worst outcome for everyone.

‘Mongrel Bunch of Bastards’: ATO Update

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The evidence mounts on the ATO’s abuse of its powers with small business people. This will culminate in the Four Corners full story this Monday, ABC 8:30.

We highly recommend you watch this. The Four Corners TV promo is here. 

There has already been considerable coverage:

Our conclusion is that the ATO must be reformed. The reform is not to reduce tax collection powers but to ensure that those powers are not abused. More on this later!

‘Mongrel Bunch of Bastards’: ABC exposes the truth about the ATO

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We thought we’d been strong in our criticism of the Australian Taxation Office! But the ABC Four Corners show airing this Monday 9 April at 8.30pm takes the criticism to a whole new level!

We’ve said of the ATO that it:

and we’ve asked:

Four Corners comes bang to the point in its title for the program: ‘Mongrel Bunch of Bastards’.

It’s a documentary exposing the mistreatment of small business people by the ATO.

Here’s the link to the ABC promo.

You’ll see and hear the stories of

In the show I say that the ATO attacks vulnerable people.

We know this because of the huge effort we’ve put into defending self-employed people unfairly under attack from the ATO.

Be prepared: Seven key ATO powers to worry you

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Some might say ‘Panic.’ We say ‘Be aware!’ ‘Be prepared!’

Our coverage and criticism of the ATO’s treatment of small business people is extensive. See here.  We understand why some people might think we are exaggerating. Surely the stories are ‘one-offs?’

But we see a pattern. The ATO’s behaviours are a result of its powers, powers that exceed those of the police. It’s a shock to discover that the ATO can:

  • Raid your home without a warrant.
  • Allege a debt without proper evidence.
  • Demand payment of an alleged debt.
  • Forcibly take (garnishee) money from your bank account.
  • Sell your house.
  • Bankrupt you.

All this before you have a chance to defend yourself. Surely not! But unfortunately, ‘yes’, these powers are given to the ATO in legislation.

We say ‘Don’t panic!’ ‘Be aware!’ ‘Be prepared!’ ‘Knowledge is self-empowering!’

Make sure your accountant knows. If your accountant doesn’t understand the ATO’s powers, he or she could make mistakes in handling your tax.

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.

Could the ATO have attempted to ‘pervert the course of justice’? Judge asks

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We work hard to ensure that our criticism of the way the Australian Taxation Office treats self-employed people is based on facts. Our summary of the mistreatment of Rod Douglass we think demonstrates the facts.

And the fact is that what happened to Rod could happen to anyone. This includes consultants, IT and engineering professionals, tradies, even home-based small business people.

But what has just occurred is extraordinary.

Michael Shord happens to be a diver working on overseas oil rigs. He is arguing with the ATO over how much tax he owes. Fair enough! His situation is a bit complex. However, a Tribunal made an error in a ruling. The ATO knew this. But when Michael tried to get the error fixed, the ATO opposed this in higher Courts.

In a Full Federal Court judgment last week Justice Logan said: (brackets and emphasized words are ours)

the “…denial of procedural fairness to Mr Shord … is patent.”

and

“…the Commissioner (Tax) should not just have not opposed the amendment (fixing the error) but readily consented to it…”

Justice Logan then said of the ATO’s behaviour in opposing the fix,

“…Departures from model litigant behaviour can, in particular circumstances, constitute professional misconduct, a contempt of court or an attempt, contrary to s 43 of the Crimes Act 1914 (Cth), to pervert the course of justice.”

This is arguably an extraordinary judicial criticism, almost a warning to the ATO.

However, Justice Logan then stated

“…it appears to me that the lack of a ready concession of the jurisdictional error was just the result of a lack of understanding…”

Prior to stating the above, Justice Logan demonstrated an acute understanding of history and the foundations upon which a just society sits. And further, how lack of integrity and honesty by tax authorities can crumble those foundations. His comments are thoughtful. Read them here.

Justice Logan’s analysis reminds us of the importance of our campaign for reform of the ATO. It’s not just about self-employed people but the very integrity of our society.

Here are links to a summary of last week’s judgment and the judgment itself. Also, here’s a quick YouTube summary.

Robert Gottliebsen in The Australian has also commented on the case: ‘Federal Court judge warns tax Commissioner’

Understanding both Rod’s case and Michael Shord’s will better prepare you when you’re faced with a Tax Audit.

You open the mail. You owe us $422,030.64 says the ATO. What??

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Imagine this. You arrive home from work. You’re a freelance consultant; an engineer or maybe an IT specialist currently doing work for a bank. Even an aged care worker or a plumber! You’re one of the 2 million plus self-employed people in Australia, one of the new breed of entrepreneurial ‘gig’ economy workers, so the commentators say!

A month ago you had a phone chat with a couple of seemingly friendly ATO officers who had queries about how you work and your tax returns. You were open and honest. Nothing to hide! Pretty simple really?

There’s a letter. You open it. It’s 18 pages of confusing Tax Office bureaucratic blabbering. Somehow you’re accused of tax fraud/evasion. You struggle to understand. But one thing hits you. It’s a demand to pay $422,030.64 for taxes going back 10 years, with 50% penalties and interest!

This can happen to anyone. It happens constantly. It happened to Rod Douglass, 55, a consultant in Perth. You might remember we’ve been helping Rod defend himself.

Rod has given us permission to publish the letter he received in July 2015. Here it is.

We defy you to understand the accusations. We’re publishing this because it’s important to understand how the ATO behaves. We consider the processes used by the ATO against self-employed people amount to bullying and intimidation. There’s no fairness here!

In defending Rod, the matter went to the Federal Court in November 2016. Then the ATO withdrew, saying they’d made an error. You’re joking! Seventeen months of legal firepower for the ATO to admit an error!

Then there’s this. Another letter, this one in March 2017. This time it’s 12 pages of ATO blather. Here it is. It’s essentially ATO running the same issue, and ignoring its 2016 admission of error. This time we defy you to work out how much the ATO is demanding.

We’re helping Rod again.

To be clear. This is not a matter of Rod not paying his taxes. He has consistently declared all income and paid taxes. The issue is over highly technical interpretations of tax law relating to how income of self-employed people should be treated. The ATO ‘forms opinions’ which are legally suspect, then attacks aggressively.

Our position is that the ATO must comply with the law, just as taxpayers comply with the law. In this article by Robert Gottliebsen (published today in The Australian) he says:

…  in the Douglass process the Australian tax office is graphically showing it can pick out any professional in Australia who is operating in partnership and bankrupt them because they can’t afford to defend themselves.

We agree. That’s why we need an independent Tax Tribunal.