The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), headed by Kate Carnell (pictured), revealed that federal Minister for Small and Family Business, Skills and Vocational Education, Michaelia Cash, requested it to examine the scope of instances where an SME has disputed an assessment by the ATO, and where the ATO has commenced early recovery action.
“Overzealous early debt recovery by the ATO can be a small business killer,” Ms Carnell said.
“Our research last year into unfair treatment by the ATO found serious system-wide issues impacting the small business sector, including early debt recovery.”
She said that the ASBFEO heard from multiple business owners that they were “devastated financially” by this practice, particularly in instances where the ATO had made a mistake.
However, Ms Carnell said that her office’s investigations will only look at “historical cases”, and not any that is currently subject to review by the Administrative Appeals Tribunal.
“The work behind this task will support the operations of our newly established Small Business Concierge Service, which began on 1 March,” she said.
“The Concierge Service provides assistance and support to small business owners appealing an ATO tax decision through the Administrative Appeals Tribunal and legal advice for unrepresented small businesses.”
Ms Carnell added: “Ensuring small businesses have access to justice, particularly where there is an imbalance of power, affords the opportunity to compete on a level playing field.”
A spokesperson for the ATO said that the agency “will cooperate fully” with the investigation.
“We note that of the 5,965 cases on hand where a portion of the debt is disputed, less than 3 per cent are subject to debt recovery action which the taxpayer has not agreed to, based on their risk profile,” the spokesperson said.
“These numbers cover all markets, not just small business.”
The announcement comes after strong criticism last year of the ATO’s dispute review process and claims of bullying against small businesses.
That led to formal investigations being launched, which led to the then Inspector-General of Taxation, Ali Noroozi, calling for independent oversight of the ATO.
Last month, a parliamentary inquiry issued 37 recommendations for improvement, including a new independent appeals function as well as a compensation redress scheme for taxpayers who are impacted by ATO maladministration.
“In the committee’s view, the tax commissioner should strike a note for fairness and respect between the ATO, tax agents and taxpayers in all his public statements, and this guarantee should be consistently extolled and consolidated in all ATO vision documents,” it said.
“The recommendations… intend to adjust the imbalance of power perceived by taxpayers in their engagement with the ATO, and to ensure that, under the ATO’s reinvention, willing engagement will be the test for fair treatment.”