Allegations of impropriety and heavy-handedness by the Tax Office against SMEs have led to calls for an overhaul of how the ATO deals with SMEs when chasing tax debts.
Peter Strong, CEO of the Council of Small Business of Australia (COSBOA), said that while the Tax Office is “a world-class organisation that has improved its interaction to small business over many years”, the current reports of SMEs being singled out for unfair retribution are of great concern.
“[The ATO’s overall standing] will be small solace to those people who are victims of poor management practices that escaped normal scrutiny and quality control or were part of unacceptable ‘normal practices’,” said Mr Strong.
“No individual should suffer from poor performance and processes applied hurriedly and without due understanding of the limited capacity of a business person.”
Mr Strong cited the situation of the ATO taking legal action against an SME and telling them the dispute will be resolved before the courts as an example of how the current processes could be improved.
“The reality is for a small businessperson to take on a large organisation in court, then that small businessperson will either have to take out a substantial personal loan or close their business,” he said.
Commenting on My Business’ original story about the serious accusations levelled against the ATO, one reader said they themselves were the victim of a flawed process that ultimately cost them their business.
“I was hit by an unscrupulous ATO investigator who gave me an assessment and then proceeded to instruct me that an appeal would be ‘fruitless’. He told me to submit the appeal through him, and of course, he dismissed it,” said the reader.
“It was such an unfair situation that I went to the local member and got him involved. It turned out that the ‘appeal’ had never been submitted by the investigator. He had got a bee in his bonnet to crush me!
“Some 12 months later, after some assistance from my local member, the debt was dropped by over 90 per cent, including the penalty reduced to zero. But by that time, it had cost me emotionally, professionally and distracted me from my business. My business was ultimately put into liquidation.”
This experience echoes those highlighted in the recent Fairfax Media/ABC expose on the ATO’s alleged dealings.
However, the ATO has strenuously denied the allegations raised.
“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 said in a statement.
“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.
“Of the almost 150 million interactions and transactions we have with taxpayers each year, almost all progress smoothly and well. Less than 0.1 per cent of all interactions result in a complaint or an objection.
Nevertheless, Mr Strong suggested that six key reforms be introduced to strengthen the transparency of ATO decision-making and dispute resolution procedures:
- The Australian Small Business & Family Enterprise Ombudsman (ASBFEO) must be involved before key decisions are made. This includes:
• Before bankruptcy procedures,
• Before garnishees are issued; and
• Prior to any key action that can bring stress and unmanageable demands onto a small business person
- The ASBFEO must also be included in the process of removing ABNs from businesses deemed to be no longer operating or not to be a bona fide business.
- The ASBFEO must be involved in an advisory role when calls are made providing significant financial demands on individual business people.
- An independent body must determine compensation for business people that have been wronged or suffer monetary and personal losses through unfair processes.
- ATO officers dealing with small business debt and processes that place stress on individuals must be trained in recognising and managing mental health needs of those they regulate.
- There must be access to independent reviews of ATO decisions available to business people.
“We do not doubt that the ATO will continue to improve. It must be highlighted that in 95 per cent of cases, the ATO provides an excellent service to small business people in some kind of difficulty,” said Mr Strong.
“Small businesspeople should continue to work with the ATO without fear.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.