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Win for SMEs in shake-up of tax compensation

Australia's Parliament House

Business claims of maladministration by the ATO are set for greater scrutiny and oversight, with the government indicating support for a series of recommendations to make the process fairer for SMEs.

In June this year, Robert Cornall delivered the findings of his review of the treatment of businesses under the Compensation for Detriment Caused by Defective Administration (CDDA) scheme.

“In 2017-18, the ATO’s net tax collections were almost $397 billion and its compensation payments under the CDDA Scheme totalled $409,035. Looking at the ATO big picture, an uninformed observer might assume the scheme was of little importance but the opposite is the case,” Mr Cornall found.

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“Concerns for small business and adverse perceptions of the ATO’s administration of the CDDA Scheme have attracted constant attention.”

He concluded that “The adverse perceptions of the CDDA Scheme identified throughout this report and its limited use over the last five years indicate the scheme is not working effectively for taxpayers in their dealings with the ATO”, and made 12 recommendations to bring about positive change for the small business community (in this case being businesses with annual turnover of less than $10 million).

Some four months after Mr Cornall’s report was handed down, the federal government revealed on Monday (4 November) that it would accept all of the recommendations. 

However, it did put the caveat that some of the recommendations had only partial or “in principle” support from the government.

The ATO will be made to update the Assistant Treasurer Michael Sukkar in exactly 12 months’ time on its progress in carrying out the changes, which includes:

  • ATO staff will be required to take a taxpayer’s financial and personal capacity to respond to any review, audit or other compliance action, both for individual taxpayers as well as small businesses.
  • greater separation of ATO officers investigating CDDA claims from the relevant division of the tax office.
  • giving the business making a complaint the opportunity to have its say on an investigator’s preliminary determinations before a final decision is made.
  • transferral of the most complex or sensitive matters to be reviewed by someone external to the ATO.
  • elevating more serious cases to the tax commissioner personally.
  • changing the onus of proof to plausibility rather than probability when determining if defective administration has occurred.
  • having the ATO update its information about making a claim, to ensure it is simple and easy to understand.
  • the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) will play a greater role in assisting businesses to navigate a compensation claim.
  • greater oversight of the ATO by the Assistant Treasurer on CDDA claims.

Work will begin on implementing the changes from 30 November 2019, the government said.

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The government’s full response to the CDDA report can be found on the Department of Finance website.

A welcome response: ASBFEO

The ASBFEO welcomed the government's committment to change, claiming its own research had identified “serious system-wide issues impacting the small businesses

“We are particularly pleased investigation of the most sensitive or complex CDDA claims and decisions on them will be independent of the ATO,” ombudsman Kate Carnell said following the government announcement.

“We also applaud the announcement that ATO procedures take into account a small business’ financial and personal capacity to respond to a review, audit or other compliance process.

“The new Small Business Compensation Assistance Service, to be administered by our office, will complement our existing Small Business Concierge Service, which provides support to small business owners in dispute with the ATO.

Ms Carnell added: “We are delighted we will now be able to help small businesses understand how they can pursue CDDA claims and we look forward to working closely with the ATO on increasing the awareness of the scheme.

“Having an effective and well-publicised CDDA scheme will help to ensure small businesses have access to justice when things go wrong.”

 

 

Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Win for SMEs in shake-up of tax compensation
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