The Australian, March 16, 2018
The Australian Taxation Office routinely abuses its position to chase small businesses for debts that don’t exist and should under no circumstances be given extra powers to hand on allegations of outstanding tax debts to credit reporting agencies, an industry group has claimed.
In a submission in response to proposed changes obtained by The Australian, Self-Employed Australia called for the bill to be withdrawn, describing it as a “grab for additional powers for the ATO to use against small business people”.
The ATO already had expansive powers which exceeded “arguably any other government body” and it “routinely” abused those powers, the group said.
“The ATO already has the power to raid a person’s home without a warrant, allege a debt, demand payment of an alleged debt, garnishee a person’s bank account to force settlement of an alleged debt, sell a person’s house and bankrupt a person before the person has a chance to ‘disprove’ the debt,” Self-Employed Australia’s submission says.
“Our opinion, based on solid evidence, leads us to allege that the ATO abuses those powers in order to bully and harass small business people into paying alleged tax debts that are often false or poorly supported by the evidence.”
Financial Services Minister Kelly O’Dwyer released draft legislation last month that would allow the ATO to disclose to credit reporting agencies tax debts owed by small businesses.
Small businesses account for almost two-thirds of entities with outstanding tax debts and the changes are aimed at putting pressure on those small businesses that are not paying tax as well as providing other businesses with more information to better determine whether their customers will pay their bills.
Under the proposed changes the ATO will be able to report outstanding tax debts if the business has a tax debt of at least $10,000 that is overdue by more than 90 days and if the business has not “effectively engaged” with the ATO.
Self-Employed Australia executive director Ken Phillips said the group had serious concerns with the ATO’s definition of “effectively engaged” based on past experiences, with the ATO remaining solely responsible for determining whether a business was “effectively engaging” or otherwise.
An ATO spokeswoman said the Transparency of Tax Debt measure was designed to “support more informed decision- making in the business community by making unpaid tax debts visible”.
“This will enable businesses and credit providers to make a more complete assessment of the creditworthiness of a business when they consider extending credit or terms of trade,” the spokeswoman said.
“The measure is also designed to reduce unfair advantage obtained by businesses that do not pay their tax on time, and encourage businesses to engage with us.”
The spokeswoman said the new legislation would “permit but not require” the ATO to inform credit-reporting agencies of unpaid debts.
She said many safeguards would be put in place and the ATO would issue a “formal notification” before disclosing tax debts, allowing the business 21 days to “contact the ATO to manage their debt”.
Taxpayers who had a payment plan in place or who were deemed to be facing “exceptional circumstances” would not be reported.
Mr Phillips said his organisation was regularly contacted by aggrieved small business owners who his group had helped determine had been unfairly targeted by the ATO.
He said that in one case, small business owner Rod Douglass was told by the ATO he owed $440,000 in back taxes and interest.
Mr Phillips said that with the help of Self-Employed Australia, including “$100,000 to $150,000” in legal assistance, Mr Douglass’s case was taken to the Federal Court and he was found to owe the ATO nothing.
The ATO said it was unable to comment on individual cases.