Government launches investigation into Australia Tax Office after allegations of unethical cash grabs

ABC Four Corners By Henry Belot , 11.4.18

The Financial Services Minister Kelly O’Dwyer has launched an urgent investigation into the Australian Tax Office (ATO) following a joint Four Corners and Fairfax Media investigation.

Two ATO whistleblowers have reported a toxic workplace culture where vulnerable small businesses and individuals are deliberately targeted to help meet revenue goals.

They described unethical tactics including an “hour of power” in which tax collectors were instructed to seize funds from the bank accounts of taxpayers assessed to owe the tax office money, regardless of their personal circumstances.

Ms O’Dwyer has told the ABC she is deeply concerned by the allegations raised in the investigation.

“I have requested a thorough investigation of all allegations raised and the Government will be responding once it has had the opportunity to consider that investigation in detail,” Ms O’Dwyer said.

She told the ABC she wants the investigation to be completed as quickly as possible.

Taking on the Tax Office

PART 1: ‘It’s malicious and it’s vengeful’
PART 2: The high cost of taking on the Tax Office
PART 3: Whistleblower exposes ATO ‘cash grab’ targeting small business

In a statement, the ATO said the cases highlighted by Four Corners and Fairfax Media did not suggest “systemic issues” within the organisation.

“The work we have done over the last five years reinventing the client experience and our culture means many of the allegations from these cases are not representative of today’s practices,” the statement said.

“Where we have made mistakes, we will apologise and seek to rectify the position and restore the relationship with the taxpayer.”

On Tuesday, Opposition Leader Bill Shorten said Labor would investigate issues raised by the whistleblowers and whether small businesses were being treated fairly.

“The whistleblowers have drawn the nation’s attention to something that a lot of businesses and people have been concerned about,” Mr Shorten said.

“It looks like people’s genuine concerns have some basis in fact.”

Mr Shorten said Labor would investigate the allegations when Federal Parliament returns in May.

Media player: “Space” to play, “M” to mute, “left” and “right” to seek.

ATO ‘can act like judge, jury, executioner’

The joint investigation has prompted tax lawyers, watchdogs, academics and peak bodies to warn the ATO needs new checks and balances to ensure its powers are not abused.

“The problem here is that you’ve got tremendous power invested in an organisation which can effectively act like a judge, jury and executors rolled up into one,” tax lawyer Graeme Halperin told Four Corners.

Former chairman of the Australian Competition and Consumer Commission, Allan Fels, said the Government should consider splitting the ATO’s administrative and policing functions to create an extra level of scrutiny within the organisation.

“The problem stems from the very great power of the Tax Office to make big decisions affecting people’s income and lives,” Mr Fels told the ABC.

What the ATO has the power to do

The ATO has extraordinary powers more akin to police and law enforcement agencies and when it makes mistakes, it can destroy small businesses and livelihoods.

“Normally when such powers are given to someone, we have certain checks on the exercise of that power but for various reasons various governments have let that power go unchecked [at the tax office]”.

The idea of splitting the tax office was floated in early 2013 by then shadow treasurer Joe Hockey, who was concerned about the ATO’s aggressive interpretation of tax law.

But Mr Hockey didn’t introduce the reform when the Coalition came to power later that year.

The ATO was opposed to the reform — warning it would slow down appeals and be ineffective — and the Government instead announced a parliamentary inquiry into tax disputes.

That stopped short of calling for the ATO to be formally split in two, but called a new second ATO commissioner to handle appeals and ensure businesses were being treated fairly.

It also called for the burden of proof to be reversed so that the ATO needed a higher standard of proof before launching debt collection action.

Those recommendations were rejected by the Government, although some changes have been made within the Tax Office.