The Australian, November 28, 2018, Robert Gottliebsen
The Morrison government may be in crisis but it has announced plans to totally change Australian small enterprise taxation and, in the process, transform the way wealth is created in Australia. In the process it removes one of the great blights on the Australian nation.
The famous quote from John Dalberg-Acton describes perfectly the small business power abuse of the Australian Taxation Office: “Power tends to corrupt and absolute power corrupts absolutely”.
The community gave the ATO total power but it became so corrupted by that power that its obscene actions against small enterprises were causing a loss of confidence in the whole system which threatened the national revenue base. To its credit the ALP was first to recognise the ATO power corruption and promised to kerb it but its measures only went half way and would have eroded over time.
The Coalition government today [29.11.18] took the steps that are required to change the culture of the ATO and restore fairness to the taxation system. It plans to legislate for a truly independent small business appeals system that, in most cases, does not involve lawyers but in test cases where lawyers are required the ATO pays the bill.
I will discuss the details below but at the moment the ATO is the investigator, prosecutor, judge, sentencer and appeal judge. And that total power has led to diabolical acts against small business which had no defence because the court system was too costly. The fear of unfair ATO acts against which there was no defence was the biggest single threat to Australian small business. Large enterprises could appeal to the court system and so the ATO was much more considered in its actions.
If the proposed legislation is passed (and I implore the ALP and the crossbenchers to do the right thing by the nation) then ATO officials will know that if they make outrageous tax claims then they will be the subject of an independent review and not just a routine tick by colleagues. I believe it will cause fundamental cultural change for the better in the ATO. Those cheating the system will not be protected.
I started the campaign for small business tax justice some three years ago. Most people said I had no hope because the ATO and its lobbyist mates (who make big dollars from advising clients) were just too powerful. But my readers backed me all the way even though the regular abuse revelations had an element of repetition. Then came outside support including top tax lawyer Richard Edmonds SC who said that there was a mentality in the ATO that on the whole taxpayers were “cheats and liars” and so any actions against them could be justified. He was supported by Mr Jutice Logan who threatened action against ATO officials over their bad behaviour in court actions.
Even with judicial backing one commentator could not overcome the power of the ATO. But my campaign for an independent tax review system outside the ATO was backed by Fairfax and the ABC, led by Adele Ferguson. She uncovered the great Australian, Richard Boyle, who risked his ATO career to be a whistleblower and reveal from the inside the real truth about the ATO.
And of course providing incredible research material was the constant advocate for small business the head of Self-Employed Australia Ken Phillips .
Even with all that support we required Prime Minister Morrison to promote Michaelia Cash to small business minister and appoint Stuart Robert as assistant treasurer. They spearheaded the campaign in the government.
The government realises that employment in Australia is going to be increasingly created by small enterprise. While there should be no mercy for tax cheats there must be fairness in the system.
Under the government’s proposal this is how small business will be able to get justice if it’s the subject of unfair actions by the ATO. First, the enterprise can establish the appeal procedures with the small business ombudsman. This makes the appeal process simple and will eliminate silly appeals.
Currently most small business appeals are conducted within the ATO (and this was the ALP proposal). Under the government plan, appeals now go to a dedicated Small Business Taxation Division within the Administrative Appeals Tribunal — totally separate from the ATO. Each small business will have a case manager supporting them through the entire process. This is really important and decisions will be fast-tracked to be made within 28 days. Under the current system the appeal process can be dragged out and the business can be bankrupted even before one of the ATO’s kangaroo courts hears the case. A payment of just $500 must be made with each appeal.
In addition 10 new tax clinics, in conjunction with major and regional universities, will be established providing free assistance to small businesses and people with disputes. This is an innovative initiative that again confines the ATO to the business of investigation and prosecution — its job.