The tax office should collect tax, not attempt to engineer business

The Australian, December 7, 2017 – Robert Gottliebsen

On behalf of 16 frightened victims of Australian Taxation Office small business policies I want to thank Revenue and Financial Services Minister Kelly O’Dwyer for her background role in restoring their Australian business numbers.

They can now earn income in the weeks leading to Christmas.

But Kelly O’Dwyer, your work is only just beginning. The ATO is challenging the way small business is conducted in Australia.

Unless the minister continues to watch the ATO very carefully the big falls we are seeing in small business numbers in Australia will accelerate.

I realise that the ATO has a great deal of independence but in accordance with the Westminster system the minister must take ultimate responsibility for its policy actions.

The business conducted by our 16 small contractors whose ABN numbers were removed was a simple one. An agency company would post on a website voice files where transcription was required and the one-person contractors would decide what jobs they wanted. They used their own tools and could access files from other link companies.

Tradespeople all around the country now work this way. It’s called the gig economy and it’s sweeping the world and if the ATO prevents Australians participating by withdrawing ABN numbers, the work will go overseas.

In the case of “the 16” the ATO decided that it would withdraw the ABN numbers because the ATO believed they were employees of the link company (I believe many others were involved in this small business attack).

The loss of income made “the 16” desperate because their ranks included disabled people, single parents, and those with mortgages. They went to Self-Employed Australia’s head Ken Phillips. To Phillips it looked a totally straightforward case of an ATO mistake—“the 16” were obviously contractors.

We all make mistakes and the ATO is not immune. Phillips asked the ATO to review the case expecting a quick answer, which would have corrected the mistake. That would have ended the matter. I certainly would not have written about it.

The ATO told him to jump in the lake. The numbers would stay withdrawn.

So he told me the story and via my digital and print commentary I pleaded with the minister to do the right thing by “the 16” and the nation. I don’t know what she did but ABN numbers were rapidly restored.

But wait.

The ATO heavies have now called on the link company and are now considering declaring that it can only operate by undertaking its transcriptions via employees not by contractors.

That’s not how this business works. The link company, which is a small family business, can obviously contract overseas, but this is total madness.

The ATO is considering telling a small business that it must employ people to do its contracting, not use contractors.

The ATO should be about tax collections, not business engineering to suit political agendas. If income is not reported or false expense deductions are made or cash is being used or no taxation returns are filed then the ATO can go as hard as it likes. That’s its job. It’s not its job to force the gig economy to go overseas because the ATO bans it here.

To be fair, the ATO is still considering the matter of the link company linked to “the 16”. I will be delighted to report the facts if a sensible decision is made.

But minister, I suspect the nation is going to again need your help.

My greatest fear is the bad behavior by the ATO is going to force massive disobedience in the small business sector and fraud of Centrelink. Go to places like Italy and Greece and you will see what happens when the community loses faith in its tax department.

Let me illustrate the small business frustration by quoting from an email I received after I explained the situation to the radio audience of Leon Byner at FIVEaa Adelaide.

“I am now 68 and I am presently working as a sole trader contracting in sports promotion and ghost writing. I have an ABN number,” the email read.

“Two weeks ago I received a letter from the Australian Business Register asking me to prove I had a business otherwise my ABN number would be cancelled (this also happened last year but a quick call back got it quickly reinstated).

“I called the Australian Business Register and spoke to a ‘12 year old’ who was clueless.

“Frankly her questions and obvious lack of any business acumen was embarrassing and insulting. As a result I called the complaints area and (to cut a long story short and after four phone conversations with them and a supervisor, and sending invoices) I finally proved to them I was in business.

“The supervisor told me this wouldn’t have happened if I had lodged tax returns for last two years. Told them I had filed tax returns and to check their records.

“The supervisor also contacted my accountant who was incredulous at these intrusions.”

The writer was a female and I have her name and I spoke to her.