The Australian, February 14, 2018
Sometimes out of the worst situations can come great new developments. In decades of journalism I have never seen a draft act of parliament carefully designed to wreck the small business community of Australia than the so-called “Transparency of (Business) Tax Debts” measures.
Any politician — government, opposition or crossbencher—- who votes for this legislation in its current form should hang their heads in total shame for the damage they will have inflicted on the small business community and confidence in tax system fairness.
And yet, this proposed legislation contains the seeds that can germinate into a fair tax system for the small business community to reverse the current activities of the Australian Taxation Office.
Paradoxically, I would never have known just how bad the proposed legislation is but for the meticulous and detailed decimation of it by the Inspector-General of Taxation Ali Noroozi, in his submission on the draft legislation. He pulls it apart clause by clause.
How anyone that could have dreamed up such a horrible, confused blow to the small business community is beyond me. But to be fair, it’s only draft legislation.
In essence the draft legislation aims to give the ATO the power to refer to credit bureaus the names of small business taxpayers who can’t reach agreement with the ATO. As we all know from my revelations over the last 18 months the ATO and its internal “kangaroo courts” are pursuing people where there is deep controversy over whether any money is owed.
Sometimes the problems are created by the chaotic systems that the ATO still uses. In most cases if those ATO false claims are revealed to a credit bureau it will destroy the small business. On the other hand, for those who are cheating, the threat of a credit bureau reference can be a useful stick to gain payment.
And for the very first time in tax legislation the government is proposing to require the ATO to inform taxpayers that they can appeal to the Inspector-General of Taxation.
On the surface this is a fantastic move and is the start of what I have been campaigning for, for over two years. The current appeal system is a complete disaster because the ATO’s kangaroo courts too often do not give taxpayers protection against bad assessments.
The Inspector-General’s submission shows that he is to be embedded in the legislation but the legislation and associated documentation is far too complex for him to have any real power and for any small business to understand how it works. And even if the Inspector-General finds the ATO is completely wrong the ATO can still go ahead and bankrupt small business. Unbelievable.
But now the good news.
Within the Inspector-General’s report on the draft are the elements required to change this legislation so that it can provide security from the current unfair ATO persecution of honest Australians paying their tax. Although the legislation needs to be amended, surprisingly the steps required to give us fair tax legislation aren’t that big.
The existing legislation actually provides that taxpayers, when they receive a tax assessment they think is unfair, have a right to put their case to the Inspector-General. That right is enshrined in the ATO website. The draft legislation provides that if the ATO is about to bankrupt the taxpayer by referring their name to the credit bureau the ATO must first write to the taxpayer and explain that the taxpayer has a right to put their case to the Inspector-General.
It is simple to enshrine in the current ATO legislation a requirement that every time the ATO puts out a backdated tax assessment they must write to the taxpayer explaining they have a right to appeal to the Inspector-General. Why wait until it is about to go to the credit bureau? A brief and simple letter should be sent out with the assessment.
Given the actions of the ATO’s kangaroo courts only a foolish honest taxpayer would use that system. Most would go straight to the Inspector-General for their appeal.
Now of course there are going to be a whole range of appeals by people who have not put their tax returns in or have done really stupid or dishonest things. It will take less than five minutes to dispose of such appeals and no one should have any sympathy for them. They must take their fate. This is all about protecting the integrity of the taxation system as applied to small business,