The Australian, March 23, 2018
One of Australia’s most reputable tax lawyers, Mark Leibler, has revealed for the first time the extraordinary powers of the Australian Taxation Office and Commissioner Chris Jordan.
He told the national convention of the Tax Institute that “it would come as a surprise to most taxpayers, and perhaps some tax practitioners that the [Taxation] commissioner has almost unlimited power to assess any person to any amount at any time”.
“The commissioner can raise an assessment on almost any basis he pleases, and then require the taxpayer to prove before the Administrative Appeals Tribunal or the Federal Court what their liability should have been.”
There are few better lawyers in Australia over the last half-century than Mark Leibler so if he says that I am sure it is right. I knew the ATO powers were wide but I did not know they were that wide. They are beyond the rule of law.
I think it is important for all the politicians in Canberra to understand these powers.
In my view, (not Mark Leibler’s) there are two groups in the taxpaying community.
First, those who can afford top lawyers to cope with these powers including taking issues to the courts and, second, those that can’t afford that legal/court protection and so are totally at the mercy of the ATO even though they may have obeyed the law.
Naturally Mark Leibler’s job is to represent the interests of those who can afford his services plus clients where he works on a free basis. (And I am aware he does that).
My job is to highlight the position of those that cannot afford an appeal to the courts or the very best advice. They are totally at the mercy of the ATO.
After setting out those powers Leibler then adds: “It is a testament to the integrity of the office of the commissioner that there are no reported cases in which this power has been abused or used for political purposes, as it has been in less scrupulous jurisdictions around the globe.”
Leaving aside political power abuse where we both agree, knowing Mark Leibler I am sure he honestly believes that there are “no reported cases in which this power has been abused”.
At the top end of town where the players have good legal advice and access to appeals the court system what Leibler said is no doubt right, because tax officials know they will be held accountable.
But when it comes to the small end of town, as my readers well know, there are many reported cases where “this power has been abused”. I believe that abuse takes place because the tax officials know they will not be accountable.
And Mark, if you doubt my word go up to Queensland and see Deloitte, who were called in by a group of Queenslanders to asses the damages in a case where abuse of power by the ATO cost large sums and damaged entrepreneurship.
Alternatively, study the case of Rod Douglass. And there are many more power abuses and that I have reported and will report as we move through 2018 and 2019.
I believe that when a body is the investigator, prosecutor, judge, appeal judge and sentencer it almost always becomes a dictatorship and power (not cash) corruption is inevitable.
Because large organisations can afford the court appeals the ATO does not abuse its power.
What the small business end of town needs is the same rights as the large end of town—access to an independent appeal body that they can afford.
I have suggested the Inspector-General of Taxation be that body but I am in no way wedded to that solution. There may be better ways of achieving appeal equality with the big end of town.
Frankly, Mark, when you do the research work you will be just as horrified as me with the abuses of power in the small business area. And it is relatively easy and inexpensive to fix and, because it restores faith in the system, it will raise more money.
Finally, in his speech, Mark Leibler took me to task.
“In a column published in The Australian late last year, business commentator Robert Gottliebsen made the following audacious claim, and I quote: ‘The good news is that while significant sections of the ATO are power-corrupted there are still honest and reputable people in the organisation and they shine’.”
This sweeping accusation was made in response to an alleged instance of maladministration by the tax office in the case of one individual..
This is the Queensland case I refer to above. The comment does mention several tax officials and links to another similar case but Mark is right — I should have listed all the others. I accept the criticism.
Finally we return to the words of Mark Leibler: “Under the self-assessment regime, the full scope of this (ATO) power lurks beneath the surface like a saltwater crocodile.”
Now my words: “Crocodiles are known for their abuse of power and so if you are a small business person and the crocodile gets you firmly between the teeth there are no appeals, You are finished.”