The Australian Taxation Office has revealed it will overhaul its internal culture to avoid a repeat of the embarrassing “garnishee” scandal that damaged its reputation among small-business taxpayers.
The tax office will introduce “procedural safeguards” to limit any potential damage to Australians wrongly stung with tax debts when it was accused last year of bullying and intimidation after it alleged that some family business taxpayers owed huge debts.
The acting Inspector-General of Taxation and Taxation Ombudsman, Andrew McLoughlin, earlier this year cleared the ATO of allegations it had conducted a “cash grab” using garnishee notices in 2016-17.
He found, instead, that an IT meltdown was partly to blame for inappropriate use of the mechanism.
The so-called “Better as Usual” project, which has in recent weeks been rolled out across the ATO, is seeking to warn taxpayers about commonly made mistakes in tax returns.
ATO second commissioner Jeremy Hirschhorn told The Australian: “There are some things we do that have potentially massive impacts on taxpayers.
“Sometimes they’re right, but if we get them wrong it’s a real problem for that taxpayer if they’ve had a bad experience.
“On those sorts of decisions, if they misfire, they can really hurt somebody. We’re making sure we’ve got the systematic and strong cultural and procedural safeguards.”
To recover tax debts from small businesses, the ATO issues garnishee notices to people who owe the government money or the financial institutions that hold their accounts.
The notices compel recipients to make either one-off or continuing payments to the ATO.
ATO whistleblower Richard Boyle, who failed to have his concerns about the garnishees dealt with under an internal whistleblower scheme, was later dismissed and now faces criminal charges and a possible prison sentence.
To help combat the issues involved in targeting revenue increases, the ATO has moved away from performance measurements based on audit liability in which budget improvements are tied to promises of gathering more revenue for government coffers.
The “tax gap” is now used to quantify areas where the ATO believes it is seeing a shortfall in tax collections due to wrongly filed returns or avoidance, which allows the agency to tell Australians what will be scrutinised.
“It’s very easy to fall into the trap that a good revenue authority is a revenue authority which gets lots of audit liabilities,” Mr Hirschhorn said.
“Helping people avoid problems is a much better way of getting the sustained tax compliance.
“Collecting tax is not an end in itself.
“Tax is a way that the people in Australia share their resources for the benefit of the country and for the benefit everybody,” he said.