ATO GST powers should be a worry for business

 Federal Industry Minister Karen Andrews Picture: .Jane Dempster.Federal Industry Minister Karen Andrews Picture: .Jane Dempster.
The Australian,

The recently elected Morrison government has scheduled to this week to put before the parliament one of the most vicious attacks on the Australian business community ever conceived by an Australian government.

It’s a complete reversal of everything Scott Morrison has been telling the Australian community and the mandate the electorate gave him.

If the proposed bill passes the parliament, I will call the minister for industry science and technology Karen Andrews to resign.

Her department has already been mutilated by the Australian Taxation Office’s relentless attacks.

The ATO has destroyed all credibility of the government’s research program and withdrawn business numbers at a whim. Those who dared appeal to the Administrative Appeals Tribunal were, according to the small business ombudsman, attacked. The internal ATO appeal system has been converted to a kangaroo court in some instances, while one industry was virtually wiped out by the ATO “death gun”. The industry department’s aims were completely thwarted.

Few of the above instances of abuse of small business and attacks on the industry department were about raising money. It was simply the joy of middle ranking tax officials showing off their extensive power.

But nothing in the above record of ATO abuse has prepared us for the latest assault planned for the business community if this week’s proposed legislation is approved by the parliament.

Given its record, I have no doubt the ATO will quickly use the proposed new powers over all its activities. Honest taxpaying business people have every reason to be fearful, so around the land they must consider disposing of their personal assets if the government’s bill is passed. Alternatively they may decide that the government has made business too risky.

The legislation empowers the ATO, at its discretion, to estimate the anticipated goods and services tax (GST) liabilities of any business in Australia. That estimate can be anything that the ATO might dream up and have no relevance to trading. .

And whether you are a small plumber or a business with a $100 million turnover, you must pay whatever the ATO says that the business is liable to pay. Facts are totally irrelevant. Gangster style, fiction is the name of the game. What if the business person can’t pay? The ATO heavies, under the legislation, will then have the power to declare that the business person is personally liable.

The ATO will be able to have the business family on the streets faster than they can say “Al Capone”.

And the designers of this planned Australia-wide business carnage want to go further. They have seen how successful the ”death gun” was in wiping out most of Australia’s high skilled gold refining industry and want to give that gun even more power.

If you can’t pay the fictitious assessment the ATO will freeze your personal tax refunds. It’s a neat touch before selling the personal assets. Pinch yourself. Yes, this is what a Morrison government has incorporated in a bill scheduled to be debated this week.

The ATO currently has powers that place it above the law of the land. It obtained these powers by convincing unsuspecting governments that there was massive tax avoidance that required draconian power to remedy. That power was then applied to the entire taxpaying community and it was abused by tax officials.

And we are doing it again.. This time the bill is called “Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019”. As implied in the title, the stated target is phoenix companies.

All of us want phoenix companies attacked, so the bill’s proponents tap common community concerns. But let’s learn from past mistakes. If we want to attack phoenix companies with such powers — and we do — then the use of those powers has to be linked to the court system, just as occurs in criminal activities. For example police must apply to the courts for a search warrant.

It underlines the need for prosecution of tax matters to be separated from the investigation of those matters, as happens in policing. And it also underlines the fact that the small business tax tribunal should be moved out of regulation into law. That would mean small enterprises had clear rights under law rather than regulation when they are under ATO attack and can’t afford the court system.

How did Scott Morrison get into such a mess? In the days of the Turnbull government, ministers became very close to the ATO and put into the system horrendous legislation without understanding how it would be used. In the pre-election period, the horror legislation was mothballed. But after the election, new inexperienced ministers did not understand the awful powers that had been cleverly buried into proposed legislation theoretically aimed at phoenix companies and the cash economy.

Footnote: I am indebted to Ken Phillips of Self-Employed Australia for alerting me to the fact that the bill was scheduled to be debated thus week.