Finally, some tax justice for small business

A “national hero”. Tax office whistleblower Richard Boyle. Picture: Dean Martin

Thanks to four ministers in the Morrison government, tax justice is finally coming to the small business community. And I am very hopeful that it will spread into medium-sized business.

For countless years myself and others have been campaigning for an end to Australian Taxation Office abuse of small and medium-sized business. Then last week in the parliament came the magical words that everyone for so long had been waiting for: “We are backing small business in over the ATO!”

The minister who uttered the historic words was Stuart Robert, the minister for Small and Family Business plus Employment, Workforce and Skills. He had the support of Treasurer Josh Frydenberg, Attorney-General Michaelia Cash and Assistant Treasurer Michael Sukkar plus, of course, the Prime Minister.

To understand the impact of that remark to the nation and to the next election I have to take you through the high drama that took place in the hours leading up to the Treasurer delivering his budget speech on May11.

The appalling behaviour of the ATO in garnisheeing the bank accounts of small and medium businesses plus the owners’ bank accounts without proper notice had been documented by the Inspector-General of Taxation. That contributed to a strong Coalition willingness to finally do something about tax abuse.

The plan was that ATO garnishees should go to the Small Business Tax Tribunal that was set up in 2018 by Stuart Robert and Michaelia Cash amid vigorous opposition from the ATO.

The press release was drafted by Treasury and the ATO and in the haste leading up to the budget none of the four ministers whose name was on the document---Frydenberg, Cash, Robert and Sukkar---realised the implications behind the “clever” Treasury/ ATO wording.

Then came my commentary under the heading “Josh Frydenberg’s small business tax stumble” which was published online on the day before the budget (May 10) and in print on the morning of the budget.

I explained that a garnishee on small business bank accounts was like a machine gun that could destroy a business within 24 hours. Under the plan in the press release, without notice, the ATO was allowed to machinegun a business and its owners and after the initial rounds had been fired if the small business actually survived it earned the right to ask for a “pause” on the machinegunning.

While that was better than having no rights to stop the machinegunning it was absolutely ludicrous. And a statement that it was in line with the US and the UK was simply wrong.

All four ministers were shocked and quickly realised that all the wonderful small and medium-sized business work they had done in JobKeeper and other Frydenberg measures, plus fast payments and unfair contracts, might be trashed by this stumble.

In Australian politics, on both sides, when you make a mistake your first reaction is to try and cover it up.

Not this time. There was not much time but Frydenberg amended his budget speech. Then, two days later, Stuart Robert not only made is historic “We are backing small business in over the ATO” declaration but added: “No longer will the ATO be able to garnishee and takeaway while the dispute is in train”.

Those 26 magnificent words almost brought me to tears. It’s been a long campaign and my readers and The Australian have backed me all the way. There is still a lot to do but it’s a huge breakthrough. I would hope that in the looming tax legislation a small business is defined as one with a turnover of around $25m.

“Historic words.” Stuart Robert speaks in parliament. Picture: Getty Images

In later commentaries I will map out some of the additional measures the government might promise if it wins the next election.

But for the moment let’s celebrate a wonderful achievement for the nation.

While I have been writing on these tax issues for many years such a fundamental change could not have been achieved without the work of others starting with Frydenberg-Cash-Robert-Sukkar combination. The High and Federal Courts, in smashing the $3bn ATO gold cover-up had great impact. The courageous work of the Inspector-General of Taxation and the Small and the Family Business Ombudsman was just as important.

But it was the relentless work of the chief of Self-Employed Australia, Ken Phillips, that was vital.

I also pay tribute to the work of Adele Ferguson at the ABC and Fairfax Media (now Nine Media).

But national hero Richard Boyle deserves more credit than me or any of the above. He knew when he alerted Australia to ATO garnishee and related bastardry that he could be jailed for the rest of his life. He was prepared to risk his personal freedom in the national interest.

I plead with the parliament of Australia to stop trying to follow the Chinese in jailing people who tell the truth about the ATO. Perhaps Boyle should be nominated as South Australia’s Australian of the year even though, if the ATO has its way, any presentation ceremony may have to take place in a jail.

Footnote: The Administrative Appeals Tribunal (AAT) believes gossip should be allowed against taxpayers but thankfully the idea was firmly rejected by the High and Federal Courts. Now the ATO, again before the AAT, believes it can simply declare that well-documented transactions five years ago did not occur. The taxpayer must then prove the documentation represents reality. If the AAT upholds this new ATO taxpayer trap, as it did with gossiping, we will need the Federal and High courts to again step in or national chaos will reign. Parts of the ATO are out of control.