From around Australia I am getting clear messages from smaller accounting firms that the bad days of Australian Taxation Office abuse of family enterprises have returned with a vengeance.
Accordingly, I asked Inspector General of Taxation Ruth Owen whether she had received similar complaints.
She replied: “I have received a lot of feedback from agents about the ATO ramping up its collection and debt management activity, and a lack of flexibility for taxpayers trying to pay their tax.
“I am looking into individual complaints as well as considering the impact on community and small businesses in potential future investigations.
“And later this month I am due to kick off a new investigation into ATO service to tax agents,” she said.
Meanwhile, as I will describe below, the ATO is now prepared to spend unlimited legal sums to pursue what I believe are dubious cases through the courts against small business.
I want to emphasise but there are a large number of ATO people who administer the taxation act in a proper manner.
But there are also many who abuse the fact that the government gives them unlimited power to make theoretical assessments that are not based on any particular set of facts.
The assessments become an immediate liability and impact bank credit and solvency trading. The ATO then makes it incredibly difficult for the persecuted family business to prove the ATO wrong. It’s now also time for political parties to look at the ATO persecution that arises from the unrestrained and unfair powers that have been given to our tax collectors.
The great national hero for both businesses and individuals is Richard Boyle, who told the truth about bad ATO practices, and his revelations were independently examined and proved to be correct.
This led to a period of better behaviour at the ATO known as the “Boyle era”.
But once some at the ATO saw Coalition and ALP politicians were demanding Richard Boyle receive long jail sentences for telling the truth, they no longer feared repercussions for bad behaviour.
As a result we now enter the post-Boyle era, complete with a return to the bad days of “bash and collect” that existed prior to his truth telling.
But I don’t blame the ATO people.
It’s the politicians who are the real villains. They handed human beings incredible powers and basically encouraged them to undertake unfair practices.
Having said that, the ATO people at the top like their powers and have developed a vast array tactics to snow both Coalition and ALP treasurers and assistant treasurers.
And although it’s early days, the major tax changes coming in the US are going to make it unsustainable for Australia to have unfair tax collection rules, let alone tax rates that look like becoming too high.
One of the techniques the ATO loves to embrace is to muster an array of high-paid legal talent, making it harder for the courts to protect the victims of bad ATO behaviour.
And so last week an array of high-paid lawyers was paraded before the District Court in Brisbane including the ATO’s prosecution team, the Australian Government Solicitor’s office and the Australian Federal Police’s legal representatives.
Sitting alone without legal representation was a female business defendant who seven years ago had made the terrible mistake of being eligible for a government research grant.
As I reported at the time, the ATO hated research grants and machine-gunned as many people as possible who received them.
Some later received apologies and reimbursement for bad ATO practices but this defendant missed out.
But last week in the District Court in Brisbane, the lone female defendant’s case went before Judge Paul Smith, AM.
Judge Smith was a soldier in the Army Reserves from 1980 to 1984 and was commissioned in March 1984, winning the Queensland University Regiment Sword of Honour. He was counsel for the Queensland Police Union at the Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct (the Fitzgerald Inquiry).
During the case, legal argument arose around issues of evidence potentially being concealed.
The prosecutor argued it was a serious issue, and Judge Smith has adjourned the case so it can be properly explored.
I am sure Judge Smith will sort out all the issues concerning possible concealment plus more mundane issues such as whether invoices were paid and whether any research money was actually received.
But given we are now in the post-Boyle era of taxation collection there will be countless other cases where the victim is swamped with legal power and judges (unlike Judge Smith) don’t realise what is happening.
And spending vast sums collecting small amounts makes no economic sense, but does make the some bad ATO people feel powerful.
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