The ATO’s lust for money must end
Behind the latest government surplus is a rank unfairness both our major political parties ignored after winning office.
ROBERT GOTTLIEBSEN
Accordingly, once a federal election nears it is the task of an opposition not only to prepare new policies for the electorate, but to look back on its last period in government and identify the major mistakes not rectified by the change in power.
In the case of the Coalition, arguably its greatest single mistake was to allow the Australian Taxation Office to abandon the “presumption of innocence” legal principles that underpin our democracy.
The ATO’s practice of sending out taxation assessments without details which then become an immediate liability, irrespective of their merits, has devastated many honest taxpayers.
The ATO data and practices were then applied to pensioners and those on social security in the Robodebt scandal, which tarnished the previous government.
While the ATO did not itself conduct the Robodebt exercise, its data and collection methods were used.
As I will set out below, a parliamentary committee headed by the Liberals’ Jason Falinski and the ALP’s Julie Owens set out exactly what the government should do.
The previous government, under Treasury and ATO pressure, pigeonholed the Falinski-Owens report, indicating the Coalition did not understand the connection between Robodebt and the bad ATO practices.
The flaws in the system, when applied to tax collection, were best illustrated when the ATO used its false data and its abandonment of the “presumption of innocence” system to deliberately destroy most of a thriving Australian high-skill industry – gold refining.
An ATO error had cost the nation many billions in lost GST revenue, which was sent by crooks to the Middle East.
Instead of chasing those crooks the ATO covered up its GST mistake by dumping enormous fictitious tax assessments on gold refiners, whom the ATO later admitted it had incorrectly blamed for loss of the GST.
Somehow the banks discovered the unpayable tax liabilities and withdrew credit, enabling the ATO actions to destroy most refiners.
But one survived and the family pursued the ATO in the courts, forcing the ATO to admit most of its claims against the refiners were fictitious – and those where the ATO did not admit error were thrown out by the High Court.
Had the ATO been able to destroy all of the refiners we would never have been able to document how the tax collection system has been turned into a very unfair exercise of government power. And the refiners rather than the ATO would have been blamed for the loss of GST.
The gold case also underlined that apart from using the expensive court system (where the ATO will go to the High Court), the only redress for taxpayers is to seek the help of the Inspector General for Taxation/Taxation Ombudsman.
The insufficiently funded Ombudsman has limited power and is overwhelmed with claims.
Worse still, the Ombudsman is forbidden access to many taxpayers’ files. There is no pretence of fairness.
But Treasury and the ATO will fight any attempt to bring justice to the system, believing revenue is more important than honesty and fairness.
They will also fight to continue the current practice of attacking our top 5000 private companies without any specific reason by requiring them to undertake years of audits and almost mindless data seeking.
These same companies are now being hit hard by the ALP’s industrial relations laws.
A vast number now will not be able survive the time and cost of further ATO interrogations not based on any relevant tax matter.
In October 2021 the Falinski-Owens report used the principles of fair taxation applied in the US to back many recommendations for the Australian taxation system, including:
● Upgrading the Inspector General of Taxation (Ombudsman) to an office modelled on the Taxpayer Advocate developed in the US.
The IGT/Ombudsman must have automatic and unrestricted access to all ATO files for individual taxpayers;
● Changing legislation to give taxpayers the same protections enjoyed by all other citizens when dealing with debts, by making debts not payable until they have been proved. They cannot be collected until that time;
● The onus of proof should lie not with the taxpayer but with the ATO.
There are few countries in the world where a tax office sends an assessment to a taxpayer but does not explain how they calculated the alleged tax debt.
An opposition which puts forward these sensible recommendations as part of its policies will gain enormous support from the business community, at a time when so many enterprises are under great pressure.
It’s just possible the current ALP government, which did not promise to introduce these changes, might put fairness and equity over the Treasury and ATO’s lust for money at any cost.
I believe if the community believes the tax system is fair then tax collections will rise, not fall.
Of course to be completely fair the tax system must be adjusted so international companies, instead of paying no tax, pay the same tax as Australian companies.
