Tax

ATO small business ‘bullying’ allegations to get the Four Corners treatment

Eloise Keating /

The battle between small businesses and the Australian Taxation Office (ATO) will tonight be given a very human face.

As part of a major investigation with Fairfax, the ABC’s Four Corners program will tonight broadcast a program called “A mongrel bunch of bastards”.

The program takes its name from a quote from business owner Mark Freeman, who has spoken out about his quest to set things right with the ATO, after a seven-year-long battle that he estimates has cost him $750,000.

“In dealing with the ATO, I’ve never come across such a mongrel bunch of bastards in my entire life,” Freeman said.

Freeman’s “horror story”, as he tells it, involved his company winning research and development grants from the government, before the ATO decided he wasn’t eligible for the grants or tax offsets. Instead, he was told he owed the ATO $250,000.

He has now spent years trying to clear his name, and claims he has been “bullied, misled and had his reputation and credit rating trashed”. And while in 2015 the ATO reportedly admitted Freeman was in the right, and subsequently wiped the debts, the compensation offered was a fraction of what he has spent taking on the tax office.

Of course, for many small businesses in Australia, stories about the at-time fraught relationship between the ATO and the business community are nothing new; the vast majority of businesses in Australia are small and interacting with the ATO is part and parcel of doing business.

These small businesses likely know of operators who’ve spent years trying to settle disputes over tax debts. Or of sole traders who’ve had their Australian Business Numbers cancelled without knowing why.

They’ve heard about the accountants who’ve had their businesses thrown into chaos because of ongoing outages of the ATO’s key IT platforms, and read about the worries of self-employed Australians, who fear new proposed powers to allow the ATO to report tax debts to credit reporting agencies will “destroy the reputation” of scores of business operators.

They’re familiar with the regular warnings that the ATO is clamping down on expense claims, targeting the “unexplained wealth” of small business owners, or paying special attention to businesses that deal with large amounts of cash.

And they’re all too aware of the ATO’s ability to wind-up companies and issue garnishee notices to reclaim funds.

But they may also know of fellow business owners who’ve benefited from the ATO’s recent focus on mental health resources for small business owners. Or seen the fruits of ATO Commissioner Chris Jordan’s attempts to create “a small business-friendly ATO”.

Peter Strong, chief executive of the Council of Small Business of Australia, tells SmartCompany he sympathises with small business operators who’ve been “done over unfairly” by the tax office, but he believes this happens to a relatively small number of businesses. For the most part, Strong says he rarely hears negative feedback from his members about their interactions with the ATO.

The message he wants to spread is to encourage small business owners to contact the ATO if there is a problem.

That said, the system “is not perfect”, says Strong, who believes there’s scope to involve Kate Carnell as the Australian Small Business and Family Enterprise Ombudsman in tax disputes.

“What we need to do is make better use of Kate Carnell’s office, which should be consulted prior to certain events taking place,” he says.

This would include the issuing of garnishee notices or wind-up applications, or in events where an employee of the tax office has made threats to a small business.

“Carnell’s office is key to all of this, because they get small business,” he says.

When it comes to compensation when mistakes are inevitably made, Strong says this process needs to take place outside of the tax office by an independent and qualified person or group, rather than being determined by the tax office itself.

“There are ways of alleviating it,” he says.

SmartCompany contacted the ATO but did not receive a response prior to publication.

NOW READ: Employers on notice as ATO looks to limit “private travel” using company cars

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Eloise Keating

Eloise Keating is the editor of SmartCompany. Previously, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry.

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  • Rohan Baker

    Kelly O’Dwyer has handed the ATO even more power recently with the ability to jail alleged small businesses that “dont pay super”.

    Comrades.

  • John Hutchinson

    If the ATO deems it necessary to take any business to court, there should be a ceiling on the amount the small business is liable for in Legal Fees of $3,000 – $5,000.00 with the balance paid by the ATO. If the ATO lose the case then they must repay the costs plus any additional damages for loss of reputation and income.

    • cleverlymanipulated

      John. No one, win lose or draw ever recovers 100% of their costs. I think for the people that are ravaged by the ATO it’s not the money that is the cost, it’s the complete destruction of your finances, health, relationships etc that can never be truly compensated and I don’t think the Court would ever get to the point they would order punitive damages against the ATO. That , my friend, would be a slippery slope the Govt would not want.

      • John Hutchinson

        So so true !!!