The tax office is launching a whistleblower hotline, encouraging people to dob in business owners suspected of black economy activity as part of a broader effort to address Australia’s enormous small-business tax gap.
The hotline, first detailed by ATO deputy commissioner Deborah Jenkins in a speech last Friday, will go live on July 1 and focus on businesses who offer discounts for cash payments.
“We want people to contact us and tell us about instances where people might not be doing the right thing,” Jenkins told an audience of chartered accountants.
The impending release of the hotline is ironic timing for the ATO, which only yesterday was the subject of a joint ABC/Nine newspaper story about Richard Boyle, a whistleblower from within its own ranks who went to the media with allegations of heavy-handed tactics against small business.
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Boyle, will appear in court this week, faces a 160-year prison sentence if convicted of breaching laws to do with handling public documents and recording phone calls.
An inspector general investigation into the allegations released earlier this year found “no evidence” of systemic wrongdoing, but did identify several isolated issues in an Adelaide ATO office.
In particular, the investigation found an Adelaide-based team leader ‘joked’ to frontline staff about issuing five garnishee notices — described as ‘business crushers’ — within a single hour.
As the tax office’s small business deputy commissioner, Jenkins last Friday acknowledged the “negative media attention” the ATO has received about its treatment of small business.
“While we don’t agree with all the criticisms, there are always ways we can improve,” she said.
“It has given us the opportunity to take stock of how we work to support small business in their interactions with us and we are making some changes to our processes so that small businesses have a better experience with us.”
Australia’s $10 billion small-business tax dilemma
Jenkins said she’s “excited” about improving the ATO’s relationship with small business by working more closely with the sector, specifically on tackling rampant black economy activity.
An extensive research project undertaken by the ATO is expected to reveal a $10 billion small-business-shaped hole in Australia’s tax bucket when the figures are officially released in the coming months.
While the small-business tax gap has been theorised as substantial in the past, the new research is expected to put the issue into perspective, according to Tony Greco, general manager of technical policy for the Institute of Public Accountants.
“It’s a big number. When you compare it to the large corporates … it’s almost five times larger,” Greco tells SmartCompany.
Greco, a member of the taskforce which made 80 recommendations to government about tackling black economy activity in 2017, says the scale of the issue will likely increase public scrutiny on small business, following several years of public discussion about big business tax dodging.
He notes the impending hotline comes off the back of new whistleblower protection laws passing parliament in February.
“The ATO has responded to that and upped the ante,” he says.
The whistleblowing laws expand the range of conduct that can be reported on under protection and sets the stage for anonymous reporting.
They were intended to encourage a know-something-say-something culture in private companies, large and small, but Greco says the ATO will have to employ some scrutiny to prevent spurious complaints.
“There will be a lot of people who will try to get at someone inappropriately. You have to cut through and use some rigour,” he says.
The hotline is likely to be utilised in conjunction with a myriad of other efforts targeted at reducing the small-business tax gap, including impending changes to the Australian Business Number (ABN) system and efforts to stamp out dodgy cash-in-hand wages.