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Terms of reference in ATO probe unveiled

by Reporter12 minute read
Terms of reference in ATO probe unveiled

The long-awaited investigation into claims of ATO bullying and misconduct towards SMEs has officially begun, with its terms of reference announced by the Inspector-General of Taxation.

The inquiry was launched following allegations that the Australian Tax Office had been using disproportionate heavy-handedness when it came to SME audits.

In April of this year, Channel Nine ran a story on A Current Affair in which allegations were levelled at the ATO regarding inappropriate heavy-handedness. 

A joint investigation by Fairfax Media and the ABC showcased multiple examples of people suffering enormous financial, and emotional, distress in seeking redress for mistakes by the ATO.  


Off the back of the furore, the Minister for Revenue and Financial Services, Kelly O’Dwyer, requested an inquiry into the allegations raised in the media investigation.

A spokesperson for the Minister for Revenue and Financial Services said: “The Minister is deeply concerned about allegations raised in the Fairfax and Four Corners reports. The Minister has requested a thorough investigation of all allegations raised and the government will be responding once it has had an opportunity to consider that in detail.” 

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, has reportedly also begun reviewing case studies of small businesses that had “experienced heavy-handed tactics by the Australian Taxation Office”. She said that she was particularly interested in examples where the ATO had targeted small businesses unfairly and the business owner had been affected financially.

The ATO has denied that it was “anti-small business” or heavy-handed in its activities but has revealed that it has looked into the case that had been put to it by A Current Affair and “absolutely stand[s] by the actions [it has] undertaken”.  

The tax office claimed that the bullying claims raised in the media were isolated examples only, and not part of a widespread revenue-grabbing policy.

“As the Taxation Ombudsman, I have a duty to independently investigate these allegations to restore public confidence,” the Inspector-General, Ali Noroozi, said in a statement recently.

Mr Noroozi will reportedly look at the issuing of garnishee notices, in response to claims they have been over used by the ATO as a “cash grab” against SME operators.

“Theallegations about the ATO’s inappropriate use of garnishee notices is of serious concern and, if not addressed, can affect community confidence in the administration of the tax system,” the Taxation Ombudsman said.

“The ATO has the vital task of collecting government revenue and recovery of tax debt is an important part of that task; however, it must be done equitably, taking into account the particular circumstances of each taxpayer while ensuring a level playing field is maintained.”

The full terms of reference of the inquiry will explore the ATO’s:

  1. strategies to manage tax debts by way of garnishee notices;
  2. policies and procedures for issuing garnishee notices, including how the ATO considers circumstances of taxpayers, such as vulnerable small businesses and individuals;
  3. mechanisms to ensure staff adherence to its garnishee notice policies and procedures;
  4. Key Performance Indicators (KPI) with respect to both tax debt collection and staff performance;
  5. specific communications to staff regarding the use of garnishee notices and associated KPIs at each location of its debt recovery units; and
  6. other relevant concerns or potential improvements identified during the course of the review.

Speaking to The Adviser sister title My Business, Mr Noroozi said: “None of these allegations have been substantiated yet. They may well have implemented these recommendations and they may be working well, and these may be just a few isolated cases. We don’t know that yet. We need to investigate to find out whether they have been adhered to.”

He added that the media coverage surrounding the issue has brought the matter to the attention of the public, and that there is now a need to “restore public confidence”.

Commenting on the announcement, a spokesperson for the ATO said: “We note the IGT has announced an investigation into the ATO’s use of garnishee notices and, as always, are committed to cooperating fully throughout the process.”

The tax office has previously denied the allegations of impropriety.

The investigation comes more than five weeks after the allegations were first aired by a joint ABC-Fairfax investigation.

In launching the investigation, Mr Noroozi made a plea for impacted business leaders to come forward, stating that the more evidence brought forward, the better the results for the entire SME community.

“Over 25 per cent of all our complaints come from small business — that’s a substantial number,” the Ombudsman told My Business.

He added that of the individual taxpayers making complaints, some of those are sole traders while others are made by tax agents, meaning the overall proportion of complaints relating to SMEs could be substantially higher.

More information on the investigation, including details of how to lodge a submission, can be found on the Inspector-General of Taxation’s website.

[Related: Calls for overhaul of ATO’s SME dealings]

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