Eric Abetz (Tasmania, Liberal Party) Share this | Hansard source

There is more to our tax system than simply how high or low rates are comparatively. I, for one, favour lower taxes, leaving individuals the personal freedom to spend their money as they deem appropriate. But there is also the vital matter—too often overlooked or ignored—of how tax collection is organised and administered. It is crucially important for those affected, as confrontations with the ATO have the potential to ruin people's livelihoods and tie them up in costly proceedings. This is illustrated by the words of Kathryn Little, a transcription contractor whose ABN was abruptly cancelled by the ATO. She said:

No one could give me a reason why the ABN had been cancelled. No one could tell me what part of the legislation or what part of the guidelines or what part of the regulations I did not comply with.

This quote says it all about the heavy-handed, non-transparent way in which the ATO is treating too many self-employed Australians, and there are many more examples of the ATO's punitive measures. Consider the case of self-employed IT engineer Rod Douglass, as outlined in a submission to the House of Representatives Standing Committee on Tax and Revenue in October last year. Mr Douglass was pursued by the ATO for more than half a million dollars for alleged fraud or evasion for distributing half of his income to his spouse for tax purposes, in spite of a statement on the ATO's own website that splitting income with a spouse was legal and acceptable. The Australian Small Business and Family Enterprise Ombudsman received more than 100 requests for help from small businesses in their dealings with the ATO, following a 2018 Four Corners report on the subject, and these are only those who have proactively sought help. Undoubtedly, many continue to suffer in silence.

The core of the problem is this: there is a huge power imbalance between the ATO and small business and individuals. If the ATO pursues a particular business or person over an alleged tax debt, it has access to considerable powers. It can cancel ABNs, amend assessments without notice and with little opportunity for appeal, and even access bank accounts for garnishment before those in question are even aware there is an issue. Its access to resources and legal expertise dwarfs that of the small business people it often targets, and it has the luxury of time—unlike most small-business people, who depend on a regular cash flow to pay staff, suppliers and so on.

Small-business people being pursued by the ATO in this manner is an affront to our values. As a Liberal, I want to see enterprise thrive and prosper. Every individual entrepreneur should have every opportunity to succeed and this should be enabled, not stifled, by government and its agencies. Operating a small business is a daunting challenge under any circumstances. It's time to consider measures that can empower small-business people and hold the ATO to account, and we can take inspiration from the US. First, the ATO should recognise it is a service organisation—a recognition which would provide the necessary cultural shift. As a service organisation, it would seek to serve, understand, help and support rather than simply demand. A legislated taxpayer bill of rights with which the ATO must comply; a tax debt that can only be collected once appeals have been fully exhausted, rather than as soon as it is claimed—the onus of proof being on the tax collector rather than the taxpayer; a well-resourced taxpayer advocate to assist people to get their taxes in order; and similar measures would all provide the framework so necessary for a customer focused ATO. Through pursuing reforms of this kind, we can empower, encourage and enable small-business people, curb the excesses and lack of accountability of the ATO and bring it into line with community expectations whilst ensuring people pay their fair share of the tax burden.