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Here’s some really interesting (not?) holiday reading

Monday, January 07, 2019

We trust the Xmas pudding and New Year champers have worked through your system and you now feel suitably relaxed as the new business year slowly winds back up.

If you’re after some ‘exciting’ tax reading (yawn!), we had bit of a flurry of submissions we needed to get to the government and parliament before Christmas. Here are a couple of them.

The Parliament's Tax and Revenue Committee: ATO behaviour

The Committee is reviewing the performance of the ATO. In our submission we summarised our criticisms of the ATO over the last several years.

We stated that, based on hard facts, the ATO:
  • fails properly to audit individuals who dodge tax, resulting in significant revenue loss; but instead
  • focuses claims of tax debt against small business people who are open, transparent and truthful about their tax affairs.
The ATO also:
  • creates false claims of tax debts based on erroneous application of the law;
  • falsifies documents to support its claims of tax debt against individuals;
  • when caught out creating false claims of tax debt and as a result withdraws its claims, nonetheless persecutes its victims by putting them through a compensation claims process that can only be described as a ‘sham’; and
  • gives special treatment to select individuals (mostly high-wealth people) resulting in a loss of tax revenue on a large scale.
In addition, we submit that the ATO:
  • Issues misleading publications and guidance.
  • Misleads Members of Parliament.
  • Attacks its critics rather than dealing with the substance of their criticisms.
  • Is coercive and threatening in its behaviour towards individuals.
  • Pursues cases that have no merit.
Yes, we don’t pull any punches and we back up our claims with evidence. Our submission is here with the Rod Douglass case study as evidence along with details of ATO false statements.

However, we will say that we are seeing some signs of reform happening inside the ATO although we need to see solid outcomes.

Treasury Review: Director Identification Numbers

Treasury is exploring the introduction of ‘Director Identification Numbers’. This would be a big new red-tape process controlled by the ATO. Our submission is here.

We oppose this on the grounds that the DIN system is allegedly aimed at preventing and addressing the problem of company ‘phoenixing’. Yet the Productivity Commission’s report, which the government uses to justify DINs, says that DINs will not fix the problem. Crooks will simply get around DINs according to the Productivity Commission. In other words, the DIN legislation, if passed, will be an invasion of privacy of millions of individuals and impose a new red-tape regime that will not achieve its stated purpose.

Further, the draft legislation:
  • Gives new, unrestrained and unaccountable powers to the ATO (the effective registration authority) to determine who can be a director and who cannot.
  • Only provides appeals against the denial of DINs after a DIN has been denied/cancelled.
  • Transfers to the ATO the authority of Parliament to determine the extension of the ATO’s powers in relation to DINs.
That is, the legislation gives the ATO bureaucracy massive and potentially unrestrained control over who in Australia is allowed to be a company director and therefore who can conduct business in Australia under a company structure. The legislation is profoundly anti-democratic.

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