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The Tax Office and horse racing. Place your bets!!!!!

Monday, November 06, 2017

If you’re self-employed, paying the correct amount of tax is very much like betting on a horse race. You can’t know if you’ve put your money on the winning horse, or whether you’ve paid tax under the correct rules.

The simple truth of this comparison lies in the fact that (massive surprise!!) nothing on the Australian Taxation Office website is law. The ATO’s website information is their view of the law and the ATO can and does change that view over time. This was demonstrated in the Rod Douglass case.

Therefore, because of the massive, unconstrained power of the ATO, the fairness and integrity of the tax administration system relies entirely on the ATO's acting with scrupulous honesty and integrity. Yet this was called into question in the case we reported last week where a Federal Court judge raised a question as to whether the ATO had ‘perverted the course of justice’.

Now we’ve come across another case. This time the ATO denied it made a commitment—even after making the commitment in writing.

Joseph Pintarich owed the ATO a lot of money. He accepted that he owed this. He asked the ATO if they would let him off the interest and penalties if he paid all the tax. The ATO agreed to this in a letter to Joseph. On the basis of the ATO letter Joseph was able to mortgage properties and paid the tax. Then the ATO said ‘Oh No! We made a mistake in our letter to you! You still owe the penalties and interest.’ The case went to the Federal Court where the ATO won. It’s being appealed to the Full bench of the Federal Court. We’ll see what happens.

You can read the details of the case here. It’s a bit scary really. This could happen to any of us.

So, next time you pay your tax or complete your tax return, just think “Umm…I wonder if I’ve just bet on the right horse or not?”
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