ATO Garnishees Full Steam Ahead

Posted by Michael Kirby on Jun 1, 2018 3:05:22 PM

Back in early April the Four Corners program aired a segment on the conduct of the ATO.  A large portion of the program was devoted to the ATO management's instructions to staff to ignore their own guidelines and issue more Garnishee Notices as they were behind on the year end revenue targets. 

After the program aired a well overdue parliamentary inquiry was announced to investigate the conduct into the ATO.  You would think after that the ATO conduct would have changed and the use of Garnishee Notices curtailed somewhat.  Contrary to that thinking, evidence in our practice suggests the ATO has decided to double down and ramp up the use of Garnishee Notices.

In a normal year we would expect to our clients to receive somewhere between 2-6 notices across the practice.  In the past month alone our clients have received close to a dozen Garnishee Notices.  Whilst I respect the fact the ATO does have to collect revenue a number of those clients actually had payment arrangements in place with the ATO, were in the process of finalising payment arrangements or there was a dispute regarding the debt.

I recently had a case where a new client rang me in tears as the ATO had garnisheed her bank account not leaving enough money for her to pay staff or her mortgage.  Her problem was she didn't even know she had the debt as the notices were going to her old accountant and he was not passing them on to her.  Now business owners should know better about what is happening in their business but sadly this is the norm rather than the exception.

Surprising the people who can afford to fight the ATO have the services of a FREE independent body to review ATO decisions.  Like Big Business the little guy needs an independent umpire who can adjudicate on disputes when they arise.   Currently they have to incur thousands of dollars in legal fees to fight a decision by the ATO. In fact the ATO use this fact to bully their way even when they are in the wrong, a fact I can personally attest to. 

I had a case recently that went through an ATO audit.  The Auditor did not like the fact our client had a financial timing advantage due to a structure that was in place and well documented.  Three times they tried to argue a breach of different laws, each time we shot their argument down in flames.  Finally the auditor brought out his Audit Manager and I was told they were going to find against the client and issue penalties.  When I asked which laws he had broken, the reply was it just isn't right.  I told him if he didn't like it change the law.  The response from the Audit Manager was we have made our decision and if you don't like it the client can go to the cost of taking them to court to fight it out there.

As Judge, Jury and Executioner the ATO has a greater responsibility to taxpayers than as a revenue collector.  They need to realise they have the ability with the swipe of a pen to ruin businesses and lives to the point people are driven to consider taking their own lives.  Unfortunately the ATO under Chris Jordan lacks any empathy with the tax payer and is driven on number and KPI's.




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Topics: xero, small business, TAX, xero accountant


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