Ross Greenwood speaks to Inspector-General of Taxation, Ali Noroozi, regarding his new investigation which looks at claims of dodgy debt recovery tactics by the Australian Tax Office (ATO)
Introduction: ATO facing investigations over dodgy debt recovery
Ross Greenwood: Welcome back to money news right around Australia. A few weeks ago we told you about a Four Corners program that was coming out looking at the tactics of the Australian Tax Office. Now, this was in particular about the tax office’s passed to garnishee a person’s wages or indeed their income stream if they’re in a business. To make certain that they get paid. Now it was seen in many cases that this was pretty heavy-handed tactics by the Tax Office. Which clearly since then has defended itself. One issue about this is, what are the tactics of the Tax Office when it comes to dealing with small and medium-sized business? Is it really a little overbearing? Is it really something that causes businesses to disappear that otherwise would not disappear if there was a more softly approach.
The Tax Office, it would be fair to say and said it will continue to garnishee wages and or income streams if and when it can. However, as you may be aware the independent watchdog of the Tax Office is indeed the inspector general of taxation. What’s happened is until basically such time that there is a call for an investigation through parliament or through other means, to do something about this. Elena simply has to sit still but now he’s moving. There will be an investigation into the Australian Tax Office debt collection service. The Inspector General of Taxation is seeking these in particular and individuals where there have been garnishee orders against them. Ali Noroozi is on the line right now. Thanks for your time Ali.
Interview with: Ali Noroozi, Inspector-General of Taxation
Ali Noroozi: Pleasure.
Ross Greenwood: Can you just explain why is that the UNL investigating the tax offices debt collection services?
Ali Noroozi: As you would recall the joint report by Fair-fax on Four Corners. There were serious allegations made about the eight years inappropriate use of garnishee notices. Now those are very serious allegations. It can affect community confidence in the way the tax estimate is administered. I think as the Tax Ombudsman or the role that I play as Tax Ombudsman it’s my duty to independently investigate these allegations and to either show the public that all is well or if indeed there is truth to this allegation, determine the extent of them. Then request that they be addressed immediately. The reason why we need to do this is not just that the taxpayers get justice as important as that is. It is also to restore confidence in the system. That has a huge bearing on the level of voluntary compliance. Which a self-assessment system like ours heavily relies on.
Ross Greenwood: There have been reports out there saying that there are around 200 rather 25,000 complaints from taxpayers against the Tax Office each year. That I see that you receive around 2,200 complaints each year. Most of those relate to debt collection. This is really front and center in your mind in terms of the complaint you receive.
Ali Noroozi: Yes. We’ve consistently received 20% or more of all of our complaints have related to debt collection. Top three among the debt related issues is garnishee notices. We have had that over a three year period since we’ve had the Ombudsman function, the complaint handling function. On top of that when these concerns or these allegations are so publicly aired we need to investigate them. We owe it to the public. They need to know whether there is an issue or not. As I say to either reassure them or to say well these things need to be fixed.
Ross Greenwood: It’s fair to say that a garnishee notice where effectively the tax office can with that consultation to that individual dip into their bank account and take money from that account. That is a pretty extreme measure for any creditor such as the tax office to take against an individual or business.
Ali Noroozi: Yes. A basically a garnishee notice if the ATO issues it, they can issue it to a third party just as a bank or an employer. Then that bank or that employer then whatever debt that was owed to the taxpayer, they then need to make that payment to the tax office in satisfaction of the taxpayer’s debts. Now if it’s unjustified then it can have devastating effects on vulnerable small businesses and individuals. Having said that as a revenue agency they do have to collect taxes. That’s a very important task. Part of that is to recover tax debt from time to time. Now if they do use it as they said on the program as a last resort then that’s great.
They also need take into account each taxpayers set of circumstances. They need to be proportionate in their action. We have made this recommendation in a review or we have made these observations in review we did back in 2015. Now we have given them some time to implement those recommendations, see what the outcome was. How that flowed on. Given the level of grievances and the public airing of them, I think it’s opportune that we are looking at this. I would urge your listeners to get in touch with us if they have been on a receiving end of one of these garnishee notice and share with us their experience good or bad. Because both of them are equally as important. If I may just share our-
Ross Greenwood: Please. That’s what I was going to ask you for is your website. How do people get in touch with you if they have had these garnishee notices to share that experience with you.
Ali Noroozi: Our Web address is igt.gov.au. They can also call us on 1300448829.
Ross Greenwood: I’ll give that again. igt.gov.au and 1300448829. Otherwise get in touch with us. We’ll give you those numbers or that e-mail address as well. Ali Noroozi is the inspector general of tax in Australia. As always Ali, we appreciate your time.
Ali Noroozi: Thank you.
If you have had experience with garnishee notices, you can submit or feedback here or by calling 1300 448 829.
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