Ross Greenwood speaks to ATO Small Business Deputy Commissioner Deborah Jenkins after The Australian Taxation Office has been cleared by the inspector-general of tax over claims of an improper issuing of garnishee notices.
Ross Greenwood: Great to have your company here on Mela news going right around Australia. Over the past year or so, there has been criticism of the Australian Tax Office in the way it deals with small business. Now, this culminated in a very serious criticism of the Tax Office in both the ABC and the Sydney Morning Herald, which is owned by the majority owner of this radio station. Now, the actual ABC Four Corners and Sydney Morning Herald allegations were that the Tax Office was taking especially harsh actions against many small businesses which included garnishee notices. The allegations, it was that those garnishee notices were tied to performance indicators for ATO staff.
In other words, that they basically got better performance notices if they were able to get more of these garnishee actions. Now subsequent to that, the inspector general of taxation and the tax ombudsman Andrew McLoughlin had undertaken a review which included looking at the Tax Office’s sites of Melbourne, Parramatta, Penwortham, Adelaide, more than 50 staff have been interviewed. Then on top of this what you’ve seen is that the small businesses ombudsman, Kate Carnell has been commissioned by the minister for small and family businesses, Michaelia Cash, to investigate the Tax Office’s actions when recovering tax states and when business have been in dispute with the Tax Office at the time.
Now, the reason why all of these actions are important is because of the significant imbalance between the power of the Tax Office, the financial power especially, the legal power as compared with small businesses. Now today at inspector generals, a report came down, the review and effectively what it had said is that broadly it believes there is no evidence of a culture of antagonism against small business. In other words, it’s cleared the Tax Office. It basically is indicated also that it believes in some areas more training is needed to be done especially with younger staff in some areas, but it actually is almost the opposite in many cases to what the central allegations had been previously.
Now, just to explain all of these to you, the deputy commissioner of small business at the Tax Office, Deborah Jenkins is on the line right now. Deborah, many thanks for your time?
Interview with: Deborah Jenkins, Deputy Commissioner, ATO Small Business
Deborah Jenkins: My pleasure.
Ross Greenwood: Does this exonerate all of the actions in all of the cases of the Australian Tax Office?
Deborah Jenkins: We welcome the findings today and what those findings were was that our staff were using the powers appropriately and infrequently. What we do say though is there were a number of recommendations, and I think you’ve mentioned a couple of them, around telecommunication training and we can always do better. For me, today it actually feels like an independent review does tell us what we’ve always known, but of course, there are areas we can always improve and I think that’s the key message for me from today’s release.
Ross Greenwood: I would’ve thought if you are a bank or the Tax Office, you would not put a business out of business lightly. It’s a very serious thing because it destroys lives. Therefore, even garnishee notices are also very significant, but then that said, people have obligations to the Tax Office. People have obligations in a similar way to their banks to repay loans, and so there is a point at which things have to change. The relationship has to change.
Deborah Jenkins: That’s right. We want to make sure that we’re creating a level playing field, and that those people who are paying the right amount of tax and they’re paying it on time and unfairly disadvantage by those who don’t. It’s really important that we do make sure that we support small businesses so they understand when they need to pay their tax, how they need to pay their tax, and that garnishees really are used as the in diverse situation. We’re talking to them about different ways, different action that we can take to help them pay their tax and several obligations.
Ross Greenwood: We understand that that’s the situation, but at what point is that the Tax Office says, “Right, enough is enough, you haven’t paid your tax. We’re going to send you broke” because this is the allegation. We do recognize that small business or large business should not use the Tax Office effectively as a bank. It’s a source of financing by not paying their tax obligations and by using the money that they otherwise would owe the Tax Office to fund their businesses to keep them going that little bit longer. Then on the other side, what we don’t want is the Tax Office somehow unilaterally driving businesses to the wall that might otherwise be successful.
Deborah Jenkins: Yes, but we take these actions, as we found today, very infrequently. The powers have been used appropriately and with appropriate guidelines. My staff really have to think about are they making every reasonable effort to contact the client directly, are there other things we can do before we hit down the duration of the garnishee because, as you said, we don’t want to drive businesses to the wall unnecessarily. We do want to give everybody the opportunity to pay their tax on time.
Ross Greenwood: There’s four recommendations here from the inspector general of tax, the independent body. One is to incorporate into the annual planning process contingency plans, the material assumptions used in operational plans, and appropriate assurance to allow the business continuity measures. What does that actually mean? From a practical point of view if I’m running a business, what does that mean?
Deborah Jenkins: I think the contingency plan you’re talking about there is the situation is actually from our perspective when we have changes and we have to move our staff to different areas to do different things. We need to make sure that when we’re doing this that we have the right people doing the right things at the right time so that our people are appropriately trained when they are undertaking this particular activity.
Ross Greenwood: Which rolls into the second recommendation to improve the candidate selection models for garnishee work and refine these models with feedback from staff who do the work. That effectively means you’ve got to make certain you’ve got the right staff who have got the experience to make this line calls right.
Deborah Jenkins: That’s right. We’ve got to make sure that they have the right training, but we’ve also selected the right people so that we can make sure we are making the right decisions. As you said earlier, these are really important decisions. I’m very conscious every day that decisions we make can make or break a small business.
Ross Greenwood: In the fourth one, I’ll leave the third one because it’s a little bit similar in some ways. It’s about the personnel, about the resources and so forth, but the second part, the final one, the fourth one, to improve support for early intervention unit staff by developing more effective mechanisms for regular case-specific outcome feedback and by incorporating roleplaying exercise in the facility training session. In other words, that your people, before they do it for real, actually understand what the consequences of what they’re doing really is.
Deborah Jenkins: That’s absolutely right. You can go and do online training or read a book, but there’s nothing like roleplaying. Nothing like actually working through and we’re dropping those situations with your colleagues and with your peers to really give you that on the ground training or on the job training that’s going to help make really effective conversations with our small businesses.
Ross Greenwood: Final one because one of the allegations coming out of Four Corners and the Sydney Morning Herald was that these garnishee notices, which are severely detrimental to any business or individual if issued that it’s somehow tied to the performance indicators of ATO staff. That appears to have been basically rejected by the inspector general of taxation, but you tell me, is there any parallel between the garnishee notices issued and the performance indicators of those staff?
Deborah Jenkins: No, our staff continue to use the appropriate guidelines and they were never given revenue targets.
Ross Greenwood: Finally, is it sometimes a perception it’s enough to scare people perhaps that a garnishee notice could be issued?
Deborah Jenkins: Sometimes the garnishee notice, we do find is actually the point at which people want to engage with us, so we use garnishee notices when people aren’t engaging with us. What I would say to people is don’t wait until you get that garnishee notice to get in contact with us. Please, if you have a debt with us have it checked to us and make sure that you can get yourself into a payment plan arrangement or have a conversation about it how we can help.
Ross Greenwood: The deputy tax office commissioner, Deborah Jenkins on that particular report handed down by the inspector general of tax today. Deborah, I appreciate your time.
Deborah Jenkins: Thank you.
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