Accountants and experts question claims of SME bullying by Tax Office

The Australian Taxation Office has been accused by one of its own of using bullying tactics against small- and medium-sized enterprises and high worth individuals, following a restructure of the Tax Office’s SME team and an increase in the revenue threshold to $250 million.

“The problem lies with the fact that the top echelons at the Tax Office, with key decision-making powers in relation to the planning, management and resourcing for technical business lines, often lack the technical capability,” the officer has told the inspector-general of taxation.

“This results in the highest risks to the tax system not being appropriately identified, unnecessary compliance costs for both the taxpayer and the Tax Office and hasty decision-making without appropriate consideration of the evidentiary and commercial realities of the case,” the Australian Financial Review reports the officer saying.

MGI principal Sue Prestney says there is room for improvement in the ATO’s dealings with SMEs and high worth individuals, drawing attention to lengthy risk review or audits and instances where a client has been required to pay 50% of a disputed tax amount upfront, only to be found later they had no tax to pay.

“There have been people who have gone through very a distressing situation who perhaps didn’t need to,” Prestney says.

“And most of us have experienced instances where the process has been very drawn out,” Prestney said.

Yasser El-Ansary, Institute of Chartered Accountants’ tax counsel, says the ATO has about 25,000 employees and that means you will get a “wide and varied cross-section of approaches and cultures across the organisation, and some pockets that are more involved in the SME market.”

“It may well be the case that aggressive tactics are adopted that fall outside of the protocols,” El-Ansary says, adding he was awaiting the inspector-general’s review of SMEs and HWI audit programs before reaching any conclusions.

“It’s a clear fact that the way in which the ATO deals with taxpayers in that market segment differs quite largely in respect with larger business,” El-Ansary says.

“And that’s not in some ways inappropriate because the different levels of sophistication mean the approach by the ATO needs to be fairly agile and dynamic.”

El-Ansary says he’s long believed the ATO needs to beef up its technical capacity and improve its understanding of the SME environment. He also believes that some ATO officers should be more skilled in responding to SMEs.

He adds that the ATO is quite focused on ensuring maximum compliance of the law at the moment, given the Government’s push to return to surplus soon, and “in some cases that may involve what others see as aggressive tactics.”

The ATO this afternoon told SmartCompany that views expressed by its staff are “always welcomed and considered, however it is important to note that these views do not always represent the broader views of staff.”

“Concerns about bullying tactics are taken extremely seriously and we have processes in place to ensure our people operate in a fair and professional manner,” a spokeswoman said. 

“Our latest ‘Staff Engagement Survey’ indicated that our staff in S&ME have a high level of engagement with our strategic direction and business outcomes.”

“The S&ME business line also met all of its corporate standards including those around quality and commitments for case finalisation which supports our view that we have sufficient staff in place at the appropriate levels to successfully achieve those standards and commitments.”

“To support our HWI and Interpretative Advice teams, staff participate in regular skilling and capability development activities and are further supported by a network of around 65 high level specialist technical support staff  and other specialist areas where required.”

“We also ask taxpayers who have been reviewed or audited to complete Client Feedback questionnaires upon the completion of an audit or review. This asks questions about auditor professionalism and responses are generally positive.”

Peter Strong, executive director of the Council of Small Business of Australia, says while there might be instances of bullying, the Tax Office generally has a good reputation among SMEs.

“I’m happy to hear more about the issue. If something happens now and then, we can deal with it, but if it’s something endemic, that’s something else,” Strong says.

“We’re in contact with the Tax Office regularly.”

CPA Australia business and investment policy head Paul Drum said while the accounting body had heard of occasional complaints about the Tax Office, it was not aware of systemic bullying.

According to the AFR, the whistleblower’s written submission to the inspector-general’s review into the Tax Office’s audits and risk reviews of SMEs and high worth individuals raises eight problems:

• Resourcing.
• Lack of recognition of the complexity of cases.
• Skill level of senior staff.
• Inadequate technical support.
• Opportunities to build capability.
• Inadequate complaint approaches.
• Lack of clarity on independent review of cases.
• Relocation of staff.