Tax & ATO News Australia

External Scrutiny Into the ATO

The house of representatives committee on taxation is currently accepting submissions into the external scrutiny of the ATO. This is after recent comments from the Commissioner of Taxation, Chis Jordan that there is too much scrutiny of the ATO. 

Encouragingly, Liberal Senator, Bronwyn Bishop, has resisted this call, saying that given the ATO’s role is to collect money and this has the potential to effect peoples’ lives, parliamentary scrutiny should remain.

More critically, the power that the ATO has to collect money is virtually unlimited, as I have written about before. This power, coupled with a culture that oscillates between rabidly aggressive (at worst) to uncompromising (at best), means that there is always a real risk that an individual ATO officer will go too far and destroy someone’s life in the meantime. This has happened, and I have personally been involved in many such cases, including cases that are deserving of compensation, so badly has the ATO behaved.

The Inspector General of Taxation, Mr Ali Naroozi, does an excellent job of scrutinizing the ATO, with limited resources. Mr Naroozi is a sensible and appropriately skeptical watchdog and needs more scope to review what the ATO does, not less. It would be an absolute disaster if the parliament was convinced that the ATO should be unsupervised.

If parliament agreed with the Commissioner of Taxation in this regard, the result will only be worse for taxpayers, including in particular those many taxpayers who are ultimately showed to have done nothing wrong. There must be consequences if the Commissioner’s actions cause an individual who has not avoided tax at all to lose their business, their house or worse. This has happened, and must not happen again.
 

Posted in: Tax & ATO News Australia at 22 March 16

ATO Wiretaps

The Federal Government is seriously considering giving the ATO wiretap powers, or more accurately, powers to access metadata, including stored phone calls, emails and SMSs.

A Government committee has argued that these powers are necessary to protect against serious crime, such as tax fraud, and noted that “Al Capone was caught through the tax system.” I kid you not.

I will leave the critique of an argument that leads from the premise of Al Capone to the conclusion of ATO needing more power to the logicians. My primary concern is that it is absolutely crazy to give the ATO more power when the Inspector General of Taxation and other Federal Government committees have already concluded that the ATO is abusing its current powers.

I have described them as monkeys with machine guns. This will potentially give the monkeys a surface to air missile.

It may surprise people that the ATO does not currently have the power to intercept telecommunications. There is a very good reason for this – the ATO currently must pass on the role of criminal investigation and prosecution to the crime authorities, specifically the Australian Crime Commission and the Australian Federal Police. Those authorities of course have the power to investigate all Federal crimes (including tax fraud), and can access telecommunication to do so.

However, there is a critical oversight role in that any warrant must be approved by a Federal Court judge. While this is quite easy to do in practice, it forces the bodies involved to turn their attention to the existence and seriousness of potential crime.

It is well established that the ATO can use its own significant investigative powers for the purposes of auditing and amending assessments. These powers can be (and are) used without any suspicion of wrongdoing – simply as a fishing expedition. The logic is that this is acceptable as far as it goes, because the ATO is simply raising assessments (although I have huge problems with this power being abused as well).

What happens when the ATO’s wide reaching powers are merged with the kind of powers usually reserved for criminal investigation and then only with the oversight of the courts? The power will be enormous, and the potential for abuse of that power will be correspondingly frightening.

I am genuinely concerned about the impact of these proposed changes on the rights of small businesses and individuals. As always with such measures, it is not the criminals who will be affected – there are already significant powers that can be used appropriately to catch the crooks. The people who will be affected are the kind of people I act for: people who do nothing wrong and are targeted by the ATO because of a data matching computer’s algorithm which no-one truly understands.

This is scary stuff.

Posted in: Tax & ATO News Australia at 28 September 15

ATO calls for more power!

The ATO has extensive investigative powers including, entering premises, demanding the provision of information in writing or by interview, demanding the provision of documents and issuing an offshore information exchange demand for documents, yet the ATO still wants more power. The ATO has called for the wire tapping laws to be changed so that it can access real time communications such as live phone calls. Under current law, only criminal law-enforcement agencies like the State Police and the Australian Federal Police can access prospective or real time data.  The ATO can only apply for warrants to gain access to “stored communications” such as emails, voice mails and SMS messages.

Posted in: Tax & ATO News Australia at 17 December 12