Watchdog to investigate ATO's debt-collection tactics
The tax office's alleged inappropriate use of debt recovery tactics will be the subject of the new investigation by watchdog Inspector-General of Taxation Ali Noroozi.
The investigation follows the joint Fairfax Media-Four Corners investigation into the Australian Taxation Office which uncovered allegations by ATO whistleblower Richard Boyle that staff in the Adelaide office were "quite clearly and categorically to start issuing standard garnishees on every case" - which was not in sync with reasonable use of the debt collection tool.
A garnishee notice allows the tax office to order a bank to hand over money from the taxpayer’s account, without consulting the taxpayer.
A standard garnishee notice requires the bank to keep sending money to the tax office whenever money is deposited in the account.
"The tax office's inappropriate use of garnishee notices is of serious concern and, if not addressed, can affect community confidence in the administration of the tax system,” Mr Noroozi said.
“As the taxation ombudsman, I have a duty to independently investigate these allegations to restore public confidence."
In announcing his review, Mr Noroozi specifically referred to the joint Fairfax Media-Four Corners investigation's claims about use of garnishee notices including that there were directions given to staff to issue standard garnishee notices in every case as a ‘cash grab’ towards the end of the 2016–17 financial year and to set targets for staff and assessed their performance based on the level of debt collected.
Mr Noroozi said improper use garnishee notices may have a "potentially severe impact on vulnerable small businesses and individuals".
"Cash flow is the lifeblood of small businesses and, if inappropriately disrupted, can have an unjustified and devastating effect on them," he said.
He said that while the ATO played a "vital task" of collecting government revenue and recovery of tax debt, "it must be done equitably, taking into account the particular circumstances of each taxpayer whilst ensuring a level playing field is maintained".
In addition to this review, Revenue and Financial Services Minister Kelly O'Dwyer had launched another probe headed by Treasury into the alleged unfair treatment of small businesses and individuals, uncovered during the investigation. These included alleged cases of bullying, intimidation and cover-ups by the agency.
Each year the tax office receives 25,000 complaints from taxpayers. Mr Noroozi gets more than 2200 complaints a year, most of which relate to debt collection.
In 2015 his office did a review into the ATO’s debt collection approaches and made 19 recommendations for improvement, including that the ATO should take account a taxpayer's circumstances and take proportionate action.
But Mr Noroozi said since his review, his office had continued to receive complaints about ATO’s debt recovery actions. "In fact, they have consistently formed over 20 per cent of all complaints made to the IGT with the use of garnishee notices being amongst the top three topics of such complaints,' he said.
The new review will examine the allegations made by current and former ATO staff interviewed in the investigation and explore the themes arising from related complaints made to his office in recent years, he said.
It will look at strategies and policies surrounding garnishee notices as well as Key Performance Indicators set for tax debt collection and staff performance.
Mr Noroozi noted that "employment issues regarding current and former ATO staff are not within the IGT’s legislative purview and will not form part of this review".
An Australian Taxation Office spokeswoman said the agency was "committed to cooperating fully throughout the process" of Mr Noroozi''s garnishee notices review.
ATO deputy commissioner of small business Deborah Jenkins had told the investigation that each year the ATO issues about 24,000 garnishee notices, 14,000 of which relate to small businesses, but that these were only used as a last resort.
The closing date for submissions to the review is June 22, 2018.