Opinion: Bad behaviour by the ATO

by AB29 Dec 2014
As you can imagine, there are many people and businesses that find themselves unable to pay their tax.  Often this is due to circumstances beyond their control however the fact remains that the money is owed and ignoring the problem will only make matters worse.

One would think the solution would be to tackle the matter head on and deal with the ATO in a positive and productive manner, sadly in many cases this may not be enough.

Before I begin I do appreciate the ATO is not a credit provider and in a perfect world everyone would pay their tax on time, every time.  I am also aware the many laws surrounding financial hardship such as the National Consumer Credit Protection Act (NCCP) do not apply to the ATO.

That being said it is clear that despite people’s best efforts many find themselves struggling financially at one time or another.  In many cases people acknowledge their debts and want to do the right thing; they just need a little help and understanding to do so.

While the ATO does have a financial hardship area and states they will help people who are finding it difficult to meet their taxation obligations, there have been many examples of what I believe to be inappropriate and immoral behaviour from the ATO.

I’ll share one such story as I feel many others would have experienced a similar situation and found themselves at the ATO’s mercy, or lack thereof.  This person, let’s call her Mary, is a small business owner.  Due to a downturn in business along with some personal problems she found herself owing the ATO a large amount of money for GST.  Mary was aware she was required to pay her GST, however when people are faced with paying tax or being able to provide for their family they will most likely opt for the latter.  Our client’s intention, like many others was to make up for the missed payments as soon as things improved.  Unfortunately like many others, Mary’s situation remained challenging and she found herself owing money to the ATO that she was unable to pay in a lump sum.  

Mary wanted to do the right thing and arrange a payment plan with the ATO to clear her debt in full.  Looking at her current financial situation and taking into account her other debts and fixed living expenses, it was determined that Mary could afford $2,200 per month towards this debt.  Payments at this level would have seen the debt paid in full over a reasonable period.  The ATO was provided with a detailed Financial Position Statement along with supporting documents that confirmed without question the amount offered represented a true and accurate portrayal of her current financial position and was the best she could do at this time.

One would have thought that the ATO would have been happy to find Mary was taking a proactive stance towards her debt and was willing to commit to significant monthly contributions, but like many others this did not prove to be the case.

We soon received a letter from the ATO headed up “We can’t accept your payment offer”.  One paragraph of this letter said:

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  • by Roman 29/12/2014 9:56:45 AM

    Under income act assesment act 1997
    Defenition of an individual is : includes a natural person
    The defenition of a person is : person" includes a company.

    It does not say anywhere that a living breathing man should pay income tax.

    Also this act fails to define the word " income"

    The legal defenition of income is profit and not wages and salaries, go amd ask the ato what is the defenition of income, every time they give a different answer.

  • by sadler.. 29/12/2014 10:09:33 AM

    I wish to keep my name anonymous thus using a fake name.

    I owed ATO mere $9000 due to slowdown in a business investment resulting in financial hardship. At the time, I could at the most afford to pay $300 per month and needed time before I can work towards making more money and be able to pay more monthly payments. I called and discussed the matter with ATO.

    Besides Mary, I am another person getting the similar response. I was told they can accept a minimum upfront of $1000 and a minimum monthly payment of $450, which must pay off the debt within 18 months. Anything less than those amounts were unacceptable and the next step explained was to put me to recovery company and bankruptcy if I still dont pay up.

    I was contacted by the recovery company with whom I set up the repayment of $250 per month. They gave me initial 3 month probationary repayment period, which meant that if my circumstances change and I can pay more after that, I can change the monthly payable amounts. All this with no interest being added to the amount owed while they payments are going to the recovery company.

    In summary, having experienced the similar treatment from ATO, I also wish to vote for ATO to mend its ways to help people going through hardships and give them a reasonable chance to pay their debt instead of pushing towards the tough choice of declaring oneself insolvent.

  • by JR 29/12/2014 11:32:32 AM

    A very good article John - I have a few clients in the same position. Let's hope the ATO adopts a better approach to payment plans soon.