ATO Targeting Small Business as "Low Hanging Fruit"
I came across this article today that suprised me:
What suprised me was not what this whisleblower is alleging - but the fact that anybody is suprised and we all didn't alrady know this.
The ATO has for years focused a disproportionate amount of effort on individuals and small business, with the perception that these cases are people that will likely not have the means to defend themselves. I saw disproportinate, because when you consider the amount of effort vs the amount of additional potential revenue when compared to redirecting that effort to mutlinational tax dodgers would see a lot more tax brought in.
I've come up against the ATO in the past - as an organisation, they are a disgusting and immoral beast. I was handling a case on behalf of my wife, who went to a tax agent, submitted all of her details for her Tax return - the tax agent gave her a copy of what was submitted and asked her to sign - which she did - and between that happening, and the actual return being lodged with the ATO, a large amount of income wasn't included.
The result was about 8-9 months of going back and forth with the ATO - bringing down a debt of around $18000 including fines, to an amount around half of that. the initial agents I dealt with were absolutely terrible. First there was the fact that their command of the English language was very, very poor, and I quite often simply could not understand what they were asking me. After going through a couple of rounds of reviews that were done poorly and with obvious flaws and gaps, I eventually managed to escalate it to a person that did have a command of the English language, who was in a position quite senior, and was very knowledgeable. I can't say I agree with everything that person did, but it was a lot closer to logic than the previous two reviews.
What made it more frustrating is that we were able to prove that the mistake happened some time after the information was given to the agent - whether on the agent's end, or the ATO's end. We complained to the Tax Practitioner Board, as the agent was not providing any assistance at all, and we believe there should have been some liability on their part - but of course, they ruled in the agent's favour. We found ourselves in a case where the ATO ruled it was the Agent's fault, and the TPB ruled that it was the ATO system fault that caused the shortfall. Great. we get screwed with having to repay a whole bunch of tax when we did nothing wrong.
But that isn't my only gripe with the ATO. my next gripe isn't a personal one, but a logical one.
The ATO ruled around 18 months ago that Uber drivers have to pay GST on all fares, and that they aren't eligible for the $75,000 quarterly threshold before becoming liable for GST. the way this was justified was that it fell under an exclusion with Taxi Drivers.
On face value, this is logical - however, at the time, Uber still was not regulated or legalised - so the ATO were essentially expecting Uber drivers to pay tax on what at the time was deemed illegal activities. I guess they might hit up my dope dealer to pay his GST as well...
Anyway, moving on from that, the next part really pisses me off. The drivers are expected to pay GST on the full fare - NOT the portion that the driver actually gets.
Essentially what's happening here, is that the ATO wants GST paid on Uber trips - which is fair enough - but they know it's too hard to get Uber to actually pay their GST, so they're asking for it from the drivers. Low hanging fruit. Drivers won't defend themselves as they are mostly low income and low net worth individuals.
Using my most recent uber trip as an example - a $12.72 fare. Uber paid $0 GST on that trip.
The driver is expected to pay $1.16 GST.
out of that $12.72, most drivers will only see $10.81 - as uber removes their 25% comission before making any payment to the driver. So the GST that the driver SHOULD be paying is more akin to 98 cents.
It might not sound like much - afterall, we're only talking a difference of 18 cents on a regular short trip, but that ends up being around 2% of that drivers take home pay - which would make a significant difference to their bottom line.
All of this is really because the ATO is too gutless to take on the multinationals, and instead focus their efforts on the minnows.