The Inspector-General of Taxation and Taxation Ombudsman (IGTO) commenced this review to maintain community confidence in the administration of the tax system after serious allegations were made about the Australian Taxation Office’s (ATO) inappropriate use of garnishee notices on small businesses. These allegations were made by both a current and former ATO officer on the Australian Broadcasting Corporation’s (ABC) Four Corners program on 9 April 2018. In this review, the IGTO investigated allegations that the ATO:
- gave directions to staff to issue enduring garnishee notices in every case as a ‘cash grab’ towards the end of the 2016–17 financial year; and
- set targets for staff and assessed their performance based on the level of debt collected.
Garnishee notices allow the ATO to recover taxpayer debts from third parties, such as banks or trade debtors. If used inappropriately, they can severely affect a taxpayer’s cash flow, in particular, the more vulnerable such as small businesses and individuals.
The ATO’s collection of revenue and tax debt recovery is vital for government policy and services for the benefit of citizens. It must be done fairly and equitably, taking into account the particular circumstances of each taxpayer but also ensuring a level playing field for taxpayers who pay on time, so as to foster a level playing field in support of the significant voluntary compliance levels from which our nation benefits.
The IGTO investigation team physically visited four main ATO local sites that issue garnishee notices or conduct related actions—Melbourne, Penrith, Parramatta and Adelaide—to see firsthand ATO systems operations and personally interview management and frontline staff at all levels. The IGTO’s independent powers were used to interview a range of ATO staff during the investigation, as well as access ATO systems, information and records. The IGTO also ensured that former ATO officers were invited to provide information, either in person or anonymously.
A clearer picture of events emerged following analysis of the totality of the facts and evidence that was obtained during the investigation process.
Problems did arise in certain localised pockets with the issuing of enduring garnishee notices for a limited period, particularly so at the ATO’s Adelaide local site, but these problems were anticipated and addressed by management once they became aware of them.