‘Annus horribilis’ for ATO but no cash grabs

A review of tax department debt recovery processes has found no evidence of “cash grabs” by debt staff.

The Inspector-General of Taxation this month released a review of ATO practices after a months-long investigation sparked by allegations of inappropriate use of garnishee notices on small business.

The ATO can use garnishee notices  to collect an outstanding debt from a third party, such as an insolvent company’s bank, or to recoup monies from a debtor.

Andrew McLoughlin

The allegations, made by current and former ATO officers and aired on an ABC Four Corners Program last April, included claims that the ATO directed staff to issue the notices as a “cash grab” and set performance targets based on the level of debt collected.

After investigating four ATO sites in Melbourne, Penrith, Parramatta and Adelaide the IGoT report identified “opportunities for improvement” but did not find evidence to back up the allegations.

“In the IGOT’s view, the allegations that there was an ATO direction for a ‘cash grab’ on small businesses or that debt staff’s personal performance were set on amounts collected are not sustained on the evidence,” Acting Inspector General of Taxation Andrew McLoughlin concluded.

Shortfalls identified

In a statement the ATO acknowledged the report had identified some “experience shortfalls” and “training requirements” that had been identified and fixed.

However, it said the reported showed that staff used garnishee powers appropriately and infrequently, and only as a last resort.

“I am pleased to see that the independent external scrutineer of the ATO has made it crystal clear that there were no revenue targets for our debt staff at any time, and no ‘cash grab’,” the Commissioner of Taxation said in a statement.

“It is pleasing to see that the Inspector-General found absolutely no evidence of a culture of antagonism against small businesses or any other type of taxpayer. In their review they found professional, hard-working people following our processes and attempting to do their often difficult job as well as possible.”

Overall, however, the IGoT described the 2016-17 financial year as a challenging one for the ATO and noted the House of Representatives Standing Committee on Tax and Revenue had dubbed it an ‘annus horribilis’.

The report found the ATO issued over 40 per cent less garnishee notices than planned in 2016-17, mainly because of a failure to deploy planned finance and collection system changes and two major IT system outages.

These factors had contributed to the inappropriate use of enduring garnishee notices, particularly at the Adelaide site, for less than three months before the problem was identified by management and rectified, the report said.

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