Tips for Small Businesses in a Tax Dispute Slides

Tips for Small Businesses

Interacting with the ATO

Law Society of Tasmania – 27 February 2020

Small Business, Australian Taxation Office

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Interacting with the ATO • Engagement and communication approach being implemented.

• We work with small businesses and their intermediaries. We deliver faceto-face workshops and webinars to small business.

How we help to support small business

Tackling the Black Economy

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Helping Small Business Tackling the Black Economy Protecting honest businesses We are focusing on businesses that deliberately hide income to avoid paying the right amount of tax and/or superannuation.

What are we doing?  New and enhanced enforcement – tailored education, data and technology, and visible enforcement  Extension of the taxable payments reporting system (TPRS)  Removing tax deductibility of non-compliant payments.

What have we learnt so far?  Many small businesses are not meeting their record keeping obligations  Businesses are not recording their sales appropriately  General misunderstanding of employer obligations  Some businesses operate outside of the tax system  Businesses are willing to share local knowledge.

IPA 2019

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Helping Small Business Insight into Small Business 2018-19

IPA 2019

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Annual turnover < $10 million

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Around 4.1 million in Australia

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99% of businesses in Australia

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Contribute around $380 billion

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Employ ~ 4.9 million Australians

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78% have no employees

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69% have turnover of < $75,000

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Around 71% pay tax on time 4

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Helping Small Business

Dispute Timeline

IPA 2019

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Helping Small Business

Disputes in context: 2018-19 Returns lodged Adjustments arising From audits Objections

37,628,897 530,508

Cases filed with Courts or Tribunals

26,276 441 IPA 2019

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Preventing and resolving disputes RDR has introduced a range of client centric, contemporary services since 2013, aimed at the earlier resolution and prevention of disputes.

Alternative Dispute Resolution Spectrum Independent Review

Early Engagement

Dispute Assist

Facilitation

•Large and small business (pilot)

•Fast Intensive Triage Strategy

•To promote the earlier resolution of disputes, avoiding protracted disputation and unnecessary litigation.

•Appropriate and meaningful contact

•Initiative that guides unrepresented individual taxpayers and small business through dispute processes with the assistance of an independent guide.

•97 trained facilitators •Aimed at less complex disputes but includes PGH clients

•We provide feedback to CEG BSL for continuous improvement •Guidelines recently updated, following consultation with CEG BSLs and the Dispute Resolution Working Group.

•Explain decisions in a way that is fair, simple and understood.

•Aim to resolve the whole disputes including payment arrangements •Decrease in complaints and an increase in compliments

•The ATO have 94 trained guides •In 2018-19 YTD to 31 Dec 2018, 112 cases have been supported.

•One of the main aims is to connect taxpayers and officers with the right people and ensure disputes are handled fairly.

•This year 94% of IHF conducted either fully or partially resolved the dispute.

Mediation and Early Neutral Evaluation •‘Advisory’ Alternative Dispute Resolution •More complex disputes •Undertaken at any stage of the dispute, including preassessment

Litigation •We litigate where there is egregious behaviour or intractable disputes or where law clarification is needed.

•52% of IHF were at audit; 40% at objection and 8% at litigation •For each IHF that fully resolves the disputes, it saves (on average) $55,000 that the taxpayer would otherwise incur in going to litigation.

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In-House Facilitation Service • Introduced in 2014 • 97 trained facilitators across the ATO • Can be used at any stage of a dispute • Free service • Key initiative to the way the ATO manages disputes

UNCLASSIFIED - Practitioner Connect – 9 May 2019, The Law Society of NSW

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In-House Facilitation Statistics 2018-19 Referrals:

Resolution:

From taxpayer

228

Partial

50

From ATO

27

Full

15

Mutual

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No. of IHFs

69

Other (incl. Courts)

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% resolved

94%

TOTAL

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Dispute Assist • Available to unrepresented taxpayers who are experiencing some form of difficulty (such as domestic violence, family breakdown, disability/illness, financial hardship or addiction).

• No other tax jurisdiction in the world offers a similar service.

• Trained Dispute Assist Guides from the ATO are assigned to support individual and small business clients with their interactions with the ATO. • 2018-19 year we supported approx. 112 taxpayers with a Dispute Assist guide, just under half of these were from the small business client experience.

• For more information, email disputeassist@ato.gov.au

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Small Business Independent Review • Small Business Independent Review Pilot began on 1 July 2018 and has been extended to 31 December 2020.

• An independent technical officer from outside the audit area reviews the merits of the audit position before the assessment or amended assessment is issued.

• Eligible businesses with an audit in progress will be contacted directly by their case officer and offered the opportunity to participate in the pilot.

• Pilot excludes: superannuation, fringe benefits tax, fraud and evasion findings, interest.

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Small Business Taxation Division (SBTD) of AAT • Makes it easier, faster and cheaper for a small business to review an AAT decision before the AAT. • Reduced application fee of $500.

• The time limit to apply for a review of most decisions made by the ATO is 60 days after you receive notice of the decision.

• After hearing process is concluded, decisions will be finalised within 28 days.

• ATO will fund a small business taxpayers legal representation when they are not represented and the ATO is using external legal representation.

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Improved service offering for debt matters This escalation service is available to legal practitioners when you are acting on behalf of your client in relation to: • director penalty notices

• creditor’s petitions

• statutory demands

• bankruptcy notices.

• windup notices • judgement notices • summons 13

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Improved service offering for debt matters This service is ONLY available in instances where there is: •

an error in a document/notice, or

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less than five (5) business days for a response.

To access this service: •

contact the Debt area by calling

13 11 42 , then

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select the appropriate subject matter option and advise the ATO officer that you believe you are eligible.

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Thank you

UNCLASSIFIED - Practitioner Connect – 9 May 2019, The Law Society of NSW

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