Speaking at a Senate Estimates hearing, ATO commissioner Chris Jordan said the tax office would be looking to give small businesses greater scope for review into any tax disputes, starting from 1 July 2018.
"We are going to trial an independent review process for certain small business audits from 1 July — with the intention over time that businesses, regardless of their size, have access and rights to a fit-for-purpose review prior to the finalisation of audit," said Mr Jordan.
The independent review process had been previously reserved for entities with a turnover greater than $250 million, designed to give both parties a better understanding of the issues and working towards resolving them.
Mr Jordan’s comments come after the Inspector-General of Taxation announced last month that he would be undertaking a review of the ATO’s use of garnishee notices.
Speaking to Accountants Daily, Institute of Public Accountants general manager of technical policy, Tony Greco, said any move to address the balance of power between the Tax Office and small businesses was welcome news.
“It looks like they are trailing somewhere halfway between a full independent review that the large corporates are able to have and possibly something better than mediation, some middle ground to appease taxpayers who feel like the ATO's actions are heavy handed.
“It’s an interesting development because when you are a small player and you're up against a big establishment — we call it Goliath, that balance of power is clearly against the taxpayer and another mechanism or something that redresses that balance would be something we definitely would welcome.
“If the commissioner thinks, for example, a business is outside of the benchmarks and could easily just apply an assessment against that business and the reverse onus of proof applies so that taxpayer has to prove to the commissioner that the assessment is invalid and that can be quite difficult for a small player to do to a level that satisfies the commissioner so it is sometimes good that you have an independent set of eyes look over that situation and come to a workable solution rather than having to fight the ATO.”
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell also welcomed the move, believing approaches like an independent review were more critical for small businesses than bigger businesses.
“The fact that small business will now have an independent area of the ATO to consider matters afresh is an important step and one that we will watch to see whether it provides for informal discussion of issues in a way that avoids formal legal routes,” said Ms Carnell.
“We encourage the ATO as part of the project to let small businesses know that there are a range of other people who can help with their tax issues, such as the Inspector-General of Taxation and our Office. This is critical when things don’t go well.
“You need to remember that when small business does its tax, it is highly reliant on trusted advisers, mostly accountants. Getting a call from the ATO saying that there’s a problem is a big shock and extremely stressful.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.