Review into the ATO’s use of garnishee notices
The Inspector-General of Taxation (IGT), Mr Ali Noroozi, today announced an investigation into the allegations made during the ABC Four Corners program, aired on 9 April 2018, regarding ATO use of garnishee notices.
Garnishee notices are the most common form of firmer action used by the Australian Taxation Office’s (ATO) to recover tax debt.
Such notices require third parties to pay the money they owe to a taxpayer to the ATO in satisfaction of the tax debt owed by that taxpayer. Accordingly, the cash flow of affected taxpayers may be disrupted with potentially severe impact on vulnerable small businesses and individuals.
“The allegations about the ATO’s inappropriate use of garnishee notices is of serious concern and, if not addressed, can affect community confidence in the administration of the tax system,” Mr Noroozi said. “As the Taxation Ombudsman, I have a duty to independently investigate these allegations to restore public confidence,” he said.
The Four Corners program allegations included comments from current and former ATO staff about inappropriate ATO use of garnishee notices and ‘a cash grab’ before the end of the 2016–17 financial year.
It was also alleged that targets were set and staff performance was assessed based on levels of debt collected from taxpayers.
“The ATO has the vital task of collecting Government revenue and recovery of tax debt is an important part of that task, however, it must be done equitably, taking into account the particular circumstances of each taxpayer whilst ensuring a level playing field is maintained,” Mr Noroozi said.
In 2015, the IGT released his report of a broad review into ATO’s debt collection approaches and made 19 recommendations for improvement. In that review, IGT stated that, in recovering tax debt, the ATO should have regard to taxpayers’ circumstances and take proportionate action.
However, debt-related complaints made to the IGT continue to form over 20 per cent of all complaints with garnishee notices being amongst the top three issues raised.
“Cash flow is the lifeblood of small businesses and, if inappropriately disrupted, can have an unjustified and devastating effect on them. My investigation will examine the accuracy of the allegations made along with themes emerging from complaints to my office with the aim of finding improvements where necessary and restoring confidence in the system,” Mr Noroozi added.
You are invited to make a submission to the investigation or to lodge a complaint about your personal experience and insights.
For further information, see the Inspector-General of Taxation website or phone on the dedicated complaints line 1300 44 88 29.
16 May 2018.