ATO criticised for at-risk Aussie’s ‘pretty traumatising experience’
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The Australian Taxation Office (ATO) has come under intense scrutiny for its handling of debt collection after a startling incident.
The case, brought to light by the tax ombudsman, is a stark example of the human cost of the ATO's controversial 'Robotax' scheme, which has been resurrecting old debts to recover more than $15 billion.
According to reports, the ATO denied debt relief to a taxpayer facing serious financial hardship and the imminent threat of homelessness.
The ATO's actions—or lack thereof—have been criticised by Karen Payne, the Inspector General of Taxation, who oversees the complaints management service.
Payne pointed out the ATO's failure to exercise its discretionary and remedial powers when dealing with vulnerable taxpayers.
‘It’s not the experience of everyone in the system, but for that individual, it’s a pretty traumatising experience,’ she said.
‘It’s important we get better guidance and better instructions to help people who are administering the system.’
Thanks to intervention from the ombudsman’s office, the ATO provided the anonymous at-risk person with a refund.
The ATO's debt collection scheme has cast a wide net, affecting not only individuals but also deceased estates, with debts ranging from mere cents to thousands of dollars.
This has raised serious questions about the fairness and practicality of the scheme, especially considering that many of these debts exceed the five-year record-keeping period that taxpayers are required to adhere to.
However, the broader issue remains unresolved, as the ATO has only paused the part of the program aimed at recovering historical debts, not cancelled them.
The ATO's pursuit of these debts has been met with criticism for the distress it has caused.
A spokesperson for the tax office said that they do not seek out payment of on-hold debts actively, and that no action is needed from taxpayers.
At the same time, the spokesperson issued a reminder: ‘We are legally obliged to use credits or refunds to reduce the amount of the debts on hold.’
Despite this, Payne stressed that the tax commissioner has various powers to mitigate unintended consequences at-risk people might face, and it is imperative that these are used to ensure a more humane approach to debt collection.
‘We can’t rely on parliament passing changes to fix every problem in the tax law,’ Payne said.
‘If you’re getting outcomes that you think were never intended to happen, then there’s a way for the commissioner to unilaterally remediate the law to produce sensible outcomes.’
In response to the ATO's debt collection practices, the offices of the tax and commonwealth ombudsmen have published a guide advising agencies on best practices for communicating with people about debts.
This guide, titled How to Tell People They Owe the Government Money, emphasises the need for transparency, clear communication, and support for those seeking reviews, waivers, and repayment arrangements.
The spokesperson for the ATO said they agreed with the guide and are committed to applying it in practice.
It is crucial to be aware of your rights and the support available to you should you find yourself in a similar situation.
If you are facing debt collection from the ATO, especially for old debts, it is important to seek advice and explore options such as debt waivers or repayment arrangements.
Remember, you are not alone, and there are resources and advocates ready to assist you in navigating these challenging circumstances.
Have you or someone you know been affected by the ATO's debt collection scheme? How did you handle the situation, and what advice would you give to others facing similar challenges? Please feel free to comment below.
The case, brought to light by the tax ombudsman, is a stark example of the human cost of the ATO's controversial 'Robotax' scheme, which has been resurrecting old debts to recover more than $15 billion.
According to reports, the ATO denied debt relief to a taxpayer facing serious financial hardship and the imminent threat of homelessness.
The ATO's actions—or lack thereof—have been criticised by Karen Payne, the Inspector General of Taxation, who oversees the complaints management service.
Payne pointed out the ATO's failure to exercise its discretionary and remedial powers when dealing with vulnerable taxpayers.
‘It’s not the experience of everyone in the system, but for that individual, it’s a pretty traumatising experience,’ she said.
‘It’s important we get better guidance and better instructions to help people who are administering the system.’
A recent revelation from the Inspector-General of Taxation concerning an at-risk taxpayer put the ATO in the spotlight. Image Credit: Shutterstock
Thanks to intervention from the ombudsman’s office, the ATO provided the anonymous at-risk person with a refund.
The ATO's debt collection scheme has cast a wide net, affecting not only individuals but also deceased estates, with debts ranging from mere cents to thousands of dollars.
This has raised serious questions about the fairness and practicality of the scheme, especially considering that many of these debts exceed the five-year record-keeping period that taxpayers are required to adhere to.
However, the broader issue remains unresolved, as the ATO has only paused the part of the program aimed at recovering historical debts, not cancelled them.
The ATO's pursuit of these debts has been met with criticism for the distress it has caused.
A spokesperson for the tax office said that they do not seek out payment of on-hold debts actively, and that no action is needed from taxpayers.
At the same time, the spokesperson issued a reminder: ‘We are legally obliged to use credits or refunds to reduce the amount of the debts on hold.’
Despite this, Payne stressed that the tax commissioner has various powers to mitigate unintended consequences at-risk people might face, and it is imperative that these are used to ensure a more humane approach to debt collection.
‘We can’t rely on parliament passing changes to fix every problem in the tax law,’ Payne said.
‘If you’re getting outcomes that you think were never intended to happen, then there’s a way for the commissioner to unilaterally remediate the law to produce sensible outcomes.’
This guide, titled How to Tell People They Owe the Government Money, emphasises the need for transparency, clear communication, and support for those seeking reviews, waivers, and repayment arrangements.
The spokesperson for the ATO said they agreed with the guide and are committed to applying it in practice.
It is crucial to be aware of your rights and the support available to you should you find yourself in a similar situation.
If you are facing debt collection from the ATO, especially for old debts, it is important to seek advice and explore options such as debt waivers or repayment arrangements.
Remember, you are not alone, and there are resources and advocates ready to assist you in navigating these challenging circumstances.
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