Acting Inspector-General of Taxation and Taxation Ombudsman (IGTO) Andrew McLoughlin has released the review investigation report into the Australian Taxation Office’s (ATO) use of garnishee notices.

The IGTO review was undertaken to maintain community confidence in the administration of the tax system after serious allegations were made by both a current and former ATO officer on the ABC 4 Corners program on 9 April 2018 about the ATO’s inappropriate use of garnishee notices upon small business. The allegations investigated were that the ATO:

  • gave directions to staff to issue standard garnishee notices in every case as a ‘cash grab’ towards the end of the 2016–17 financial year; and
  • set targets for staff and assessed their performance based on the level of debt collected.

Garnishee notices are the most common form of firmer actions used by the ATO to recover tax debt. Such written notices may be issued by the ATO to third parties, who are required to pay money, owed to the taxpayer, to the ATO to satisfy the taxpayer’s tax debt. Such third parties may include employers, banks, trade debtors and certain agents. Garnishee notices may require either a one-off payment or standard recurring payments for certain periods of time.

Recommendations

Four recommendations were made in the Report; the Commissioner of Taxation welcomed and accepted ‘all of the Inspector-General’s recommendations in relation to ATO’s internal communication, training procedures and contingency planning’. The recommendations included:

  • to have contingency plans for major assumptions used to estimate staffing resources needed for collection activities, to minimise the impact should the assumptions not hold;
  • to improve the automated models which select garnishee cases for ATO staff to review and refine these models with feedback from staff, to remove taxpayers who are less likely to warrant garnishee action;
  • to facilitate consistency of communications between ATO staff at all levels, for critical or complex messages where major changes to work focus occur; and
  • improve support for the ATO’s Early Intervention debt staff by providing those staff with direct feedback on cases they work on, and by incorporating role-playing exercises into training sessions, both of which support better staff decision-making.

(Source: Inspector-General of Taxation | ATO Statement | Read the report)

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