A review into the Australian Taxation Office’s debt collection practices has found that staff in its Adelaide office were not driven to seize money from taxpayer accounts as part of a wide-ranging “cash grab”, but that there were incidents at that office that highlight the need for better staff training.
- The inspector-general of tax finds no systemic issues with the ATO’s use of garnishee orders to recover small business debts
- The review did recommend better training for staff in the ATO’s “early intervention” team that deals with tax debtors
- The review was conducted after a Fairfax-Four Corners investigation revealed evidence of aggressive debt collection practices
The review by the tax ombudsman, the inspector-general of taxation, was conducted after a joint Fairfax-ABC Four Corners investigation into the ATO, which found that staff in the Adelaide office were directed to issue garnishee notices to seize money from taxpayers that the ATO believed owed it a debt.
In that investigation, former ATO debt collection officer Richard Boyle — who is now facing the possibility of prison time for his public revelations — had told the media investigation that, in 2017, some staff were instructed to seize funds from the bank accounts of taxpayers assessed to owe the tax office money, regardless of their personal situation.
The legal term for this type of action is a “garnishee notice”, which enables someone owed money to deduct it directly from amounts that third parties owe to their debtor, such as from wages and bank accounts.
Mr Boyle revealed to the investigation that a team leader email sent in May 2017 to staff towards the end of a shift read: “… the last hour of power is upon us … that means you still have time to issue another five garnishees … right?”
Acting inspector-general of tax Andrew McLoughlin said allegations that there was an “ATO direction for a cash grab on small business”, or that debt staff personal performance were set on amounts collected, “are not sustained”.
But his report noted that “this is not to say that all staff on all occasions have exercised that power proportionately and appropriately”.
Tax commissioner Chris Jordan said he was pleased an independent external scrutineer had found there was no “cash grab”.
“The ATO has always had strict guidelines and processes in place for the use of garnishee notices in the management of debt matters,” Mr Jordan said.
“We are legally required to collect money owed to the Commonwealth and we discharge this duty with care.”
The report found that, in the 2016-17 financial year, the ATO issued 23,712 garnishee notices — about 40 per cent less garnishee notices than the predicted 40,289.
It also found that staff issued enduring garnishee notices in only 8 per cent of cases allocated to them, and at an average rate of one notice issued every five hours.
“These figures provide a strong basis for concluding that the ATO’s early intervention debt staff, in the main, took care to consider the appropriateness of issuing garnishee notices in light of the taxpayer’s circumstances and took their responsibility to consider the next best action policy seriously,” Mr McLoughlin said.
‘Hour of power’ email
The IGT review noted the hour of power email was sent to 12 frontline staff in the local Adelaide office by a single team leader who was supervising them one Saturday as they worked overtime.
The email included a comment regarding the issuing of five garnishee notices in one hour, but the IGT review found that two such notices per hour were not achievable and rates, on average, were much lower.
The report noted that the team leader who authored the email told the IGT that “their intention was made clear — it was not intended in a literal sense, but rather in an ironic sense”.
“With the benefit of hindsight, given the manner in which this style of communication had been misconstrued, it may have been better to express that message differently.”
Based on the team member’s comment, the review therefore came to the conclusion that “the message was intended ironically, and not literally”.
It also noted that this “unfortunate expression” was communicated to 12 staff out of the 200 staff that were skilled to conduct enduring garnishee work and did not form part of the broader debt line management communications.
The IGT recommended that ATO senior management improve support and feedback for its early intervention (EI) unit staff to improve skill and experience.
“This is particularly the case for those staff who, due to secrecy and integrity requirements, are otherwise unable to view the direct results of their decisions,” it said.
Mr Jordan said he accepted all of the inspector-general’s recommendations in relation to the ATO’s internal communication, training procedures and contingency planning.
Garnishee notice complaints
In the 2016-17 financial year, the ATO received 177 complaints about garnishee notices, and the IGT received 51 complaints about it, mostly from small businesses.
The IGT said it was concerned that “many small business taxpayers are made aware of our taxation ombudsman services too late to avail themselves of the complete range of options open to them to resolve their concerns quickly, independently and with minimum cost”.
“The impact on small business owners, even in a small but important number of cases, can be very significant and take the form of substantial emotional, reputational and financial harm.”
Concerns raised by small businesses included that the ATO should not have issued the garnishee notice at all — for example, they believe that they have no debt or have paid the debt.
They also included concerns that the ATO should not have issued an enduring garnishee notice — for example, it froze the business’s bank account or business trading account, and that at times a garnishee notice was issued as the business owner was attempting to enter into a payment arrangement with the ATO, or believed they were already paying off the debt.
The report noted that “the manner in which ATO garnishee action is taken can have disproportionate impact on the operations of small businesses as well as contribute to emotional, reputational and financial difficulties”.
The IGT review was based on interviews with more than 50 staff across the ATO’s Melbourne, Penrith, Parramatta and Adelaide offices.
Four recommendations were made in the report surrounding better contingency planning, improvements in automated models that select garnishee cases for staff to review, and better communications and training, all of which were accepted and agreed by the ATO.
The review did not specifically look into Mr Boyle’s case. But Senator Rex Patrick has written to Attorney-General Christian Porter requesting that the minister consider whether Mr Boyle’s revelations may qualify as a public interest disclosure and therefore offer him legal protection.
The reporter Nassim Khadem was part of the joint Fairfax-ABC Four Corners investigation during her previous employment with The Age and The Sydney Morning Herald.