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10 Oct 14 On ATO maladministration

MEMBER 156 writes:

"As much as the ATO, their Commissioners, Deputy Commissioners and senior staff go to the trouble of letting us know they are fair, even handed and administer the tax act fairly for all taxpayers, nothing could be further from the truth. Consider the case of a friend of mine whose treatment at the hands of the ATO was nothing short of appalling.

He, his wife and two children had been living and working overseas for well over 10 years. In 2009 the ATO wrote to him to agree with him that he and his wife were non-residents and there was no further need to lodge income tax returns in Australia unless their circumstances changed. The younger of his two children was taken ill in 2011. My friend stayed overseas working while his wife and two children travelled to Australia for treatment. Sadly the child passed away and trips were made to and from Australia to organise a funeral, final farewells from family and grandparents and then back overseas to resume work.

Somewhere along the line the ATO must have interpreted this series of events as a very real intention by my friends to return to Australia. They sent my friend a series of letters to a long forgotten address in Australia determining they were residents from the 2010 year onwards. The letters somehow managed to find their way to my friend’s father who sent them overseas. The one thing I agree on is the letters from the ATO should have been dealt with a lot sooner than they were.

The ATO raised notices of assessment for four years as residents taking into account all of the income earned from overseas employment. But in a master stroke of pure incompetence, they failed to give my friend a credit for the foreign version of PAYG Withholding. And they hit them with 75% penalties. The tax bill was over $200,000. 

Now the ATO had no idea this family had lost a child in the most tragic of circumstances, but their lack of resources and pure lack of professionalism also meant they didn’t do a scrap of proper investigation. Just their one size fits all approach, all expat Australians MUST be resident, we know so. This exercise cost my friend $2,500 in accounting costs to a large firm to get it sorted. To say that an already grief stricken wife was hysterical is an understatement. In the end all the assessments were reversed and, lo and behold, they are in fact non-residents. Even when my friend rang the ATO to discuss the assessments, the staff were rude and indignant and clearly did not know the law in this area. They selectively quoted passages that helped their own cause without taking into account all of the facts. 

I want the ATO representatives reading this to understand that anyone with the full facts would have come to the natural conclusion that these people were non-residents. 

I’ve been in this game for over 32 years now, and this is the most underhanded disgraceful treatment of a taxpayer I have ever seen. Please do not try and tell me you act fairly for all taxpayers because you do not. I am now going to offer to help my friend get the $2,500 back from the ATO as a maladministration matter."