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Nov 26, 2012

ATO whistleblower bully case points to ‘tick and flick’ advice

Australian Taxation Office Commissioner Michael D'Ascenzo is being personally sued in a workplace bullying claim that exposes a "tick and flick" attitude to taxpayer objections.

Chris Seage — Tax consultant and former ATO audit manager

Chris Seage

Tax consultant and former ATO audit manager

The whistleblower at the centre of court action against the Australian Taxation Office over allegations she was bullied for lodging a complaint about ATO maladministration is now personally suing the Commissioner of Taxation Michael D'Ascenzo and three other senior ranking officials in the Federal Court that threatens to expose a possible bullying culture within the upper echelons of the organisation. This action is precedential in Australia as a whistleblower has not previously held individual public officials personally accountable under the Public Service Act 1999. Serene Teffaha, a senior ATO lawyer engaged as a tax technical specialist, last week lodged a statement of claim in the Federal Court alleging the Commissioner of Taxation, acting on behalf of the ATO, may be vicariously liable for the wilful misconduct and culpable negligence of his public officials that include fellow respondents to the claim, first assistant Commissioner David Diment, assistant Commissioner Margot Rushton and Susanna Lombardi, national director of the small and medium enterprises division. In 2011, Teffaha and four other senior colleagues lodged the whistleblower complaint with David Diment alleging various maladministration issues associated with the ATO's high-profile pursuit of high-wealth individual Australians worth between $100 million and $250 million a year. The complainants believed taxpayers were being disadvantaged by not having their objections to assessments dealt with in a fair and professional way. Some of the explosive new allegations raised in the statement of claim include:
  • The ATO issued staff a formal target of ensuring taxpayer objections to audit decisions were upheld in less than 20% of cases, irrespective of merit (that is, the target was to disallow 80% of taxpayers' objections)
  • Original decision makers of audits exerted influence over the ATO officers with responsibility for determining objections, with the intention of procuring disallowance of these objections
  • Teffaha and others were instructed by Susanna Lombardi that the ATO's audit decisions should receive a "tick and flick" and affirm those decisions without appropriate consideration of the merits of each individual taxpayer's objection.

These are serious allegations that strike at the heart of our democratic tax system. Taxpayers have a right under the law to object against their assessment if they believe it is wrong. What Teffaha is alleging is the ATO introduced targets for their staff to disallow objections and to "tick and flick" original decisions made by audit officers. Crikey has obtained the ATO document confirming the targets. This action would have severely disadvantaged thousands of small business taxpayers; it's possible some could seek recourse through the ATO, the Inspector-General of Taxation, the Ombudsman and the courts due to this document now coming to light.

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5 comments

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5 thoughts on “ATO whistleblower bully case points to ‘tick and flick’ advice

  1. Mark from Melbourne

    If you read the memo, it is clearly promoting a model where potential disputes are dealt with through DRP prior to formal complaints being lodged to minimise costly legal proceedings – and that a reasonable way of measuring the success of this model is less than 20% of complaints being “won” by the complainant.

    You could perhaps quibble that such a target might not be a true measure of success or might cause dysfunctional behaviour but overall this seems like an eminently sensible approach and similar to what our courts try to do ie solve things early rather than leave it for costly legal procedures.

    As to there being a whistleblower case to answer, well that’s a whole other matter.

  2. Serenatopia

    Thank you Mark from Melbourne for your comment.

    I am the whistleblower the article refers to.

    If the primary motivating factor driving the ATO is early dispute resolution, the target may appear sensible.

    Unfortunately, many taxpayers are stone walled by the ATO at the audit stage as they struggle to resolve their matters. This forces cases into the objections phase rather than early dispute resolution (please refer to the Inspector-General of Taxation’s Review of SME’s to get the exact figures).

    The target is set in a vacuum where taxpayers previously expressed concerns may have been disregarded. It is, therefore, inappropriate at all levels to fix a percentage at the objection phase. This is also not in line with the Taxpayers’ Charter.

    I colloquially refer to this as the ‘widget culture’. Senior officials in the ATO running business lines and setting standards, without detailed knowledge and understanding of what is actually happening on the ground.

    Even in an ideal world where the ATO is effectively applying an early dispute resolution model, fixing target percentages will only focus on quantity outputs rather than quality ones.

  3. Gerry Hatrick, OAP

    [The ATO issued staff a formal target of ensuring taxpayer objections to audit decisions were upheld in less than 20% of cases, irrespective of merit (that is, the target was to disallow 80% of taxpayers’ objections)]

    Erm, wut? Surely I’m not the only one to think this is _batshit insane_

  4. Sheriff of Nottingham

    The issue of refering Serene Teffaha to attend a medical examination with a psychiatrist is the exact same ploy that airline companies do to pilots when they survive a plane crash.

    It’s the first step in self exoneration and the beginning of the blame-game.

    @Mark From Melbourne

    The tick and flick is not a policy the ATO use to minimise the cost of legal action for SME’s or even to fast track disputes…it serves to minimise legal costs for the ATO and serves their interests above all else.

  5. Jim Wright

    One question worth asking is – why does the bullying take place on what seems to be a very large scale? In the late 1980s, the then Tax Commissioner, Mr. Trevor Boucher, introduced a system of rewards for ATO officers, apparently based on the money they brought in. We saw the consequences first-hand in the downturn in the early 1990s, when a tax officer tried to brankupt me and my wife, claiming a hugely inflated amount of money. We fought the ATO off, but it cost us our home and just about everything else we had and significantly affected the rest of our lives. The behaviour of the ATO officer conducting the cases was so bizarre, I watched him for several hours afterwards. The entire time, he sat with his arms folded, looking straight ahead, never saying a word, but shaking his head whenever the government solicitor approached him with a proposal. At the time, I considered his behaviour payback for him missing out on his bonuses. However, more recently, I have had an exchange of letters with Ms Teffaha and she advised that these rewards were limited to more senior staff. This prompted me to wonder whether the ATO officer on our case had been directed under threat to take a hard line on the cases I referred to and his odd behaviour, refusing to look anyone in the eye, simply reflected the sense of shame he felt. Perhaps we should look for the money, or other source of power.

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