Jul 19, 2013

What are your rights with the taxman? Call to clean up ATO ‘disgrace’

Another disgruntled taxpayer is suing the ATO for $5.1 million in damages, as taxation experts call for stronger compensation rights and a taxpayers' charter to be enshrined in law.

Chris Seage — Tax consultant and former ATO audit manager

Chris Seage

Tax consultant and former ATO audit manager

A disgruntled taxpayer who lost his wealth, health and marriage after a five-year tax audit has lodged a statement of claim in the Federal Court seeking $5.1 million in damages, alleging the commissioner of taxation acted negligently and in breach of his statutory duties. Another taxpayer who fought the Australian Taxation Office for a decade and won six times through the courts but is out of pocket nearly $1 million is considering personal action against the agency, amid calls by leading tax academics that compensation rights and the taxpayers’ charter should be enshrined in law.

Sydney architect Gary Kurzer battled the ATO for five years over an audit gone bad. The ATO originally demanded $407,000 in tax and penalties, which was later reduced to $8700 after former commissioner Michael D’Ascenzo stepped in and ordered a review of his case. However, as Crikey revealed in January, Kurzer’s lingering battle ruined his health, relationship and finances. After rejecting a $70,000 offer from the ATO to settle the matter, he told Crikey: “I will now be seeking a realistic monetary claim that reflects my losses in the Federal Court for negligence and breach of statutory duty against the Tax Office.”

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28 thoughts on “What are your rights with the taxman? Call to clean up ATO ‘disgrace’

  1. Serenatopia

    A very-well researched and academic piece of reporting Chris. Congratulations to you and Crikey for providing a critical platform for these issues.

    I also appreciate the key insights into the failures of the current system articulated so well by Dr Bevacqua, David Hughes, David Russell QC, Professor Bentley and Tony Greco.

    However, I am far more optimistic about the role of the judiciary in clearly establishing the principle that the Commissioner of Taxation owes taxpayers a duty of care to perform objection decisions in accordance to law and fact and to follow AAT orders under the Taxation Administration Act.

    The First Directions Hearing went very well today and Justice Steven Rares did NOT summarily dismiss the proceedings. In fact, he concurred that, subject to substantiating the claims through evidence, that Gary Kurzer’s case raises legitimate grievances. I think Justice Rares is the best man for this job.

    The matter will go to Mediation on 27 August 2013. The ATO is represented by Minter Ellison.

    Serene Teffaha
    Human Rights Advocate

  2. mattsui

    I find it hard to feel sorry for Pattenden. There’s only one reason for basing a financial service in Vanuatu and that’s to avoid paying taxes. Boo-hoo.
    Not so sure about the other case but let’s be honest. The system is so full of loopholes begging to be rorted, it’s a lawyers banquet. The whole system should be rebuilt from the ground up – if it were less socially acceptable to dodge tax, there would be no need to discuss the “rights” of obscenely wealthy tax cheats.

  3. lespauljunior

    Either the tax laws, or the facts of the matter, applies or they don’t. Ambiguity, loopholes, mistakes, et al, have no place in a tax system. Simplify it, or allow the taxpayer the same courtesy to “interpret” as the ATO takes … (and they take it to supremely untenuous ends). The difference is that the ATO uses a bottomless pit of time and public money (including paying private legal firms) to pursue (including innocent) people until they are destitute and exhausted (some just commit suicide). This is unbalanced, and is a case of having to prove yourself innocent using your time and money whilst the people who have broken laws (the ATO staff) continue life using the public purse as an unending source of succour… promotion, and superannuation. The ATO, last year, spent over $100m on “legal services” and recovered $3.5m (sums from their own publication).

    Being the person subject to the ATO negligence, I can tell you that trying to face the day (foreclosure, debt recovery actions, unpaid bills, loss of support systems, mental injury, and a raft of challenges …including the ludicrous assumption that you are a “tax cheat”) is impossible to convey to those who have not been subject to this heinous process. Not a single politician will even bother to reply, let alone assist. (My) information sent to Joe Hockey appears to have been appropriated as Liberal “policy”, but no support given back to the Australians who have the need for remedy.

    My local member, Malcolm Turnbull, has not had the courtesy to see me, despite three years of requests. Believe me, when the ATO attacks, you are on your own as far as “your government” is concerned.

  4. Merve

    Vanuatu? End of story. You only do business from there to avoid taxes.

  5. Shaniq'ua Shardonn'ay

    Yep, sorry but the ‘Vanuatu’ did it for me. Just because there are legal loopholes doesn’t mean it is the right thing to do. And if you want to dispute the claim don’t claim it’s equivalent to losing an arm and a leg.
    Lost a million? Luxury Problem.

  6. Harry Rogers

    Entirely predictable responses from most readers.

    A reflection of the society we live in full of pre-judgements and the death of fairness.

    Where to from here??

  7. mattsui

    @ Harry Rogers #5
    Where to from here??
    Why don’t we hand a few thousand more dollars over to the lawyers so they can decide for us. I’m sure any advice given will be in the purest interests of the clients.

  8. Serenatopia

    Mr Ron Pattenden was exonerated by the Court six times from being a labelled a tax cheat. The ATO spent your taxpayer money pursuing a losing case. Gary Kurzer is not a millionaire, but like most of us, is a mum and dad investor…the ATO also spent your taxpayer money hurting him…this is about all of our rights to ensure that we are treated fairly by our bureaucrats and taxpayer funds are not spent on ruthless pursuit of the innocent. In relation to lawyers, well the ATO spent over 100 million of our taxpayer money last year on the likes of Minter Ellison to pursue losing cases and recovered only 3.5 million! It’s not Pattenden who is making the decision to embezzle our taxpayer funds, it is unelected fat cat bureaucrats.

    It is time we all stood up and said enough is enough. Instead of cutting sole parent pensions and scholarship funding in our universities, I can show the Government how to cut a billion easy from their budget—axe all contracts with the major law firms! There’s a start!

  9. Harry Rogers

    Hear, hear Serenatopia!

    Sadly the tax department and others take advantage of the innate jealousy of the wage earner when someone who does well is considered a cheat when he looks for fairness.

    I suspect you won’t change this attitude as it assists the ATO and others to demonise citizens freely without recourse.

    Its endemic in people who seek to blame others for their position in society. We can only hope with education that this dumbing down ceases however until the problem “is in their backyard” they will continue to carry the noose.

  10. Chris Seage

    I appreciate everyone’s comments but I feel I must clarify the Pattenden story. As a writer I try and tell a story in so many words but obviously I am confined to write in certain parameters – meaning words – which sometimes means I can’t tell readers everything I would like them to know. Ron arrived in Australia from England in 1978 with 80 pound in his pocket. He ran pubs in London before arriving in Australia. He launched a fund to pay for funerals for members of the Aboriginal community, who would make payments to the fund and whose next-of-kin would receive a benefit when the member died.

    If the benefit exceeded the cost of the funeral Pattenden would donate the excess to the Fred Hollows Foundation.

    The only reason he set up in Vanuatu was because in Australia it would have cost him $5M to set up whereas in Vanuatu it was $300K.

    Does that mean in Australia we are uncompetitive? I think so.

    I hope what I have said gives some light to Ron who has been very brave to come forward with his story. Not many taxpayers do.

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