Tax agents who deal with the ATO explain that tax investigating officers can look at clients in virtually the same situation and give one remission and the other none. Meanwhile, the OSR makes a decision one day, then changes it and kicks the business in the butt. What’s going on here?

Australians owe the Australian Tax Office (ATO) over $50 billion but the debt on overdue tax bills tops $9.4 billion. Behind this massive debt and interest bill is an ATO that’s behaving like the legendary character from the TV show, Seinfeld, who was known as the Soup Nazi.

Reportedly based on a real soup seller in New York, the Soup Nazi was famous for dishing out rough justice and then saying to customers who might ask questions about his product or ask for more bread: “No soup for you!”

Explaining these huge figures is an ATO team who increasingly saying: “No!” to taxpayers who ask for time to pay and remission from the general interest charge (GIC). And adding to the bill is a draconian penalty interest rate of 10%, which is double the mortgage rates and bigger than what banks charge for business loans, where the borrower secures the loan with say their property.

By the way, the NSW Office of State Revenue actually charges 12% for tax debts, many of which are made up on the spot by overzealous public servants who have no regard to the bankruptcy threats they impose on businesses.

Interestingly, tax agents and other experts who deal with the ATO on behalf of many clients explain that the investigating officers can look at clients in virtually the same situation and give one a remission from the GIC and others no relief!

The AFR’s Professional Services Editor, Edmund Tadros looked at this inconsistency. “Tax agents and tax lawyers have complained the agency’s processes are opaque and difficult to navigate, triggering an ATO review and a separate Tax Ombudsman review,” he wrote.

Talking to Clayton Taber, of law firm Mills Oakley, this expert on the ATO said the data reflects his own experience. “[The] ATO is currently remitting about half as much interest as it was four years ago,” he said. “It is now noticeably more challenging to have clients’ interest remission applications accepted by the ATO.”

Last year, the ATO said yes to remission requests to 76% taxpayers. In the previous year it was 88%. By the way, many of these remissions were because the tax office investigators took a long time but then they made the remission only temporary.

Lawyer Tania Waterhouse agrees that getting a remission has become harder and believes the ATO needs more people evaluating requests. “We now only succeed where there have been natural disasters or health issues including where a family member has passed away,” she told the AFR.

Regrettably, the attitude of the ATO and other tax offices in the states is becoming an unnatural disaster created by undoubtedly an under-resourced government agency, which is being pressured by politicians to collect as much money as possible, as soon as possible.

Tadros has found that the core of complaints is a lack of transparency. Tax Ombudsman Ruth Owen reinforces this observation. “They don’t understand how decisions are being made, and there’s a lack of consistency,” she said. “So, tax agents who appear for multiple people [report that] they get different results with what seems like similar circumstances.”

Right now, there’s a review into the practices of the ATO that’s open until October 2. But this is likely to be another waste of time and money until there’s a politician who rolls their sleeves up and understands how piling on interest on taxpayers who have cashflow problems only compounds the problem.

This is not lost on the Tax Ombudsman. “What I am seeing is a lot of taxpayers in debt who are trying to agree to a repayment,” Owen said. “They’re trying to do the right thing, but the ATO won’t agree to a remission of the [general interest charge], which means the debt gets bigger and bigger, and it gets away from them. My question is, is that the intent of the policy of interest charges?”

Sure, there are scam merchants who try to dodge their tax responsibilities but there are also businesses struggling post-Covid, after 13 interest rate rises, in a slowing economy, which has seen inflation at levels not seen in three decades and a workplace environment that is more employee-friendly than it is for bosses.

Who’s responsible for the ATO and its behaviour? Try Treasurer Jim Chalmers. Ultimately, it’s Chalmers who’s saying: “No remission for you! And cop 10% interest on top”.