If you want to scare business owners, just tell them that the Australian Tax Office (ATO) is targeting their industry and there’s a certain fear generated by the idea of the tax office knocking on your door. It conjures up the old laughable but worrying line: “I’m from the ATO and I’m here to help!”
A few years back, I emceed a conference around the country for the then Small Business Minister, Joe Hockey. The representatives from the ATO who were there and speaking to an audience of small business owners said they hoped these businesses paid a lot of tax on the basis that it implied they had a good business making solid profits! It was delivered with the honest attitude of an accounting type, who believed in the importance of paying the right tax, but many in the audience thought it was meant to be a joke courtesy of the ATO!
A story in the SMH from Rachel Clun informs us that while we’re said to fear the tax office, in fact the ATO is like Santa Claus to many households and businesses when it sends out tax refunds each year.
However, after years of Coalition Government-enforced compassion from the ATO with the damage done by the pandemic lockdowns, we’ve been warned that it’s no more nice treatment for this revenue-collecting arm of Dr Jim Chalmers, because the Treasurer needs money to beat down the big budget deficit.
And there’s an additional warning that you shouldn’t expect to pay for your annual holiday or bankroll Christmas presents and parties via your tax refund this year. ‘‘It’s kind of like Christmas for adults, but with accountants, and over the past few years these annual gifts were supersized,’’ said Tony Greco of the Institute of Public Accountants to the SMH. ‘‘Unfortunately, this year there’s a lot of people who are just going to be getting socks and undies from the Grinch.’’
Apart from a tougher ATO attitude to tax collection from struggling businesses, now we’re out of the troubling times of the Coronavirus, there are other threats to what we can get out of the Tax Office.
Here are some of the changes that will reduce refunds:
While the SMH implied that the ATO was going to be the Grinch that could lower the happy times at Christmas by shrinking tax refunds, CPA senior tax policy expert Elinor Kasapidis implied to Rachel Clun that another Grinch has already hurt the happiness of the yuletide. Of course, that grinch was Dr Phil Lowe of the RBA, whose 12 interest rate rises have seen many Aussies earmark their tax refunds to help make ends meet! A CPA poll “…showed more than two-thirds of respondents intended to spend their refund on bills and essentials, and to reduce debt.”
This kind of action is precisely why the RBA has been raising rates. When the central bank deems that we pay more to use the bank’s money, it’s because the RBA wants to punish us, so we’ll stop spending too much, which brings down inflation.
We never think about falling interest rates being the basis of generating the good times of holidays, gifts and greater material happiness. However, when you’re in a lot of debt and rates are rising, you feel the pain and unhappiness of denying yourself, all driven by that very important institution in our lives called the Reserve Bank of Australia!
You can see why they call economics a dismal science, but it’s not always dismal.