Supporting small businesses involved in tax disputes
The Government confirmed in this Budget that it will support small businesses involved in disputes with the Australian Taxation Office (ATO) by providing funding to help small businesses resolve their tax disputes.
These measures were previously announced by the Government prior to the package commencement date of 1 March 2019.
Small Business Concierge Service
A Small Business Concierge Service will be established within the Australian Small Business and Family Enterprise Ombudsman’s office to support small businesses without legal representation by providing advice regarding the Administrative Appeals Tribunal (AAT) process.
The services to be provided will include the following:
- Prior to applying to the AAT, one hour of legal advice for unrepresented small businesses upon payment of $100
- After applying to the AAT, unrepresented small businesses may receive another hour of free legal advice.
A dedicated Small Business Taxation Division will also be created within the AAT to provide the following support services:
- A dedicated case manager throughout the process
- A lower standard application fee of $500
- Fast-tracked decisions made within 28 days of the hearing.
It is expected that the AAT hearings will be conducted without legal advisers. However, where the ATO engages external legal counsel and the small business does not have legal representation, the ATO will cover the cost of providing the small business with equivalent legal representation.
If the AAT decision is appealed to the Federal Court, the ATO will pay the small business’s reasonable costs.
Whilst these measures are aimed at ‘creating a level playing field’, BDO questions how much support can realistically be provided in one to two hours of legal advice, particularly given the level of complexity underlying many tax disputes. Although the provision of equivalent legal representation during an AAT hearing is a fairer measure for small businesses, there remains the possibility that the ATO may elect to run hearings without legal counsel instead as the ‘general rule’. This would mean that the small business can still be under a ‘resource’ disadvantage. BDO considers that the provision of additional hours of legal advice would better assist small businesses to resolve tax disputes in a cost-effective manner.