Draft Legislation to extend the power of the AAT to pause or modify ATO debt recovery action – Treasury consultation

The Government is seeking stakeholder views on exposure draft legislation that increases the rights of small businesses to contest the ATO’s collection of disputed tax debts in the AAT. In the 2021‑22 Budget the Government announced that it would extend the power of the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery action in relation to disputed tax assessments under review by the Small Business Taxation Division (SBTD) of the AAT.

The exposure draft legislation amends the Taxation Administration Act 1953 (TAA53) to to reinstate the AAT’s power (under s41 of the AAT Act) to suspend the operation of the decision the subject of review – at least, in relation to Small Business Taxation Decisions, subject to be satisfied (broadly) that it is justified (see amendments inserting s14ZZH(3A)(i)-(iii) in the extract from the draft legislation below).

• allow the AAT to make orders that stay or modify the Commissioner of Taxation’s debt recovery actions in relation to tax assessments under dispute in the Small Business Tax Division of the AAT,
• enable small businesses (i.e. businesses with an aggregated annual turnover of less than $10 million) to seek AAT orders that prevent the Commissioner from taking debt recovery actions, like commencing winding up proceedings or issuing garnishee notices, until the underlying dispute is resolved, and
• empower the AAT to order the Commissioner of Taxation to offer instalment arrangements including 50/50 payment arrangements and to accept security in lieu of immediate recovery.

Further details on the draft legislation are contained in the explanatory memorandum.

[Treasury website: consultation landing page; draft Legislation; draft Explanatory Memorandum]

[Tax Month – January 2022 – Previous 2021] 12.1.22

 

Extract from draft Legislation

Schedule 1—Increased Tribunal powers for small business tax decisions

 

Taxation Administration Act 1953

1  Section 14ZQ

Insert:

small business taxation assessment decision means a taxation decision that is:

(a)  an assessment of tax‑related liabilities (as defined in section 255‑1 in Schedule 1) relating in whole or in part to carrying on a business; and

(b)  made in relation to a small business entity (within the meaning of the Income Tax Assessment Act 1997).

2  At the end of section 14ZZB

Add:

(3)  However, despite subsection (1), section 41 of the AAT Act applies in relation to a reviewable objection decision that relates to a small business taxation assessment decision, subject to the modifications set out in section 14ZZH.

3  After section 14ZZG

Insert:

14ZZH  Modification of section 41 of the AAT Act

Section 41 of the AAT Act applies in relation to a reviewable objection decision that relates to a small business taxation assessment decision as if the following subsection were inserted after subsection (3):

“(3A)  The Tribunal must not make an order under subsection (2), or an order varying or revoking an order in force under subsection (2), unless:

(a)  the proceeding before the Tribunal is in the Small Business Taxation Division of the Tribunal; and

(b)  if the party requesting the order is not the Commissioner—the party satisfies the Tribunal of all the following matters in relation to the making of the order, when considered in the context of both the particular circumstances of the decision under review and the overall taxation system:

 

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