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Too little legal advice for SME tax problems

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A government-funded service introduced to help small businesses embroiled in a dispute with the Australian Taxation Office (ATO) does not offer enough support, a leading accounting and tax advisory firm says.

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Funding for the Small Business Concierge Service, run by the Australian Small Business and Family Enterprise Ombudsman’s office, was announced in March to provide advice to small businesses without legal representation regarding the Administrative Appeals Tribunal (AAT) process.

The service includes one hour of legal advice for unrepresented small businesses for the subsidised rate of $100. After applying to the AAT, small businesses may receive another hour of free legal advice.

BDO Business Services Partner David Fechner said the concierge service was welcome but said the initial one-hour time allocation was “probably far too small to be useful”.

“If it was an issue that small businesses could deal with that quickly then they probably wouldn’t need to speak to anybody,” he said.

“I think they should be setting their number at three or four hours to get to the nub of the issue and understand what’s going on.”

Under the new system, a dedicated Small Business Taxation Division will also be created within the AAT to provide a dedicated case manager throughout the process and a lower standard application fee of $500. AAT decisions will be made within 28 days of the hearing.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the new service made it simpler, faster and cheaper for small businesses to address their tax disputes with the ATO.

She said the one-hour session with an experienced small business tax lawyer would be subsidised through the scheme and would allow the lawyer to review documents and provide advice on the viability of an appeal.

“Our case managers will help small business owners understand the AAT process; providing information on costs and timelines to support a timely resolution,” Carnell said.

“Should an appeal progress, our case managers will help the small business owner with the process … and ASBFEO will offer an additional hour with a lawyer, at no cost to the small business.”

BDO provides advice to businesses going through an audit process and also to those considering appealing an ATO decision.

Fechner said small businesses that received an audit request from the ATO should deal with it promptly by addressing the audit questions in detail.

“You should put together all of the information and then get your tax adviser to review it,” he said.

“Disputes then become a commercial decision like any litigation – how much is in dispute and how much are you prepared to spend on advisory fees to dispute it?

“This is why the Ombudsman service would be useful if it allowed a greater amount of time and money because it would allow small businesses that have legitimate claims to not have to make a decision that looks like a litigation decision – I doubt one-hour is going to be enough.

“We think the level should be substantially higher and any news that gets out there to increase the debate on this is good news because hopefully someone might pick up on it.”

This article is sponsored by BDO Adelaide.

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