Commissioner 'whacked all the time' on small business definition

Speaking at the National Small Business Summit in Sydney last week, Mr Jordan said the ATO said there are two ambiguous areas that he said that ATO would love to have codified.

The first ‘grey area’ is concerned with defining whether a worker within a small business is either an employee or a contractor, something that can only be answered along the lines of ‘how long is a piece of string?’.

He said the second ‘grey area’ comes about when a worker receives 80 per cent or more of their income from one source.

The test in that case, according to Mr Jordan, concerns whether that worker is paid to deliver a result versus being paid to deliver a service.

“We've two grey areas we have to deal with, and we get whacked all the time,” Mr Jordan said.

“We're agnostic. We do not have any philosophy. Some people say we're terribly anti-small business. Well, we're not. Why would we be? It doesn't make sense. But there are some grey areas in that contractor/employee [definition] where we'd be delighted to have this fixed.”

In response to Labor’s announcement that would it appoint a new tax commissioner specifically for dispute resolution should it win the next federal election, Mr Jordan said it’s “sort of been done”.

“We think we're doing well in an independent way in facilitating resolution of disputes from many alternative dispute resolution processes,” he said.

However, Mr Jordan conceded that if no-one else thought it was doing well in facilitating dispute resolution, it’s something the ATO has to think about.

“Is it more around having a low-cost, informal but separate body that does what we're doing, but because people think, ‘Well, we're doing it, so it can't be right’,” he said.

“There used to be the Taxation Board of Review, it got all rolled into the Administrative Appeals Tribunal. Well, maybe the focus needs to be on rolling some of it back out, and have a small business tax appeals division that's focused on mediation and ABR techniques in a more informal way rather than the court process.

“We're not saying we know best. I'll listen … I'm willing to take on board any constructive criticisms in this regard. We want people to have confidence but we've got to have a level playing field.”