Is the Australian Tax Office Unfairly Targeting Small Business?

If you’ve been watching the media recently, you may have seen reports of the Australian Taxation Office (ATO) targeting small businesses (including one of our fellow transcription companies) who use contract employees to deliver service to their clients. These reports were extremely concerning, with claims of ABNs being cancelled without warning, and businesses having received calls from the ATO to “understand their business model” prior to the cancellations taking place. The implication was that contract staff should be employed, rather than contracted, which could have devastating consequences for a business such as TTP.

A business model centred around contracted transcriptionists is the most logical way to deliver a cost-effective service to our clients, while maintaining an onshore team. By having an “on demand” workforce, periods of high demand can be readily accommodated by providing more work to our pool of resources, while, conversely, a slow period allows our contractors freedom to spend time with their families, and to have work-life balance. As a small business, we aren’t locked into having staff sitting idle. Many TTP contractors do not wish to have a full-time 9-5 job for various reasons, and therefore contract their services out in a manner that is convenient to them, beneficial to the businesses they contract to, and which ensures excellent service to the customer base.

The most disturbing aspect of the claims that aired is the suggestion that the ATO might be purposely targeting smaller businesses who are least able to defend themselves, with the aim of shutting down the gig economy. Losing access to their contractors for a period of time can cripple a business completely, destroy its cash flow, and see transcriptionists and proofreaders driven onto welfare, while ensuring that valuable, long-term clients are forced into finding other, untested Australian-based service providers (or, in the worst case, sending sensitive and confidential work to offshore services). Frankly, it is clear that a targeted shutdown of contractor-delivered transcription services in Australia would do nothing more than send substantial revenue overseas, and deprive Australia of the associated tax paid by the contractors and small business in the onshore model.

FACT: Small business contributes substantially to the Australian economy. The most recent ABS data for 2016-17 shows there were 2.18 million small businesses operating in Australia, consisting of 1.37 million non-employing businesses and 813,000 businesses that employed between one and 19 employees. Small businesses accounted for 97.5 percent of all businesses operating in Australia.

We would like to take this opportunity to thank our loyal contractors for their service, and also our customers for their business. By choosing Australian services, you are keeping jobs and revenue onshore.

Call to Action!

If your business relies on contracted services, would be negatively impacted by the loss of those resources (be it transcription, virtual office, or services such as web design), be sure to let your elected representatives know that these services are valuable to you, and that driving Australian small business out of business will impact Australia negatively, both from a revenue standpoint, and from contractors being driven into the welfare system.