After hearing from not-for-profit groups and community advocates, the ATO launches framework outlining how it will support vulnerable small businesses with compassion.
What’s happening: The Australian Taxation Office has released its Vulnerability Framework, a principles-based guide designed to support people engaging with the tax system whilst experiencing vulnerability, including small business owners.
Why this matters: Small business owners fit within the framework, alongside individual taxpayers, SMSF trustees and those managing deceased estates.
The Australian Taxation Office has released its Vulnerability Framework following extensive public consultation, marking a shift in how the tax office approaches support for people experiencing difficult circumstances, including small business owners.
The framework outlines the ATO’s role in supporting people through vulnerable periods and provides transparency about how the organisation will act with empathy, compassion and clarity when people engage with the tax system.
Small businesses explicitly included
The framework specifically acknowledges that people experiencing vulnerability may engage with the ATO in various roles, including as a small business owner, trustee of a self-managed superannuation fund, or managing a deceased estate, not just about their personal tax matters.
This recognition comes at a critical time for Australia’s small business community. With 43 per cent of small businesses failing to turn a profit last year and 75 per cent of owners earning below the average wage, many operators face mounting financial pressures that can contribute to vulnerability when dealing with tax obligations.
Small business taxpayers displaying signs of vulnerability should encounter services that mitigate the factors standing between them and tax compliance. Some 142 vulnerable individuals and small businesses benefited from the Dispute Assist hotline in 2023-24, according to the tax office.
Defining vulnerability
The framework recognises that vulnerability can be experienced by anyone at any time. Vulnerability may arise from various circumstances, including personal crises such as mental health challenges, family and domestic violence, serious illness or injury, bereavement, or financial hardship.
Natural disasters, relationship breakdowns, homelessness and other significant life events can also contribute to a person experiencing vulnerability when dealing with their tax obligations.
The definition of vulnerability is deliberately broad, with social, economic, environmental, physical and mental health conditions all contributing factors. A taxpayer’s disability, age, lack of access to essential services, and their experience of mistreatment, abuse, or other personal circumstances can also influence their vulnerability status.
The ATO heard from a wide range of voices during public consultation, including not-for-profit organisations and community advocates. The insights gathered during this consultation period helped shape the final framework and the actions the tax office is taking to implement it.
The framework acknowledges that whilst the ATO may not be able to change the outcome of a tax or superannuation obligation under law, the organisation is committed to listening, communicating clearly and connecting people with the right support.
What support is available
The ATO has outlined several support options for people experiencing vulnerability. These include assistance for those affected by natural disasters, crises of any kind, or other difficult times.
Personal crisis support is available for people struggling with mental health and wellbeing issues, family and domestic violence, financial hardship, or bereavement. The tax office has also developed specific tax and superannuation support options for people experiencing vulnerability.
Current support options include tailored payment arrangements, additional time to meet obligations, and access to specialised support teams within the ATO who are trained to assist people experiencing difficult circumstances. For businesses experiencing financial distress, options may include longer payment plans.
Financial counsellors and National Tax Clinic representatives can access the Advocate Help Desk via phone or email. Experienced ATO staff have been trained in assisting advocates to support taxpayers experiencing vulnerability.
Framework principles guide action
The framework is built on six core guiding principles that outline how the ATO will interact with vulnerable taxpayers. These principles emphasise equity and fairness, accessibility and inclusion, empathy and compassion, transparency and accountability, privacy and data security, and continuous improvement.
The framework also highlights the importance of treating people fairly, ensuring services are accessible and inclusive, and responding with empathy and compassion. The tax office’s commitment to transparency and accountability in its dealings with vulnerable people, protecting privacy and data security, and pursuing continuous improvement in how support is delivered underpin the approach.
Not a free pass
Notably, the framework is not a pass to avoid paying tax. Commissioner of Taxation Rob Heferen has stated the ATO is using all tools available to collect what is owed. However, it may be unreasonable and unfair to apply the same approach or consequences to vulnerable taxpayers as to those who are deliberately non-compliant.
The framework cannot change tax obligations, for example, the law does not allow the ATO to waive tax debts. But it serves as a guiding approach for how the office listens, communicates and connects people to the right support.
The framework states that experiencing vulnerability can impact a person’s ability to meet tax obligations or access entitlements because barriers may affect their capacity to engage, register, lodge or pay, making it harder to access services and understand requirements. When non-compliance occurs, it is often due to these barriers rather than lack of willingness to comply.
Implementation of the framework will require time and ongoing work. The ATO is committed to building its capability to support vulnerable people, including training staff, developing appropriate systems and processes, and ensuring teams have the resources needed to provide effective support.
The tax office plans to empower its staff to engage empathetically and make decisions aligned with the guiding principles by providing necessary information, tools, resources and support. Supporting people well takes time, care and the right tools, with staff receiving guidance, leadership and team support to put the framework into practice.
The framework calls on the ATO to regularly review and enhance its services to accommodate vulnerable taxpayers. On a personnel level, the tax office says it will train staff to recognise signs of vulnerability, and embed trauma-informed and culturally safe principles into its training.
Staying informed
The ATO has made several resources available, including the full Vulnerability Framework document, an Easy Read summary for accessibility, examples of current support options, and information about how the framework is being implemented and how the organisation is building its capability.
Not-for-profit organisations and community groups are encouraged to share the framework and support information with their clients and networks to help people understand that support is available.
The tax office has emphasised that whilst implementation will take time, it remains committed to ongoing consultation and transparency as the framework is rolled out across the organisation.
Information about the ATO Vulnerability Framework and available support options can be found on the Australian Taxation Office website.
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