The ATO has released its Vulnerability Framework to the public. The framework is a set of principles that define the ATO’s approach to collecting taxes and how it treats vulnerable people. For businesses, this means that the ATO has a code of conduct to help those experiencing hardship, enabling them to meet their tax obligations.
What is the Vulnerability Framework
The Vulnerability Framework serves as a guiding practice for the ATO. Essentially, it’s a code of conduct for ATO staff to follow when engaging with the public and businesses. Where people and businesses are vulnerable or have been experiencing hardship, the ATO makes it clear that its conduct will take their circumstances into account.
The principles of the Vulnerability Framework are:
- Equity and fairness: Engage based on circumstance
- Accessibility and inclusion: Provide support and remove barriers
- Empathy and compassion: Understanding and recognition of circumstances
- Transparency and accountability: Committed to openness in their conduct
- Privacy and data security: Protect taxpayers’ identity and details
- Continuous improvement: Refine their conduct over time
But what is ‘vulnerability’, as defined by the ATO?
Vulnerability defined by the ATO
“A person experiencing vulnerability is an individual who faces an increased risk of harm, exploitation, exclusion, or isolation. This can be due to various factors, including, but not limited to, social, economic, environmental, physical or mental health conditions, disability, age, lack of access to essential services, mistreatment, abuse, or other personal circumstances.”
Australian Taxation Office, Vulnerability Framework
By the ATO’s definition, vulnerability is broad by design to capture mitigating circumstances that affect a person or business’s ability to address their tax obligations. To put this into perspective, consider the following example.
Example
John owns a lawnmowing business operating in multiple suburbs in Sydney. His turnover is just under $300,000, and he lodges his BAS submissions every quarter.
Recently, John has been recovering from a workplace accident. This has caused him to pause his work and rehab for his injury. During this time, he has been behind on his tax obligations, like submitting his quarterly BAS. The ATO contacted John and, upon being informed about his accident, granted him a four-week extension.
This is just one example, but it illustrates that, while the ATO is still holding John to his tax obligations, it is aware of his condition and willing to accommodate him.
Vulnerability Framework: How it works
While the framework helps the ATO consider individual and business circumstances, its primary focus is still on collecting taxes and reminding taxpayers of their obligations. What the framework does is influence the ATO’s approach to collecting taxes by providing:
- Support: Provide the best resources to help taxpayers with vulnerable circumstances meet their obligations.
- Services: Cater to individuals, providing assistance where needed.
- Design: Have accessible services that remove barriers that hinder taxpayer obligations.
- Staff: Have capable staff who can follow the framework and best assist vulnerable taxpayers.
When applying this framework, the ATO will use a three-step action plan to assist those in hardship:
Prevention and early engagement
The ATO looks to minimise the barriers that vulnerable people face when it comes to their tax obligations. By working with government and non-government entities, the ATO will provide resources to help taxpayers.
Response
The ATO will tailor their approach in response to any circumstance that justifies it, providing flexibility and assistance to manage the impact of tax matters.
Re-engagement
The ATO will support taxpayers through the tax system, making sure that their requirements are met. This includes debt matters, penalties, and interest.
The Vulnerability Framework and your business
The ATO’s Vulnerability Framework is designed to assist people and businesses experiencing hardship. While taxes are an obligation for everyone, the ability to meet them doesn’t need to be an obstacle in and of itself. This is the purpose of the ATO’s framework.
If you are experiencing hardship, there are avenues that you can take to lessen the burden of meeting your obligations. For any assistance needed, contact the ATO.
