back to article Australian Taxation Office named as party preventing IT contractors being paid

Plutus Payroll has named the Australian Taxation Office (ATO) as the party with which it is in dispute and ostensibly the reason it has been unable to pay hundreds of contractors owed weeks of pay, as The Register has reported earlier this week. An email sent to contractors and seen by The Register on Friday evening (Australia …

  1. Anonymous Coward
    Anonymous Coward

    The logical implication...

    ... must be that the ATO cannot unfreeze Plutus' accounts because of a software glitch, which a contractor was supposed to have fixed this week.

  2. SotarrTheWizard

    We OBVIOUSLY are missing big chunks of the story. . .

    And no experience with the AUSTRALIAN Tax authorities. . . . but Tax agencies are fairly well known for "grab first and ask questions later". In .US, you're considered guilty and must prove innocence in Tax Court. . .

    1. macjules

      Re: We OBVIOUSLY are missing big chunks of the story. . .

      But the ATO would notify first. Plutus either failed to heed any warnings or simply refused to open the plain brown envelopes.

      1. Anonymous Coward
        Anonymous Coward

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        But the ATO would notify first.

        In a letter sent by standard mail from their office in the UK or some other unlikely place. Plutus might get the letter next week.

        All tax departments work from the same crib sheet (we received a tax notice that was posted 3 days after the due date).

      2. Anonymous Coward
        Anonymous Coward

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        No they would not. There would be a dispute no doubt, probably with lawyers, but the ATO can and do freeze accounts without any notice as a negotiating technique. Because they can.

    2. Anonymous Coward
      Anonymous Coward

      Re: We OBVIOUSLY are missing big chunks of the story. . .

      "In .US, you're considered guilty and must prove innocence in Tax Court. ."

      so you're guilty until proven innocent? Way to go, Land of the Free ....

      1. Anonymous Coward
        Anonymous Coward

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        This is literally true. The United States Internal Revenue Service (IRS) has its own court system, and you are presumed guilty unless you can prove your innocence. Hope you've saved every scrap of money-related paper for the last seven years....

        And the IRS are a bunch of friendly lapdogs compared to the State of California. The IRS can be draconian, but they'll work with you (maybe not fine you quite into starvation) if they think you're genuinely trying to comply with a tax code so complex that there is literally no human being on the planet that understands it all. California, on the other hand, gives zero fucks.

        1. Anonymous Coward
          Anonymous Coward

          Re: We OBVIOUSLY are missing big chunks of the story. . .

          California, on the other hand, gives zero fucks.

          Massachusetts is the same way.

        2. kain preacher

          Re: We OBVIOUSLY are missing big chunks of the story. . .

          I had the DMV take money out of my bank account for failing to resister a car a I sold. Even thought Isent the paper work releasing title saying I no longer own it.

      2. Anonymous Coward
        Anonymous Coward

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        so you're guilty until proven innocent? Way to go, Land of the Free ....

        Pretty standard in a number of countries. Authorities like to have bully power when it comes to squeezing the peasants, bugger pesky due process..

        1. Pompous Git Silver badge

          Re: We OBVIOUSLY are missing big chunks of the story. . .

          "Authorities like to have bully power when it comes to squeezing the peasants, bugger pesky due process.."
          Back in the late 90s we had provisional tax for self-employed people such as myself. The ATO sent me a bill for ~90% of my anticipated income for the forthcoming year. That was rather more than I could afford to pay so they levied interest on the unpaid amount. Come the end of financial year, the ATO refunded the "overpayment" I had made, but kept the interest on the extra I had "owed" them. They are complete and utter bastards.

      3. Orv Silver badge

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        The irony is the political reaction to IRS overreach has been to continually cut their funding...which just ensures the only people they go after will be individuals and small businesses, since they no longer can afford the staff to audit large companies.

    3. Anonymous Coward
      Anonymous Coward

      Re: We OBVIOUSLY are missing big chunks of the story. . .

      This. They must be taking their cues from California's Franchise Tax Board or Board of Equalization. We once had a corporate charter suspended without warning for failing to pay a $25 annual filing fee.

      1. bombastic bob Silver badge
        Facepalm

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        "We once had a corporate charter suspended without warning for failing to pay a $25 annual filing fee."

        that's no joke, either. actually, for small corporations in Cali-fornicate-you, there are a handfull of little things like this, including the $800/year minimum tax, whether your profitable or not.

        So after hearing that the bank accounts were 'frozen' (allegedly?) it looks like they'll need an order from a judge to pay the contractors what they're owed out of that. yeah, governmentium obstructing common sense. it sounds plausible enough to believe without question.

        this entire situation deserves one gigantic FACEPALM

    4. Truckle The Uncivil

      Re: We OBVIOUSLY are missing big chunks of the story. . .

      The Australian Tax Authorities charge interest on money they think you owe them. When it turns out they were wrong you still have to pay the interest even if it is more than the original (negated) sum.

      1. Abacus

        Re: We OBVIOUSLY are missing big chunks of the story. . .

        @ Truckle The Uncivil

        "The Australian Tax Authorities charge interest on money they think you owe them. When it turns out they were wrong you still have to pay the interest even if it is more than the original (negated) sum."

        No, they don't. Being an Australian tax agent with 30 years in the industry, I can assure you, and any other commentards reading this, that you are talking out of your arse. The overcharged interest is reversed, in full. If it isn't, get yourself another tax agent.

        1. Pompous Git Silver badge

          Re: We OBVIOUSLY are missing big chunks of the story. . .

          "Being an Australian tax agent with 30 years in the industry, I can assure you, and any other commentards reading this, that you are talking out of your arse. The overcharged interest is reversed, in full. If it isn't, get yourself another tax agent."
          Er... my tax agent was myself. While I occasionally talk to myself it tends to become a little boring. Not to put too fine a point on this, the ATO effectively told me to fuck off when I asked about the excessive interest charges. Indeed, they told me to fuck off when I told them I had no intention of earning (or attempting to earn) the ridiculous amount they had decided I was going to earn.

          1. Abacus

            Re: We OBVIOUSLY are missing big chunks of the story. . .

            Like I said to the other poster, get yourself another tax agent. Somebody who knows what they are doing, which you quite obviously don't.

    5. aberglas

      Re: We OBVIOUSLY are missing big chunks of the story. . .

      Australia is not (quite) the USA (yet).

      Unburdened by any Bill of Rights, we have never had slavery. Nor do we have the US civil forfeiture laws in which police can arbitrarily steal people's money. Nor the extreme plea bargaining against draconian laws.

      It is very rare for the ATO to freeze assets. So there is probably more to this than disclaimed. And it will go to court in a few days, unlike the USA.

  3. Your alien overlord - fear me

    Is there an Australian IR35?

    1. J P

      AIUI, yes - but operated by end-user, rather than intermediary, or entity-adjacent-to-intermediary. So has never caused the same issues as in the UK.

  4. Prst. V.Jeltz Silver badge

    I wonder if the customers are still chucking the contractors wages into a black hole , or have made other arrangements , like pay them directly , or a new umbrella company

  5. iLurker

    If the contractors have any sense - one who is properly incorporated can employ the rest and take over the business, be paid by customers and pay the other contractors. The contractors might lose a few weeks pay but that's a heck of a lot better than waiting many months - years possibly - for the court process to drag out.

    Australian courts are incredibly slow to reach obvious conclusions.

  6. Richard Jones 1
    Joke

    I wonder what will happen with the Aus Tax Office IT?

  7. Chris G

    I don't know about the Oz tax people but in Spain they freeze your accounts and then tell you, basing their action on the fact that if you have notice you may take the money out and do a runner.

    They will also go to court to get an 'embargo ' take money from your account and then send you a letter to inform you. Town councils can do it too.

  8. Stevie

    Bah!

    I worked for an agency for years which routinely "forgot" to pass on Social Security taxes it withheld from the consultants's wages. I only found out because I turned 50 the year I started with them and so received a report of my payments/expected retirement benefits.

    When I told the others they ranged from "who cares" to sending demands to the agency. I went a different route and contacted the SSA who in turn told me to simply send a copy of my year end witholdings (W2) to them and they'd correct the records. This became a yearly ritual, and I often wondered why none of the Company Officers ever got pulled in to explain these discrepancies.

    Years after I left them, people are finally doing time for the shenanigans.

    But I still wonder what took so long. The scam was stupidy blatant.

  9. tedleaf

    Is it correct that plutus do not charge for using its services ?

    If that is correct then I cannot see how I could be a viable going concern and would be very suspic

    1. tfewster

      So, how much do you pay for your El Reg membership?

      To be fair, I don't know how the Internet infrastructure is funded either, but just hope the people providing the backbone never notice us freeloaders ;-)

      1. Colin Tree

        adds up

        .... So, how much do you pay for your El Reg membership? ....

        by copping these fecking adds

        and maybe a bit of tracking and profiling

        the internet is THE marketing tool

        there's no such thing as freeloading

        even if you are trying to

    2. Anonymous Coward
      Anonymous Coward

      The tax issue may explain how they were able to do it

      It is obviously impossible for a payroll processing company to not charge for its services, which should have been a huge red flag to anyone dumb enough to sign up with them. The only way they could make money and be a viable business is to 1) steal money or 2) steal personal information to sell to criminals.

      Looks like they might have been pocketing the taxes they were supposed to be sending to the ATO, figuring they'd flee the country once they were caught. I wouldn't be at all surprised if the owner(s) are long gone, as is the money owed the ATO.

      1. Truckle The Uncivil

        Re: The tax issue may explain how they were able to do it

        @DougS

        Never heard of short-term interest rates? With an arrangement with a bank you might be able to make quite a bit without charging. Depends on the volume of transactions.

        1. Anonymous Coward
          Anonymous Coward

          Re: The tax issue may explain how they were able to do it

          How much money can they make holding onto money for say a week or two before paying, at today's interest rates? Nowhere near enough to pay for the salaries of people, building rent, etc.

          Sorry, there is a reason this is the only no-charge payroll processor anyone has ever heard of.

          1. Pompous Git Silver badge

            Re: The tax issue may explain how they were able to do it

            @ DougS

            I believe in the earlier thread there was mention of other income streams the business has. Think of loss-leaders in supermarkets. Or my offering a 15% discount for payment up front when I was contracting for that matter. There's no way I'd have made up the difference on 30 day invoices. But I did solve my cash-flow problem.

          2. Roland6 Silver badge

            Re: The tax issue may explain how they were able to do it

            >How much money can they make holding onto money for say a week or two before paying, at today's interest rates?

            Well it does make you wonder how companies such as topcashback.co.uk, who claim to pass on all of the commission received, can be successful. Because whilst they do have some zero commission refund links on thier website, the only time I and I suspect many others use their site is to browse and click on the commission refund links.

          3. katrinab Silver badge

            Re: The tax issue may explain how they were able to do it

            On a $5000 payment, about $1.40 per week. That is nowhere near enough to cover the cost of payroll.

  10. HellDeskJockey

    Memory Alert

    This happened to me in the 1970's IRS froze the company accounts and bounced our paychecks. I'm still waiting for that money. But I did learn a valuable lesson.

    If PaycheckOk = FALSE THEN Work = Done

  11. Herby

    Be aware...

    While this doesn't apply here (no warning), but if you are UNSURE of the person who is writing the check, and they have written a bunch of them, it is best to CASH (yes, get lots of folding paper, or those new fivers) the check. Once you have the CASH they can't take it back from you. Just go to the issuing bank and say "please cash this check". They may not like it, but (at least in the USA) that's what they have to do. If sometime later (after the money runs out form others cashing their checks), and you deposit the check you thought was "good", they will suck it back from your account. This isn't a pleasant sight, and might lead to the same frustration.

    Yes, I've been through a Chapter 7 bankruptcy (death of a company!). It isn't pretty!

    1. Red Bren

      Re: Be aware...

      In the uk, it's damn near impossible to "cash" a cheque, you have to pay it into a bank account and wait for it to clear before you can get hold of any folding money because terrorists or something.

      1. Pompous Git Silver badge

        Re: Be aware...

        "In the uk, it's damn near impossible to "cash" a cheque, you have to pay it into a bank account and wait for it to clear "
        If it's a pay cheque the banks are required by law to cash it here in Oz.

        1. Truckle The Uncivil

          Re: Be aware...

          @Popmpous Git

          Sorry but that is incorrect. Been through it. The "always cash a pay check" business is based on an agreement between banks (not law). Their reasoning (as they explained to me) was that funds from a person's pay must be available on payday. So if paycheques have to clear then they have to be issued a week earlier. This upsets the employers and fragments of who owes who what and when and where interest goes just devolves into crap as it fragments further and further.

          Since the people issuing the pay checks are usually in good standing, the banks pay them and the agreement between the banks is to pay each others. But there is no legal obligation and particular bank mangers can be arseholes if they want to be.

          1. Pompous Git Silver badge

            Re: Be aware...

            @ Truckle the Uncivil

            Happy to stand corrected. It was what I was told by a lawyer I did some work for many years ago. Initially the cashier refused to cash the cheque (it was crossed), but when I said the magic word "wages" she said "Not a problem!" and promptly cashed it.

    2. DiViDeD

      Re: Be aware...

      Haven't seen a cheque (check to our American cousins) in nearly 20 years. Most people younger than me would be likely to ask 'What is this check of which you speak?'

  12. Alistair
    Coat

    @ Red Bren

    in *any* country - you go to the *ISSUEing* bank and ask them to cash it - they are required to unless there are already insufficient funds in the issueing account, or the amount exceeds their max single transaction cash handling limits. < that limit is usually set by a federal agency, for tax purposes >

    And you absolutely can ask for cash - up to a generally large number. Here in the frozen north, the max cash amount they are *required* to be able to hand you unannounced is $10000, which most banks will quibble about but can do, eventually. And I'm pretty sure that a one month cheque for services rendered isn't going to be *quite* that large. I know from (at least 15 years ago) a single interesting event in my past, that Canadian banks will want 72 hours notice *and* a formal letter detailing what you will use the cash for if you want more than that in actual paper money.

    1. Sgt_Oddball

      Re: @ Red Bren

      Not so in the UK. As redbean stated. If you have an account with the issuing bank then no problem.. to a degree. But if the cheque is cashed, money taken and then it is discovered that the payee had insufficient funds then the money will come back out of your account.

      There are services that will cash the cheque on your behalf but they will take a healthy slice off the money.

      It's mostly an anti fraud measure to stop accounts being setup, cheques paid and cashed without funds and money vanishing into thin air.

      Anti fraud measures like this are why banks in the UK can afford to offer banking services to private individuals for free.

      It's all down to local laws and regs rather than some international standard.

    2. StephenH

      Re: @ Red Bren

      In Australia, if you put two lines across a cheque and write Not Negotiable on it, the cheque cannot be cashed. It must be deposited into an account. If it also has Account Payee Only, the bank account must belong to the payee.

      These are security measures to stop stolen cheques being cashed.

      1. Jon 37

        Re: @ Red Bren

        @StephenH: Yes, UK cheques come preprinted with two lines across them and "Account Payee Only" printed there. So they have to be deposited into an account that belongs to the payee.

        In theory you can cross out the words "Account Payee Only", and sign by the alteration. Then the cheque can be cashed or payed into any account. But I've never seen anyone do that ever. (Or at least that was the case 20 years ago when I first got a chequebook and read how they work... may have changed since).

        1. Anonymous Coward
          Anonymous Coward

          Re: @ Red Bren

          >> In theory you can cross out the words "Account Payee Only", and sign by the alteration. Then the cheque can be cashed or payed into any account. But I've never seen anyone do that ever.

          I did this about 10 years ago. The bank refused to accept if, said I'd defaced the cheque and insisted it was reissued. They just basically told me I was wrong and never do this again.

          I think you need to be careful with theoretical adjustments of financial instruments

          1. Truckle The Uncivil

            Re: @ Red Bren

            Since you can write a cheque upon anything (they do not have to be the bank's stationary) the bank would appear wrong. I believe a cheque written on the side of a cow has been cashed in the UK. They did work something out as to how the cheque would be kept for a year.

            1. Pompous Git Silver badge

              Re: @ Red Bren

              "Since you can write a cheque upon anything"
              Back in the early 1970s I used to sell my paintings and drawings door to door. One prospective customer was out of cash and cheques so I told him to write it on a piece of toilet paper. He did so and was clearly suppressing a smirk presumably because he thought I was wrong in my assertion that he could do so. The teller at his bank initially refused to take it, but on my insistence that she ask the accountant for direction did so.

      2. david 12 Silver badge

        Re: @ Red Bren

        > Not Negotiable on it, the cheque cannot be cashed.<

        Except that when I was learning about it (many years ago), the Aus courts had held that banks could ignore that instruction without penalty. They had to follow the instruction, but if they didn't, it didn't matter.

        Yes, banks are bastards too.

    3. David Roberts
      Windows

      Re: @ Red Bren - 10,000 dollars?

      I have a hazy memory of a charge out rate of £500 UKP per day back when consultancy rates were good.

      Even at current exchange rates that probably breaks your limit.

      Moral: bill every fortnight.

  13. Anonymous Coward
    Anonymous Coward

    Here's the business model. Take million in wages and don't pay them out instantly. Trade the cash as the best daily rates on banks' treasury platforms. Don't pay tax.

  14. Androgynous Cupboard Silver badge

    I know who will have first dibs

    In an insolvency, the first dibs on the companies assets go to pay the involvency firm, the second to the taxman, then from memory it's staff (non-directors) salaries, and so on down the list until way, way down at the bottom of the list - trade creditors, which is what any contractors working through Plutus are.

    I imagine if the Oz Revenue Dept. felt they were owed something by Plutus it would follow this same pecking order, and most likely the contractors will see fuck all of their money. I do hope I'm proved wrong on this.

    1. david 12 Silver badge

      Re: I know who will have first dibs

      >he second to the taxman, then from memory it's staff (non-directors) salaries<

      I think in Aus it's staff first, then tax, but Im not sure of the details.??

      1. Pompous Git Silver badge

        Re: I know who will have first dibs

        "I think in Aus it's staff first, then tax, but Im not sure of the details.??"
        It's secured creditors first — bank mortgages etc, then unsecured creditors. Employees have priority*, then ATO, then everyone else. Each category is paid out in full before the next. The contractors here are in the last category so unlikely to be paid in full if the company is liquidated.

        * Capped if you are a director, a relative or the spouse of a director.

        1. JimC

          Re: The contractors here are in the last category

          I suppose that's the point: contractors don't have unpaid wages, they have unpaid invoices. This seems to have implications for the likes of Uber and the 'gig' economy, and maybe another reason why pseudo self employment should be dealt with.

      2. Anonymous Coward
        Anonymous Coward

        Re: I know who will have first dibs

        "I think in Aus it's staff first, then tax, but Im not sure of the details.??"

        In the UK, if the company doesn't have sufficient funds, the official receiver will pay employees' unpaid wages/salary, plus redundancy pay if applicable, with a cap at x per week.

        That cap is quite a bit lower than an IT worker's pay rate, but better than nothing.

        Your ex-employer won’t necessarily tell you this, in my case a friendly accountant told me to how to claim from the receiver.

        In such a case, don't forget to claim for holiday entitlement not yet taken.

        Any expenses owed are deemed to be 'unsecured credit' and you are unlikely to see any of that repaid.

    2. Adam 1

      Re: I know who will have first dibs

      > if the Oz Revenue Dept. felt they were owed something by Plutus it would follow this same pecking order

      I guess it depends on whether the government feels the political heat enough to try and leave some scraps on the table for the state coffers in lieu of having no palatable alternative gst carve up.

  15. Anonymous Coward
    Anonymous Coward

    ATO freezing accounts

    Thats a new one, to me. The missus has her own accounting practice, yes you see stuff ups from the ATO but you can work with them.

    We see dubious stuff, companies fold, that sort of thing. It get sorted in the end. For the ATO to freeze their accounts,destroying their customer and supplier base and risking being sued for the damages they cause, there must be some serious shenanigans going on.

    Yes compensation for the actions of the ATO is possible to claim, I have seen it achieved. (The Missus is that good!)

  16. GrumpyKiwi

    ATO = Australian 'Tards Office

    I've had dealings with ATO's software support people for their incredibly crappy portal. If the rest of it is run like the software support people (hours of support 09:30 - 16:00 except Wednesdays when it's 10:30 - 16:00) then it leaves me completely unsurprised that this is happening.

    1. david 12 Silver badge

      Re: ATO = Australian 'Tards Office

      > (hours of support 09:30 - 16:00 <

      Sydney time.

      They used to have WA offices, but they closed down for 'efficiency', with very limited 'after-hours' supported provided only by forcing Sydney/Canberra/Melbourne staff to work irregular hours without compensation.

  17. Winkypop Silver badge

    WA offices

    Over here WA stands for Wait Awhile.....

  18. james 68

    I wouldn't put anything past a tax office.

    Just before leaving the UK I got a tax rebate due to overpayment of £437.76, two months later in Japan they send me a bill for £437.76 saying that I underpaid for the previous year. I phoned them to enquire if they had made a mix-up somewhere (my taxes at the time being automatically deducted by the Education Authority I had two separate accountants check the records and was told they could only find the overpayment and not any sign of an underpayment, I was also very curious as to why the amount matched the rebate exactly). Their response was that there was no mix-up it was pure coincidence that the amounts matched exactly and that it should be paid immediately to ensure that my Japanese visa would be unaffected - I was seriously left feeling like it was extortion, their choice of words sounded like a protection racket in a cheesy movie. I paid it and moved on, but I remain far from satisfied with their explanation and attitude.

    NEVER trust a government office, especially a tax office.

    1. Pompous Git Silver badge

      @ James 68

      After I wound up my business, the ATO spent 10 years harrassing me for $830 they claimed I owed. Eventually they put a collection agency onto the case and for the umpteenth time explained to them that I did not ow the ATO any money. The collection agency gave me a phone number at the ATO in Canberra. The person I spoke to checked my records and exclaimed "You don't owe us; we owe you!"

      Several weeks later, just before Christmas I received three cheques totalling somewhat more than $1,000. They paid interest on the outstanding amount. Ya win some, ya lose some! So it goes...

  19. kain preacher

    Interest ? whats that. Here in good ole US of A you only pay interest to the IRS not the other way around. Also you only have a 5 year limit to collect your refund.

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