Mark Freeman’s bright business idea earned him a government grant, despite this, the tax office disregarded this and hit him with a huge bill. Seven years and $750,000 later, he is still fighting for justice.
Background
In April 2018 Mark Freeman participated in a Four Corner’s ATO investigation interview with the ABC’s Adele Ferguson.
Mark Freeman says “Honestly dealing with the ATO I’ve never come across such a mongrel bunch of bastards in my entire life“.
Mark Freeman’s troubles began in mid-2011 when the Tax Office began auditing his company and told him he wasn’t entitled to the research and development rebates he’d been claiming, he was hit with a massive tax bill.
Background of Blackwater Treatment Systems R&D & the Corrupt Conduct of Senior ATO Officials
Blackwater Treatment Systems P/L (BTS)is a privately funded research and development (R&D) enterprise, developing a breakthrough micro wastewater treatment system which retro fits to existing septic systems. The BTS technology converts the onsite septic system`s basic treatment and disposal of wastewater, into an onsite treatment technology for advanced treatment, recycling and reuse, of all types of waste waters e.g. blackwater, greywater or sewage as a combination of black and grey water. BTS has been a collaborate research partner with the University of NSW, for field research at a PhD level. Components of the BTS technology are recognised by the Australian Research Council (ARC) as a discovery and for developing a disruptive innovation.
The sole business activity for BTS is R&D, which as stated is privately funded. The research and development (R&D) while commercially focused, does not presently make a profit, subsequently losses and the associated risks with the R&D are expected. This is acutely applicable when applying for Government R&D Tax Offsets as an incentivised refund from a percentage of the associated R&D losses.
The BTS R&D, requires Innovation and Science Australia approval in order for BTS to apply for the refundable R&D Tax Offsets at 43.5% of the privately funded R&D losses. BTS does not have any objection rights in relation to the R&D Tax Offsets as such offsets, do not form part of an assessment as payable tax cannot be assessed from such losses.
Targeted Malice
The company had won research and development grants from the government’s innovation arm, it was working in collaboration with the University of NSW and had third-party support from Standards Australia.
But the ATO decided the company wasn’t eligible for the grants and tax offsets and hit Freeman with a $250,000 tax bill.
Mr Freeman says corrupt ATO auditors have falsely assessed debts from the BTS R&D losses. It is alleged that senior ATO officials, have abused their assessment positions to corruptly manipulate information to falsify and diminish R&D loses, and knowingly manufacture associated debts against BTS to total more than $250,000. Mr Freeman alleges that senior ATO officials continually breached the Criminal Code Act (Cth) 1995 in order to avoid responsibility and accountability for their extensive corrupt conduct.
The accusations of corrupt conduct includes, knowingly mislead Ministerial (Assistant Treasurer) inquirys to coverup defective audit administration which evolved into criminal conduct. Senior ATO officials intentionally exploit procedural misconduct, intentionally establish a strategy to conceal and or omit crucial information and or provide misleading information. Senior ATO officials intentionally manufactured and enforced a fabricated audit debt to financially destroy an enterprise, and by this process eradicate any links to corrupt conduct associated with the identified senior ATO and Government officials.
Mr Freeman says he was shocked and stunned, he could not comprehend how he could accumulate such a large debt. When Mr Freeman pushed back, things got worse as the Tax Office applied more pressure. The ATO threatened to destroy the company, if he didn’t buckle to the pressure of the ATO and pay the money.
Two months later the ATO issued an order known as a garnishee notice. The notice gave the ATO power to seize control of Mr Freeman’s bank account and take money from it. The bank couldn’t enforce or couldn’t comply with the garnishee order because the funds just wasn’t there.
Mr Freeman had to work out of his shed as he battled to clear his name for years. The hardest thing is proving your innocence when they deem you as being guilty. And even then, having your innocence rejected without reason.
“It was like a horror story,” he tells a joint Age/Sydney Morning Herald/Four Corners investigation into the ATO.
“I was stunned. We hadn’t generated that type of income to even be owing that type of audit debt,” he says. “But on closer review of the assessment, it was obvious that the [tax] auditor had left out critical paperwork.”
It is a fight that has cost the 62-year-old personally and financially. The fight has also taken a toll on Freeman’s personal life.
He alleges he has been subjected to “defective administration, predetermined outcomes, fabricated debts, denial of procedural fairness and targeted malice”. He says he has been bullied, misled and had his reputation and credit rating trashed.
When he took on the ATO he had no idea that it would consume his life for the past seven years. His office, in a house he rents in Ulladulla on the NSW south coast, is jam-packed with files and boxes of meticulous paperwork that he has amassed to help clear his name, a fight he estimates has cost him $750,000.
R&D – A Target on Your Back
Mr Freeman says, one you file an R&D grant application, is an invitation to have a target on your back!
Having to deal with an agency the size of the ATO, with the resources that they have, goes past the stage of explaining how difficult it’s been on us. It’s been difficult on my wife. It’s been difficult on the family. And for something that we didn’t do anything wrong, not a thing wrong.”
Mr Freeman set up Blackwater in 2006 with a small inheritance and his savings. It came from his passion to save the ocean. “Coming from a surfing background, I had a natural objection to ocean outfalls,” he says. “After looking at the facts of the ocean outfall, I realised our best opposition was to develop an alternative reuse for the wastewater.”
He says, the aim for the treatment system – which looks like a portable box – is to have it installed in every Australian home to recycle waste into reusable water. A prototype is set up at Ulladulla Sewage Treatment Plant, but Mr Freeman’s battle with the tax office has set it back a few years due to lack of funding. “This is the first on-site system designed for reuse for the domestic market. The prototype in itself is hopefully setting new guidelines for reuse, national guidelines. We’ve taken a centralised sewage treatment plant and miniaturised it into this prototype.”
Mr Freeman is one of a number of legitimate companies eligible for research and development grants that the tax office has crushed.
It was more than 7 years since the Tax Office came knocking and Mark is still fighting for adequate compensation. Mr Freeman put in a very small estimate of about $750,000, and he was offered $1,500. The second round offer was $11,500.
Criminal Conduct of Public Officials
Mr Freeman has all the documents to support the facts that discloses the corrupt conduct of senior Commonwealth Government officials and senior ATO officials and their breaches of the Criminal Code (Cth) Act 1995 and or the Crimes (Cth) Act 1914. Their criminal conduct as senior ATO officials, and the intentional abuse of their positions as public officials, is observed to instigate the following actions.
The allegations against the Commissioner:
- Intentionally provide false information to mislead Ministerial inquiry`s to conceal corrupt conduct.
- Fabricate audit debt outcomes by intentionally omitting and manipulating information.
- Access archives files and intentionally manufacture & insert fraudulent information.
- Damage a valid enterprise by intentionally falsely editing, omitting, and concealing third party supporting information and documents
- Uphold the defrauding of an enterprise by intentionally concealing legitimate objections.
- Issue a Garnishee Order to a banking institution (with a fabricated indemnity); as an attempt to defraud an enterprise for a debt, which was knowingly under dispute.
- Provide advice that was knowingly incorrect, vague, unsettled and or ambiguous.
- Intentionally instigate a cover up of systematic and negligent failures within the ATO`s system of internal legal reviews, in order to knowingly obstruct accountability of corrupt conduct.
- Former prime minister Mr Scott Morrison used public money to shut down an investigation into the corrupt conduct of the ATO. This matter is with the NACC however they have stalled for more than 13 months.
The former Prime Minister Malcolm Turnbull did state “no-one could escape law enforcement agencies no matter how high they may be in a government department“. Therefore, it is not unreasonable to expect, these public officials who have breached the Criminal Code (Cth) Act 1995 and or the Crimes (Cth) Act 1900 will be brought to justice.
The act of providing information supporting the accusations of corrupt conduct, by senior Commonwealth Government officials and senior ATO officials is not taken lightly. It is viewed as the last available course of action for accountability.
Anything less has already shown to be, not publicly defensible, susceptible to political interference, untrustworthy, unreliable, and counter-productive to the daily standards that the public expects of a Commonwealth public official.
The ATO Finally Admit Fault
After years of fighting for justice, the ATO couldn’t ignore the obvious in front of them. The information that was provided to the ATO was overwhelming that there was genuine research and development. After 4 years of fighting, the ATO conceded its mistakes and completely wiped his debt. No small thing, the ATO normally never admit wrong doing.
The Commissioner of Taxation has advised that errors identified during the audit process have been dealt with following the objection application.
National Anti-Corruption Commission (NACC)
Mr Freeman made a complaint to the NACC in July 2023 about the corrupt conduct of the ATO, former Commissioner of Taxation Mr Chris Jordan, former Prime Minister Mr Scott Morrison and other senior politicians. The evidence was handed to the NACC on a platter, every document and email that was sufficient to hold Mr Jordan, Mr Morrison and others within government accountable.
The documents submitted to the NACC present evidence of several crimes, such as bribery and perjury. Allegedly, Mr Morrison used public funds to halt an investigation into the corrupt activities of the ATO.
Instead of taking immediate action, the NACC have continued to stall and delay. Thirteen months on and the ‘case remains open’, is not good enough. Australians demand accountability and justice.
It is time for the NACC to be privatised, because it is clear the government agency is another ineffective waste of taxpayer funds used to bury evidence of misconducting public officials.