The ATO has released its Annual Report for FY 2022 which noted that collectable debt had increased during COVID-19 from $26.5 billion as at 30 June 2019 to $44.8 billion as at 30 June 2022. With small business making up $29.3 billion which is 65% of the outstanding debt as at 30 June 2022.

The ATO refer to this debt as collectable debt because it is debt which has been self-reported by business. The Annual Report notes that one of its key priorities is to address this increase in collectable debt.

The ATO noted that ‘the increased debt is a result of disrupted economic activity due to lockdowns and cash flow impacts on small businesses and households. During the early stages of COVID-19 we deliberately shifted our focus away from firmer debt collection action to assist businesses and the community experiencing challenges because of the pandemic.’

To address the increased debt the ATO has increased its engagement process with small businesses through an awareness campaign advising clients of the need to engage with the ATO in relation to the outstanding debt and the potential for firmer and stronger action if they did not engage.

The firmer actions available to the ATO include the issuing of director penalty notices, garnishee orders, reporting to credit authorities or legal remedies including insolvency.

ATO recovery action to date

In March 2022 the ATO wrote to approximately 30,000 businesses and 52,000 directors with significant outstanding tax debt ($10.4 billion) advising them of their obligations, actions and remediation.

The ATO advises that this action resulted in 25,000 clients engaging with the ATO with $2.21 billion in debt being paid and a further 13,000 clients with debts totalling $2.16 billion entering into payment arrangements. Those that did not engage were issued with director penalty notices.

The Annual Report notes the ATO has issued 2,800 director penalty notices since 1 May 2022.

Options available to Clients

If you have clients who have outstanding tax debt there are a number of options available depending on the clients individual circumstances. These include;

  • Paying the debt
  • Entering into a payment arrangement
  • Restructuring the business and potentially compromising the ATO debt via a Small Business Restructure of a Voluntary Administration
  • Winding up the Company via a Liquidation

AS Advisory

AS Advisory are experts in assisting clients to deal with their tax debt and are always happy to meet with you and your clients on a no cost, no obligation basis to discuss your clients individual circumstances.

AS Advisory is also conducting presentations on the options available and should you be interested in us attending your office to conduct a presentation on the above to you and your staff please register your interest via the link below.

Register your interest in having a a presentation on the available options to deal with tax

Contact our firm directly to learn how AS Advisory’s award winning client service could help you or your business.