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The Tax Office says it will intervene earlier and use firmer actions to ensure businesses meet tax obligations this financial year.
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ATO zeroes in on business debt collection for FY24–25
14 August 2024
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The Tax Office will make debt collection a top priority this financial year, declaring it will use earlier intervention and “firmer and stronger actions” when dealing with businesses with outstanding obligations.
It plans to crack down on businesses’ superannuation guarantee, pay-as-you-go withholding and GST liabilities, according to a recently released corporate plan for FY2024–25.
“This year, we will continue to focus on being responsive to our environment and will showcase our strengths in innovation, and in working with integrity, fairness and compassion,” ATO Commissioner Rob Heferen said.
“We will continue to use a tailored approach to engage with taxpayers to ensure they meet their obligations, particularly those with collectable debt, in the most efficient way for government and the taxpayer.”
The ATO said debt collection would be one of six key focus areas for this financial year, identifying it as an “enterprise risk” that had to be managed through “core strategies, prevention, engagement through early intervention and firmer and stronger actions”.
“Our core strategies will be enhanced by our Lodge and Pay Reset program, using data and analytics to drive rapid progress in delivering on‑time payment and addressing collectable debt,” it said.
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Other focus areas included strengthening its data and digital capabilities, multinational taxpayer performance, cyber security and fraud measures.
It said a new payment strategy would improve debt collection by tailoring approaches to different client segments, taking into account factors such as capacity to pay and compliance history.
“We will support clients who are engaged to get them back on track,” it said.
“We will take decisive and swift action with those clients who make the choice not to engage and who purposefully avoid payment obligations.”
The ATO’s enhanced data analytics capabilities would play a crucial role in this new approach, it said, flagging its intent to use technology to identify drivers for non‑payment and refine strategies to drive on-time payment.
This included expanding its use of automation and artificial intelligence “to increase operational efficiency”.
It also planned on consulting with key partners to create a “multi‑year approach designed to make it easier for small businesses to meet their tax obligations from the start and on time”.
The push to improve its debt collection activities comes after the ATO’s total collectable debt increased to $52.4 billion as of 31 December 2023.
In its FY2023–24 corporate plan, the ATO singled out small business tax performance and collectable debt as focus areas, causing director penalty notices and insolvencies to surge.
Data for the past year shows it issued 26,702 director penalty notices worth $4.4 billion, a 50 per cent jump from FY2022–23.
Heferen also committed to meeting community expectations per the law, hinting at the recent controversy around its now-suspended campaign to recoup as much as $15 billion by resurrecting on-hold debts.
The campaign involved sending thousands of letters to taxpayers and tax agents listing the sums without containing further details of their origins, meaning many would be impossible to verify or take “days of reverse workflow”.
While the ATO argued the practice was required by law, it paused the campaign in February following community backlash, with the government proposing reforms in May’s budget.
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