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Engage or face firmer action, ATO warns taxpayers with unpaid debts

  • May 16 2022
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Engage or face firmer action, ATO warns taxpayers with unpaid debts

By Jon Bragg
May 16 2022

The tax office is offering support and assistance to those with overdue debts.

ATO

Engage or face firmer action, ATO warns taxpayers with unpaid debts

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  • May 16 2022
  • Share

The tax office is offering support and assistance to those with overdue debts.

ATO

The Australian Taxation Office (ATO) has called on taxpayers with overdue debts to engage and take advantage of the tailored support and assistance that is available to them or face firmer actions.

As a result of the COVID-19 pandemic, the ATO said it had shifted its focus away from firmer debt collection in order to help and assist impacted businesses and the community.

ATO deputy commissioner Vivek Chaudhary said that the tax office preferred to work with taxpayers to resolve their situation through engagement rather than enforcement, but noted that this required taxpayers or their representatives to actually talk with them.

“We understand that a lot of people – especially small businesses – have done it tough through COVID and may now have a tax debt,” said Mr Chaudhary.

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“Our message is – don’t stick your head in the sand – even if you can’t pay the full amount owed straight away, please contact us or your registered tax professional to discuss and we will work with you to set up an appropriate payment arrangement. We cannot help taxpayers who do not engage with us.”

The ATO warned that taxpayers who don’t engage could face firmer action including garnishees, recovery of director penalties, disclosure of business tax debts as well as legal actions including summons, creditors petition, wind-up and insolvency action.

“Our debt collection activities prioritise those taxpayers representing higher risks and refusing to engage. That is why our initial focus will be on taxpayers with higher debts before including taxpayers with all other debts,” said Mr Chaudhary.

“Taxpayers with Superannuation Guarantee debts may be prioritised irrespective of their debt value. This is because the Superannuation Guarantee is an entitlement that is owed to employees.”

The ATO confirmed it has sent nearly 30,000 awareness letters for disclosure of business tax debts and over 50,000 awareness letters about the use of Director Penalty Notices, with a focus on those with significant tax obligations outstanding that have not responded to calls and letters.

“Both programs focus on making taxpayers aware of their obligations, the actions we may take, and provide clear pathways for taxpayers to re-engage, work with us, and avoid escalation. As part of this approach, we will continue to offer support to help taxpayers meet their obligations,” Mr Chaudhary concluded.

Earlier this month, the ATO announced that it was cracking down on incidents of fraud involving the creation of fake businesses to scam GST refunds.

According to the tax office, about $850 million in potentially fraudulent payments have been made to around 40,000 individuals.

Engage or face firmer action, ATO warns taxpayers with unpaid debts
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