Forging ahead and living with COVID-19 is a positive step forward for the economy and business. As the Australian economy starts the long road to recovery, the Australian Tax Office has signalled that it will recommence pursuing tax debt again sending a warning to all taxpayers.
The ATO has given notice this week that it will actively chase debts again in Victoria, NSW and the ACT after pausing its pursuit of unpaid taxes while the States were coping with COVID-19 outbreaks and lockdowns.
The ATO said it is owed a record $55 billion at the end of June 2021, prompting the ATO to resume debt recovery steps and chasing those with the largest debts first.
Companies and respective directors who failed to lodge their returns or pay tax on their workers’ superannuation payments were to be “prioritised” and financial penalties for non-compliance were expected to be “more noticeable” in Victoria, NSW and the ACT.
The number of companies entering external administration in 2020-21 represented just 58% the number in 2019-20 and 52% the number in 2018-19.
Laws that extended the time companies had to respond to statutory demands by creditors and gave temporary protection for directors whose companies traded while insolvent have expired.
Collectable debt is growing sharply, as lodgement and payment deferrals expire and the pressure is on the ATO to reduce the its debt book which is reportedly three times larger than after the GFC.
The ATO’s notice sounds a clear warning to all taxpayers, especially company directors, that tax debt must be addressed immediately – an eventuality that will place more pressure on businesses already struggling to recover or survive.
Read more here from SmartCompany: ATO chases debts as lockdowns continue. Is it making a bad situation worse? (smartcompany.com.au)