The Australian Tax Office (ATO) is pursuing debts again in NSW, ACT, and Victoria after pausing its pursuit of unpaid taxes during the covid-19 outbreaks and subsequent lockdowns in these regions.

Public servants from the Australian Tax Office (ATO) began pursuing debts, which totalled a record $55 billion at the end of June 2021, by making phone calls in mid-November. The ATO also revealed on Tuesday 16th November that those with the largest debts would be first to receive a phone call.

Organisations and their 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.

Accountants across the country are warning the ATO against a heavy-handed approach to debt collection.

Australian Tax Office (ATO) Pursuing Debts

The accountants’ peak body, Certified Practising Accountants (CPA), noted that many businesses remained fragile after the coronavirus lockdowns.

Elinor Kasapidis, CPA’s senior manager of tax policy, expressed concern that trouble with the ATO could be detrimental for many businesses. “They’re nowhere near recovered and they are not yet certain of their cash flows. So, they need to have some time to see how the next few months will go and it would be a shame for businesses that have survived this far only to be pushed under by heavy-handed action,” said Kasapidis.

Kasapidis believes it is reasonable for the ATO to restart its “lodge and pay” activities, given the record levels of debt on its books, but urged the office to work with businesses in developing repayment plans.

An ATO spokesperson stated that the tax office had already taken a “tailored” approach to small business debt throughout the pandemic and had helped more than 1 million taxpayers with payment plans.

The spokesperson highlighted that interest-free payment arrangements were available but warned taxpayers not to try to avoid the ATO. “We cannot help clients who do not engage with us. These enforcement actions will be prioritized for those clients representing higher risks and refusing to engage. Our initial focus will be on taxpayers with higher debts before including taxpayers with all other debts in the new calendar year. Taxpayers with Superannuation Guarantee debts may be prioritized irrespective of their debt value,” said the ATO spokesperson.

Tax Ombudsman Karen Payne commented that the level and nature of complaints her office has been receiving suggest that the ATO had been adopting a non-aggressive approach to debt collection. “Normally, we would expect debt complaints to be about 25 per cent of our total complaints, but at the moment, they’re about 17 per cent, and the type of complaint we’re getting is also suggesting that the level of action in the community is not aggressive. I do think [the ATO] are going to take a softly-softly approach, that’s my understanding, and our complaint numbers don’t suggest that they’ve gone out there with a vengeance,” says Tax Ombudsman Karen Payne.