Over 18 months have passed since the COVID Pandemic caused a significant change in the enforcement policy within the ATO’s debt/tax recovery teams. While initially this policy was (at least in part) mandated by the Federal Parliament, the position adopted in 2020 has continued throughout 2021.
It appears however that things are beginning to change.
From what we understand, and hear from clients/referrers, the ATO has begun the process of issuing notices to businesses whose tax debts exceed $100,000.
One must assume that this is the first step in the recovery process. How the ATO goes about step 2, and recovering the tens of billions of outstanding debt, remains to be seen however all will agree that this is an issue that could not be ignored indefinitely.
In our experience, the ATO are at present quite receptive to payment plans and extended payment terms. The ATO is encouraging businesses to be proactive in dealing with outstanding tax liabilities.
Should businesses fail to cooperate with the ATO in relation to significant, aged debt (being $100,000 outstanding for more than 90 days) it is now possible that a notation will be registered on that business’s credit file. While to date the tax affairs of businesses were largely not known within the public domain, in 2019, the Federal Government passed the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019. The Act allows the ATO to report a business to credit reporting agencies if the business owes more than $100,000 in tax, has an ABN, is more than 90 days in arrears, and does not have a payment plan in place or being negotiated. The listing of a notation on a business’s credit file can impact its ability to raise credit which might have wider implications for the business operations. While the Act was passed in 2019, the powers described thereafter have not yet been exercised due to the struggles already experienced by businesses as a consequence of the COVID Pandemic.
At Rose Litigation Lawyers, we have significant experience in tax litigation and debt recovery. If your business has outstanding tax liabilities to the ATO, then please call one of our team members now to discuss your options.